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Wednesday, April 14, 2021

Qatar sees uptick in mergers as businesses navigate pandemic

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Experts say the pandemic forced companies to re-evaluate their business models.

Qatar has seen an uptick in deal activity driven by the global and regional M&A dynamics, despite the economic effect of the COVID-19 pandemic. 

Dealmakers throughout the region have adapted rapidly and imaginatively to the crisis, according to PwC Middle East’s third TransAct report entitled ‘A Renewed Search for Value as Confidence Begins to Recover.’

Investors in Qatar have also been strategically looking at outbound investments to unlock new markets and diversify supply chain reliance, while also assessing what their core business should look like moving forward. 

“We are living in a new normal where businesses are having to rethink their strategies and navigate the uncertainty. The Covid-19 pandemic will continue to force businesses across many sectors to restructure and transform their operations in the years to come,” said Romil Radia, Middle East Valuations Leader and Regional Deals Markets Leader at PwC Middle East.

“However, whilst it remains essential for deal makers to factor in the current, uncertain environment, companies and investors should also view M&A as an opportunity to achieve their strategic objectives and it may be the best or fastest way to fill in gaps, for example, in technologies or resources,” he added. 

Read also: Qatar’s bank mergers, will there be more?

This is particularly relevant for Qatar’s banking sector as the country’s almost saturated banking market could see more consolidation due to the low profitability of banks triggered by the pandemic, particularly those with weaker franchises and limited pricing power. 

“We should also expect more consolidation plays extending across a range of sectors, in particular those hit hard by Covid-19 where players will seek to create value through M&A.

The recent merger of Masraf Al Rayan and Al Khaliji Bank, for example, will likely be followed by a number of other mergers in the short to medium term,” said Kamal Fayed, Deals Partner at PwC Qatar.

Prior to that, the Islamic Bank Dukhan and International Bank of Qatar (IBQ) merged in April 2019.

Financial experts believe there were too many banks in the Qatari market for too few customers. As a result several banks have chosen to merge, thereby reducing their expenses and costs while staying competitive.


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