DUBAI – Middle Eastern deal activity has been picking up after a subdued period. Cash-rich Gulf Arabs and governments are buying European assets, lured in part by attractive valuations due to weak markets, Makram Azar, global vice-chairman for investment banking at Barclays, told Reuters. "There is a pick-up in M&A activity in the MENA (Middle East and North Africa) region, led to a large extent by Qatar and Abu Dhabi," Azar said. "The environment in Europe is still challenging but there are names that were beaten up and are now trading at attractive levels. This presents an opportunity for Gulf investors." Barclays leads M&A advisory rankings in MENA, according to Dealogic, with $4.7 billion of deals this year, followed by Goldman Sachs at $3.7 billion and Credit Suisse on $3.5 billion. Gulf investment into Europe almost froze in 2010 and 2011 because of confusion over the euro zone debt crisis and losses suffered on previous overseas deals completed at the height of the 2008 crisis - most notably sovereign funds from Abu Dhabi and Kuwait investing in US banks. Middle East funds are beginning to return and are making waves, led by cash-rich Qatar, which said last month it was buying a 20 percent stake in London Heathrow airport owner BAA. Also, Qatar's sovereign wealth fund became an unexpected kingmaker in the Glencore-Xstrata deal after spending more than 3 billion pounds raising its stake to 12.3 percent. Other regional players are also involved, including among others, Abu Dhabi fund Mubadala acquiring a 5.6 percent stake in Brazilian conglomerate EBX for $2 billion and Almarai, Saudi Arabia's largest dairy company, buying Argentine farm operator Fondomonte S.A. for $83 million. Gulf Arab investors are also targeting options closer to home as they look for places to park their cash. "The oil price is at a high level, higher than the levels at which Gulf government budgets are based on, and this excess revenue needs to be invested," Azar said. – Reuters
