A nascent culture of mergers and acquisition is emerging in Qatar as the economy continues to expand on increased investment, high population growth and diversification away from the hydrocarbon sector.
Previously there was little competitive pressure in the relatively small Qatari market due to the presence of large, family-owned conglomerates with close relationships to each other and to the government, and significant levels of state ownership of key companies. This made traditional, adversarial M&A activity less likely as Qatari family-owned businesses were hesitant to risk family reputation, or the disapproval of government officials, by engaging in takeovers.
The non-hydrocarbon sector has been experiencing rapid expansion in Qatar, whose vast wealth derives mostly from oil and natural gas export revenues.
The government has taken strides to encourage and facilitate foreign investment in the country of two million inhabitants, and new legislation helped shape the emergence of M&A activities.
In 2000, Qatar enacted a law allowing foreign investors to own up to 49% of the share capital of a Qatari company in all sectors of the national economy, provided that the remaining 51% of the share capital is owned by at least one Qatari partner. The law also allows foreign investors to own up to 100% of the share capital in certain exempted sectors such as healthcare, education, tourism, energy and industry.
This change, coupled with other benefits offered such as the freedom to repatriate profits and tax exemptions, opened the door for inbound M&A activities in Qatar.
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