Mideast M&A activity drops 15pc in Q1
Dubai, April 9, 2014
Middle Eastern merger and acquisition activity recorded $5.7 billion in the first quarter, 15 per cent less than the $6.8 billion during the same period last year, according to an analysis by Thomson Reuters, a leading source of intelligent information for businesses and professionals.
The quarterly investment banking analysis for the Middle East region also pointed out that the investment banking fees reached $120.3 million, down 17 per cent from the previous quarter.
Nadim Najjar, managing director, Middle East, Africa, and Russia / CIS, said: “Middle Eastern companies raised $1 billion from two initial public offerings during the first quarter of 2014, a 37 per cent decline in IPO activity from the same period in 2013 ($1.6 billion). There were no follow-on or convertible offerings in the region during the first quarter so overall, ECM activity fell 46 per cent.
“The larger of the two IPOs was the $905 million offering from Mesaieed Petrochemical Holding, a unit of state-owned Qatar Petroleum. It was Qatar's first IPO since 2010. Egypt's Arabian Cement Company raised $109 million in March. As sole bookrunner on the Mesaieed Petrochemical Holdings IPO, Qatar National Bank took first place in the Q1 2014 Middle Eastern ECM ranking.”
The fees from completed M&A transactions totalled $46.4 million, up 19 per cent from the same period in 2013, and accounting for 39 per cent of this year’s overall Middle Eastern fee pool, said the analysis.
Equity capital markets underwriting fees totalled $39.6 million, more than twice the amount registered during the first quarter of 2013 ($17.4 million) and marking the best annual start for ECM fees in the Middle East since 2008. ECM fees account for 33 per cent of the fee pool, the highest first quarter share since 2006, it said.
The fees from debt capital markets underwriting declined 47 per cent year-on-year to $17.4 million, while syndicated lending fees fell 49 per cent to $16.9 million, said Najjar.
Lazard, a leading financial advisory and asset management firm, earned the most investment banking fees in the Middle East during the first quarter, a total of $28.8 million for a 24 per cent share of the total fee pool. It topped the Middle Eastern completed M&A fee league table, while Qatar National Bank was first in the ECM underwriting fee rankings, according to the analysis.
JP Morgan and Samba Financial Group took the top spots in the Middle Eastern DCM and loans fee rankings, respectively, it said.
Meanwhile, outbound M&A drove activity, up 147 per cent from this time last year to total $3.5 billion. Saudi Arabian overseas acquisitions accounted for 59 per cent of Middle Eastern outbound M&A activity, which inbound M&A also increased, climbing 171 per cent to $506 million, said Najjar.
The largest deal during the first quarter was Aramco’s purchase of a $2 billion stake in South Korea’s petroleum and refinery company, S-Oil Corp.
Boosted by this deal, energy and power was the most targeted sector, accounting for over half of first quarter activity. Morgan Stanley topped the Middle Eastern involvement M&A league table with $740 million, he said.
“Middle Eastern debt issuance reached $4 billion during the first quarter of 2014, down 67 per cent from the same period last year and the lowest quarterly total since the third quarter of 2011. It is the slowest annual start for debt capital markets activity in the region since 2009. Investment grade corporate debt totalled $3.3 billion and accounted for 84 per cent of the first quarter total,” said Najjar.
“The UAE was the most active nation accounting for 41 per cent of activity, followed by Saudi Arabia with 38 per cent,” he added.
International Islamic debt issuance declined 34 per cent year-on-year to reach $6.4 billion, the lowest first quarter total since 2011. JP Morgan took the top spot in the Middle Eastern bond ranking during the first quarter with a 17 per cent share of the market. - TradeArabia News Service