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Ivan Kroshnyi about investment in UAE

The Best Investment Environment: Why I Chose UAE

The Middle East has been famous as an oil region. Meanwhile, the United Arab Emirates is doing its best to break this stereotype by developing and promoting tech and startup sectors.

Based on the Mena M&A Insights report by Ernst & Young, 359 mergers and acquisitions (M&A) worth $42.6 billion have been registered in MENA (the Middle East and North Africa) in the first half of the year. The UAE, Egypt, Saudi Arabia, Morocco, and Oman became the top five countries by the value of transactions.


UAE – 105 transactions worth $14.2 billion. Next comes Egypt – 65 transactions worth $3.2 billion, Saudi Arabia – 39 transactions worth $2.8 billion, Morocco – 18 transactions worth $1.8 billion and Oman – 10 transactions worth $700 million.

Top five target sub-sectors by the value of transactions in the region – Transportation, consumer goods, telecommunications, real estate, electricity, and utilities.

The main contribution to M&A activity in the region is internal transactions, 48% of the volume.

The UAE is the most preferred destination among internal transactions involving PE or SWF, 18 transactions

This activity is explained by the involvement of private equity and government organizations as well as growing investments in the tech industry.

Internal Transactions

173 transactions worth $13.9 bln in the region. Interestingly, only three deals are ~41% of the M&A value. More importantly, 2 out of 3 originate from the UAE – Ghitha Holding PJSC with the purchase of Tamween Management LLC for $2.4 bln and Q Holding with the acquisition of Reem Investments PJSC for $1.6 bln.

Top 5 by value in the region: Real Estate ($3.3 bln), Consumer Goods ($2.9 bln), Banking & Capital Markets ($2.4 bln), Asset Management ($1.5 bln), Transportation ($0.8 bln).

Inbound Transactions

94 transactions worth $9.8 bln. The United Arab Emirates is yet again a favorite investment area with 51 transactions worth $7.4 bln, i.e. more than 50% thanks to reforms aimed at strengthening the business environment, attracting foreign investment, and promoting the incorporation and expansion of businesses.

External Transactions

92 transactions worth $19 bln. The UAE is demonstrating jaw-dropping figures again. Tech and consumer goods were ahead of the pack – 35% of 54 external transactions in the UAE. The largest deal was made in the UAE in May – Etisalat Group acquired 9.8% of Vodafone Group shares for $4.4 bln.

Top 5 leaders by value: Telecommunication ($4.4 bln), Media Outlets and Entertainment ($3.5 bln), Aviation ($2.2 bln), Consumer Goods ($1.3 bln), Power Industry, Utility Services ($1.3 bln).

In essence

Against the backdrop of fluctuating commodity prices and inflationary pressures, oil and gas activities in the Gulf region, particularly in the UAE, are diversifying. Transportation, consumer goods, telecommunications, real estate, energy, and utility services are gaining steam as investments. The economic diversification initiated by the government continues to stir up interest in strategic deals.

The UAE attracts over 50% of all venture capital investment in the entire region. It is interesting. However, if you look at the population size, it becomes even more interesting as we are talking about a high concentration of top-notch talents as well as an ecosystem that allows startups and companies that are undergoing different stages of scaling to succeed and thrive.

While volatility in crude oil prices, economic uncertainty, and global market turmoil had little impact on growth, the activity of transactions was primarily driven by private equity (PE) or sovereign wealth funds (SWFs).

In other words, the M&A market demonstrated a decrease in dependence on transactions made by GRE, government-affiliated organizations. The private sector has the lead. What catches investors’ eye are fundamental indicators, sufficient liquidity, and revaluation of long-term growing companies.

Now let’s dig in deeper

Now let’s talk about fintech I, as an investor, have always been particularly interested in. With state aid and the implementation of exceptional programs, the UAE continues to maintain its leadership in the region’s fintech sector.

The UAE is an onshore and financial zone various legal frameworks apply to. There are currently two financial free zones, namely the Dubai International Financial Center (DIFC) and the Abu Dhabi Global Market (ADGM).

Here’s what motivates me to run my business here

1. Government support. As a part of UAE Vision 2022, the United Arab Emirates strives to turn the country into a fintech leader with many different initiatives being introduced to make it happen.

2. Supportive legislation. Several important bills have been adopted bringing clarity and boosting confidence in the fintech sector. The laws obviously impose certain financial requirements the companies must comply with. However, these are necessary to ensure stability and trust in the industry. The latest bills are aimed either at amending the existing legislation or creating a new one in order to tackle the tech problems in the financial sector. Some are associated with large-value payment systems (LVPS), security tokens, and cryptocurrencies.

3. Talent-luring environment. The UAE has one of the best immigration policies. Skilled and innovative expatriates are very welcome here. The Emirates stands out among other countries as it offers a safe and stable environment. A multinational community that brings together over 195 ethnicities is living, working, and studying here.

4. Favorable tax environment. Despite the planned introduction of corporate income tax in June 2023, the UAE will remain the top choice for entrepreneurs in the region, in particular, for companies that generate income that is less than 375k dirhams (about 100k U.S. dollars). This type of company will be exempt from tax which will encourage the growth of startups and SMEs.

5. Diversity. Fintech investments are primarily targeted at either direct-to-consumer businesses or businesses that provide financial institutions with tech solutions. A large amount of investment goes to the education sector, healthcare, insurance, and technology (AI, deep learning, etc.).

6. Global interest in the region. The UAE sparks a massive interest of investors as compared to other countries in the region with larger populations or larger market sizes. The investment boom started a few years ago with startups emerging specifically in the UAE and is now only gaining momentum.

7. Trends. Buy Now Pay Later (BNPL). Digital and e-wallets. Crowdfunding. Fractional real estate investing. Cryptocurrencies. Robo-advisors.

8. Comfort. The United Arab Emirates is one of the world’s key financial hubs. There is a lot of money concentrated here. Another huge perk is that investing in UAE-based companies is much safer because of the transparent legal system. The legislation is quite favorable too as far as the private sector is concerned. This environment allows people to flourish because they aren’t marginalized or discriminated against based on their ethnicity, gender, or nationality. This is a place where you can succeed regardless of where you come from.

9. Infrastructure. In terms of road quality and smartphone penetration, the UAE has a highly developed infrastructure and the highest smartphone penetration rate in the world.

10. History. The UAE has been known as a country of merchants and always strived to support business and create new opportunities for further development.

11. Adaptability. The UAE has made its intention to diversify the economy independent of oil very clear. This is particularly evident given the capital injections into renewable energy sources and the digital economy.

12. Adequate perception. The UAE is a small country that is unable to compete in specific sectors with other countries with cheaper labor. That being said, if you take a closer look at the digital economy and the emerging sectors, you can get a solid return on talent that—while being pretty expensive—can come up with a unique product in the UAE thanks to the tech evolution.

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