Regional capital, sovereign-linked investors and technology transformation are reshaping the Middle East mergers and acquisitions market as companies focus on strategic growth rather than deal volume.

The Middle East mergers and acquisitions (M&A) market entered the second half of 2026 in a period of adjustment. While overall transaction volumes moderated compared with the previous year, investors continued to deploy capital into sectors considered essential for long-term economic growth, including technology, artificial intelligence (AI), energy, infrastructure and logistics.

According to PwC Middle East’s TransAct Middle East – 2026 Mid-Year report, an estimated 272 M&A transactions were recorded across the region during the first half of 2026, representing an approximately 8% decline year on year. However, the reduction in volume did not signal a loss of investor confidence. Instead, the market became more selective, with capital increasingly focused on businesses capable of supporting digital transformation, economic diversification and strategic resilience. [1]

The UAE and Saudi Arabia remained the two dominant M&A markets in the region, together accounting for approximately 65% of regional deal activity. [1]

For companies, investors and entrepreneurs operating in the Gulf, the message is clear: the next phase of investment growth will be driven less by the number of transactions and more by the strategic value of assets being acquired.

UAE and Saudi Arabia remain regional investment centres

The UAE and Saudi Arabia continue to strengthen their positions as leading destinations for regional and international investment.

The two economies have invested heavily in diversification strategies designed to reduce dependence on traditional sectors and develop new growth industries, including technology, logistics, financial services, renewable energy and advanced manufacturing.

In the first half of 2026, Saudi Arabia recorded an estimated 74 M&A transactions, while the UAE remained one of the region’s most active markets. Together, the two countries represented the majority of Middle East deal activity. [1]

The strength of both markets reflects several factors:

large-scale government transformation programmes;
strong sovereign and institutional investors;
growing technology ecosystems;
increasing demand for infrastructure and digital services;
expanding regional business opportunities.

The UAE, in particular, continues to position itself as a global hub connecting companies, investors and markets across Europe, Asia, Africa and the Middle East.

Investment becomes more selective

The first half of 2026 showed a shift in investor behaviour.

Rather than pursuing growth through transaction volume alone, investors increasingly focused on companies with strong strategic value, technological capability and long-term market potential.

PwC’s analysis found that most disclosed-value transactions remained below the largest deal categories, with 151 transactions valued at less than US$100 million. Only one transaction exceeded US$500 million. [1]

This indicates a market where investors are still active but are applying greater discipline when evaluating opportunities.

Businesses attracting attention are increasingly those that can demonstrate:

sustainable revenue models;
technology advantages;
operational efficiency;
access to growing markets;
strategic importance within national development plans.

Technology and AI become the leading M&A sector

One of the most significant trends in Middle East M&A activity is the rapid growth of technology investment.

Technology, media and telecommunications (TMT) became the region’s most active sector during the first half of 2026, recording 76 transactions, compared with 54 during the same period in 2025. [1]

The increase reflects a broader transformation taking place across the region.

Companies are investing in:

artificial intelligence platforms;
enterprise software;
digital infrastructure;
cybersecurity;
cloud technologies;
automation solutions.

AI has become particularly important because governments and businesses across the Gulf increasingly view advanced technology as a foundation for future competitiveness.

The growth of AI-related investment is also connected to wider digital transformation initiatives, where companies are looking to improve productivity, automate operations and create new business models.

Sovereign and regional capital continue to shape the market

One of the defining characteristics of Middle East investment activity is the growing role of regional and sovereign-linked capital.

According to PwC, state and sovereign-linked entities participated on at least one side of half of the region’s largest transactions during the reporting period. [1]

These investors often take a long-term approach, supporting sectors considered important for economic development.

Areas receiving significant attention include:

energy transition;
infrastructure;
logistics;
industrial capabilities;
technology;
strategic services.

This approach differs from purely short-term investment strategies. Sovereign-linked investors often focus on building national capabilities, strengthening supply chains and supporting economic diversification.

Infrastructure, energy and logistics remain strategic priorities

While technology attracted the highest number of transactions, traditional strategic sectors continued to receive major investment.

Energy, utilities and resources recorded 22 transactions during the period, increasing from 15 transactions a year earlier. [1]

Large infrastructure-related deals demonstrate continued investor interest in assets that support economic growth.

Among the largest disclosed transactions highlighted by PwC were:

Dubai Electricity and Water Authority’s acquisition of an additional stake in Emirates Central Cooling Systems Corporation, valued at US$1.41 billion;
GFH Financial Group’s US$400 million acquisition of a majority stake in Byrne Equipment Rental;
AD Ports Group’s additional stake acquisition in Global Feeder Shipping valued at US$299.5 million. [1]

These transactions reflect continued demand for essential infrastructure and businesses connected to regional trade growth.

What M&A trends mean for businesses in the UAE

For companies operating in the UAE, the changing M&A environment creates both opportunities and challenges.

Businesses seeking investment are increasingly expected to demonstrate more than financial performance. Investors are looking for companies with clear competitive advantages and the ability to participate in future growth sectors.

Companies that may attract greater interest include those operating in:

Artificial intelligence and digital services

Businesses providing AI solutions, automation technologies and digital platforms are positioned to benefit from increasing enterprise adoption.

Logistics and supply chain technology

As the UAE expands its role as a global trade and logistics hub, technology-enabled logistics companies remain strategically important.

Financial technology

Digital payments, banking technology and financial platforms continue to support the region’s evolving financial ecosystem.

Sustainable infrastructure

Energy transition and sustainable development projects remain priorities for governments and investors.

The outlook for the second half of 2026

The Middle East M&A market is expected to remain focused on quality rather than quantity.

According to PwC Middle East, technology and AI, critical infrastructure, industrial capability, energy transition, defence and security are likely to remain priority investment areas. [1]

Future transactions are expected to be shaped by companies that combine:

technological innovation;
operational resilience;
regional scalability;
strategic importance.

The region’s investment landscape is therefore entering a new phase. Growth will not simply come from increasing the number of acquisitions, but from building stronger companies capable of competing in a rapidly changing global economy.

For the UAE, this creates an opportunity to further strengthen its position as a regional investment hub, connecting capital, technology and businesses across global markets.

Sources

[1] PwC Middle East – TransAct Middle East 2026 Mid-Year Report
Middle East M&A activity, sector trends, transaction data and investment outlook.
https://www.pwc.com/m1/en/publications/transact-middle-east-2026-update.html

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