KUWAIT, Nov 3, (RTRS): Kuwait investment bank GulfMerger said on Monday it expects 8 merger and acquisition deals it is advising on to be concluded by April as consolidation pressures among mid-sized regional firms gains momentum. GulfMerger, which offers M&A advisory services to companies, is working with clients on regional deals in sectors including telecoms, building materials, logistics, financial services and consumer goods, Chief Executive Yann Pavie said.
In the first of the deals, GulfMerger advised Italian cement producer Italcementi on its $14 million acquisition in March of Kuwait’s Gulf Readymix.  Other buyouts are on track for conclusion before the end of its fiscal year in April despite global financial turmoil, Pavie said.

“Let Goldman do the big deals but if you look at the middle market no one is catering to it,” Pavie told the Reuters Middle East Investment Summit in Kuwait City.  “We’re announcing two in the coming weeks and all of the others immediately after.”  Medium-sized companies in the world’s top oil-exporting region are likely to pursue consolidation to help them weather the fallout of the biggest financial crisis since the Great Depression, Pavie said.  “In this environment, some companies will need to restructure. In the mid-market today you have many sectors (which) are fragmented,” Pavie said.  “The mid-sized firms were not invested in stock markets. They have the liquidity and they have the cash flow from operations that they need to deploy. You will see more M&A activity coming from this pocket.”

The Gulf M&A pipeline would be driven by Kuwaiti companies eyeing regional expansion and global companies wanting to move into a region where economies are expected to grow in real terms next year despite a possible global recession, Pavie said. Gulf economies have been surging as six years of high oil prices allowed state and private investors to pour windfall oil revenues into infrastructure and industry projects. “This region will be the first to benefit from the global money coming back,” Pavie said. “Buying a cement company was so expensive in the last two years, people were waiting for things to quiet down.”

GulfMerger plans to come to market with a $150 million senior debt fund and a $50 million co-investment fund once market conditions improve, Pavie said. The firm would expand across the region to tap a wave of potential consolidation deals, beginning with top oil exporter Saudi Arabia, the largest Arab economy, within two years, he added. “Saudi for us is critical,” Pavie said. “I think that no single market for the region has scale on its own, and Saudi being the biggest must be a must on everyone’s strategy.”