Thomson Reuters, the world’s leading source of intelligent information for businesses and professionals, released the quarterly investment banking analysis for the Middle East region.
During the first quarter of 2014, Middle Eastern investment banking fees reached $120.3m, down 17% from the previous quarter. The value of announced M&A transactions with any Middle Eastern involvement reached $5.7bn during the first quarter of 2014, 15% less than the $6.8bn witnessed during the same period last year, and marking the lowest first quarter total in the region since 2004.
Nadim Najjar, Managing Director, Middle East, Africa, and Russia / CIS, said, “Middle Eastern companies raised $1.0bn from 2 initial public offerings during the first quarter of 2014, a 37% decline in IPO activity from the same period in 2013 ($1.6bn). There were no follow-on or convertible offerings in the region during the first quarter so overall, ECM activity fell 46%. The larger of the two IPOs was the $905m 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 $109m in March. As sole bookrunner on the Mesaieed Petrochemical Holdings IPO, Qatar National Bank took first place in the 1Q 2014 Middle Eastern ECM ranking.”
Mr. Najjar pointed out, “Middle Eastern investment banking fees reached $120.3m during the first quarter of 2014, down 17% from the previous quarter and a 2% decline compared to the first quarter of 2013.” He added, “Fees from completed M&A transactions totalled $46.4m, up 19% from the same period in 2013, and accounting for 39% of this year’s overall Middle Eastern fee pool. Equity capital markets underwriting fees totalled $39.6m, more than twice the amount registered during the first quarter of 2013 ($17.4m) and marking the best annual start for ECM fees in the Middle East since 2008. ECM fees account for 33% of the fee pool, the highest first quarter share since 2006.”
Mr. Najjar pointed out, “Fees from debt capital markets underwriting declined 47% year-on-year to $17.4m, while syndicated lending fees fell 49% to $16.9m. Lazard earned the most investment banking fees in the Middle East during the first quarter of 2014, a total of $28.8m for a 24% share of the total fee pool. Lazard topped the Middle Eastern completed M&A fee league table, while Qatar National Bank was first in the ECM underwriting fee rankings. JP Morgan and Samba Financial Group took the top spots in the Middle Eastern DCM and loans fee rankings, respectively.”
In respect to Mergers and Acquisitions, Mr. Najjar pointed out, “Value of announced M&A transactions with any Middle Eastern involvement reached $5.7bn during the first quarter of 2014, 15% less than the $6.8bn witnessed during the same period last year, and marking the lowest first quarter total in the region since 2004. The low first quarter total was largely impacted by an 85% decline in domestic and inter-Middle Eastern M&A which totalled just $674m, the lowest first quarter total since 2006.”
Mr. Najjar added, “Outbound M&A drove activity, up 147% from this time last year to total $3.5bn. Saudi Arabian overseas acquisitions accounted for 59% of Middle Eastern outbound M&A activity. Inbound M&A also increased, climbing 171% to $506m. The largest deal during the first quarter was Aramco’s purchase of a $2.0bn stake in South Korea’s petroleum and refinery company, S-Oil Corp. Boosted by this deal, Energy & Power was the most targeted sector, accounting for over half of first quarter activity. Morgan Stanley topped the 1Q 2014 announced any Middle Eastern involvement M&A league table with $740m.”
Speaking about the debt capital market activity in 2014, Mr. Najjar, said, “Middle Eastern debt issuance reached $4.0bn during the first quarter of 2014, down 67% from the same period in 2013 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 $3.3bn and accounted for 84% of the first quarter total.” He concluded, “The United Arab Emirates was the most active nation accounting for 41% of activity, followed by Saudi Arabia with 38%. International Islamic debt issuance declined 34% year-on-year to reach $6.4bn, the lowest first quarter total since 2011. JP Morgan took the top spot in the Middle Eastern bond ranking during the first quarter of 2014 with a 17% share of the market.”
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