Interest in mergers and acquisitions (M&A) activity is picking up in Saudi Arabia, including from Western companies looking to acquire firms in the kingdom.

“We’ve seen a number of US and European players working with local companies on consolidating their position in the market. These are strategic firms trying to acquire their counterpart in Saudi Arabia,” Ahmed el-Guindy, head of investment banking at Cairo-based EFG Hermes told MEED at the sidelines of the annual EFG Hermes One-on-One conference in Dubai.

“From what we’ve seen or been involved in [they’re interested in acquisitions in] the food beverage industry and related industries, such as packaging,” he said. “There is more openness in Saudi Arabia in terms of cooperation with global clients and the value they can bring to the table. From both sides we’re seeing more positive signals and it remains to be seen how quick expectations will turn into reality.”

EFG Hermes, one of the largest investment banks in the region, is also expecting more M&A deals in the UAE and Egypt.

“We’re seeing a lot of appetite, especially from financial sponsors [private equity investment firms], which are the main players today,” said El-Guindy.

In Egypt, El-Guindy expects a pick-up in activity in consumer-oriented sectors, while a higher volume of infrastructure-related transactions could take off once the government finalises a new compliance framework.

The bank recently closed its first regional transaction of the year, advising on the acquisition of an oil services firm for about $200m. In Egypt, it expects to close two transactions in the next two to three months. In total the investment banking division currently has more than 12 mandates, including several M&A deals.

In 2013, the bank advised on Abu Dhabi-based First Gulf Bank’s acquisition of finance company Dubai First from Dubai Group and Dubai conglomerate Al-Futtaim’s acquisition of Kenyan car dealer CMC Holdings, which is awaiting regulatory approvals.

“The new trend we’re seeing is focus from the GCC [into east Africa as] you won’t see that many countries growing at 5 per cent with a healthy outlook,” said El-Guindy.