Middle East M&A deals fall 29 per cent to $18.7 billion
The value of merger and acquisition (M&A) transactions with any Middle Eastern involvement fell 29 per cent in the first half of the year when compared to the same period in 2015, according to financial data provider Thomson Reuters.
The total value reached $18.7 billion during the period under review making it the slowest first six months for deal making in the region since 2014, Thomson Reuters said in its quarterly investment banking analysis for the region released on Thursday (July 21).
The region’s equity and equity-related issuance also saw a sharp 80 per cent drop during the first half marking and the slowest opening six-month period for equity capital markets issuance since 2004. The issuance totalled $1.1bn during the period.
“Bolstered by a record-breaking second quarter, Middle Eastern debt issuance reached US$32.9bn during the first half of 2016, a 45 per cent increase compared to the value raised during the first half of 2015 and the strongest first half for DCM issuance since records began in 1980,” Nadim Najjar, Managing Director, MENA, Thomson Reuters.
Meanwhile, recording the strongest period for investment banking fees in the region since 2014, total fees reached $416.8 million, an increase of 8 per cent compared to fees recorded during the first six months of 2015.
In respect to investment banking fees, Fees from completed M&A transactions totalled US$104.0m during the first half of 2016, a 24 per cent decrease compared to a year ago and the slowest first half for M&A fees since 2012.
Syndicated Lending fees accounted for just over 55 per cent of the overall Middle Eastern investment banking fee pool, the highest first half share since 2002.
Equity capital markets underwriting declined 77 per cent compared to last year, while debt capital markets fees totalled $63.7m, up 48 per cent from 2015.
Fees from combined debt and equity capital markets underwriting accounted for 30 per cent of the overall fee pool in the region during the second quarter of 2016, up significantly from the 6 per cent recorded during the first quarter of the year.
Powered by M&A and DCM fees, JP Morgan earned the most investment banking fees in the Middle East during the first half of 2016, a total of $20.6m for a 4.9 per cent share of the total fee pool. Rothschild topped the completed M&A fee rankings with 19.7 per cent of advisory fees, while HSBC was first for DCM underwriting, up from second place a year ago. ECM underwriting was lead by Emirates NBD PJSC with $4.4m in ECM fees, or 24.4 per cent share. Mitsubishi UFJ Financial Group took the top spot in the Middle Eastern syndicated loans fee ranking with $12.8m in fees for 5.6 per cent of the market.
As for M&A deals, Outbound M&A activity fell 22 per cent from first half 2015 to reach $9.2bn, the lowest first half total since 2014.
Overseas acquisitions from Saudi Arabia accounted for 42 per cent of Middle Eastern outbound M&A activity, while acquisitions by companies based in Qatar and United Arab Emirates accounted for 31 per cent and 11 per cent, respectively. Domestic and inter-Middle Eastern M&A decreased 22 per cent year-on-year to $6.1bn. Inbound M&A fell 76 per cent to $809.8m, a seven-year low.
Technology was the most active sector, accounting for 22 per cent of Middle Eastern involvement M&A. The largest deal with Middle Eastern involvement during the half was the $3.5bn investment in United States-based Uber Technologies by Saudi Arabia’s Public Investment Fund. JP Morgan, which advised Uber Technologies, topped the first half 2016 announced any Middle Eastern involvement M&A league table. Jones Lang LaSalle and CBRE Holding, which advised BlackRock on the $2.5bn sale of its Asia Square Tower to Qatar Investment Authority, ranked second and third respectively.
In respect to Equity Capital Markets, six initial public offerings raised $379.7m and accounted for 35 per cent of first half 2016 activity in the region. Follow-on offerings accounted for the remaining 65 per cent of activity. Dubai Parks & Resorts raised $456.9m in an follow-on offering in May, the largest equity offering in the region during the first half. Emirates NBD PJSC took first place in the first half 2016 Middle Eastern ECM ranking with 38.3 per cent market share.
As for Debt Capital Markets, Qatar was the most active nation in the Middle East accounting for 41 per cent of overall activity, followed by the UAE and Oman. International Islamic debt issuance increased 10 per cent year-on-year to reach $19.4bn during the first half of 2016, the largest first half for issuance since records began. JP Morgan took the top spot in the Middle Eastern bond ranking during the first half of 2016 with 11.3 per cent share of the market, while CIMB Group took the top spot for Islamic DCM issuance with a 15.6 per cent share.