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Sovereign wealth funds key to deals

Dubai, July 8, 2011

Gulf bankers, hit by a dearth of deal flows so far in 2011, are hoping sovereign wealth funds will drive a second-half rebound powered by a buoyant oil price and an easing in political tensions.

The state-owned funds, allocators of the state's excess investment capital, have benefited from a 20-per cent surge in crude over the past year.

They are expected to aggressively scout for deals after lying low earlier this year when protests hit the Middle East.

'Most of the sovereign wealth funds in the region are very liquid and there have been few large deals in the first half,' said Waleed El Amir, Mena investment banking head at Bank of America (BofA)-Merrill Lynch.

'We should see volumes pick up considerably in the second half.'

Mergers and acquisitions (M&A) in the Mena region hit a rough patch in the wake of the financial crisis as an era of leverage-led buyouts waned and several high-profile investments suffered heavy losses.

The amount of fee income raised by investment banks from mergers and acquisitions activity stood at $280.8 million in the first half of 2011, down nearly 30 per cent from the same period last year, according to Thomson Reuters data.

Total value of completed deals stood at $14.18 billion, a 65pc slump versus the year-ago period.

J P Morgan Chase led the charts for M&A fees in the first half, while BofA Merrill advised on the largest number of completed deals in the region, data showed.-Reuters




Tags: Deals | Gulf growth | sovereign wealth fund |

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