Mideast inbound M&A transactions at all-time high

Business Reporter -

MUSCAT, APRIL 16 -

Middle Eastern & North African investment banking fees totalled an estimated $243.1 million during Q1 2018, 6 per cent less than the value of fees recorded during Q1 2017, Thomson Reuters announced in its 2018 Q1 investment banking analysis for the Middle East.

Nadim Najjar, Managing Director, Middle East and North Africa, Thomson Reuters, said: “Debt capital markets underwriting fees totalled $62.9 million. Despite being down 18 per cent year-on-year, this was the second highest start of the year in the region since our records began in 2000.”

Equity capital markets fees decreased 46 per cent to $8.4 million, while fees generated from completed M&A transactions totalled $15.1 million, an 82 per cent decrease from last year and the lowest annual start since 2004. Syndicated lending fees reached a record high of $156.6 million, up 87 per cent from Q1 2017. Debt capital markets fees accounted for 26 per cent of the overall Middle Eastern & North African investment banking fee pool. Syndicated lending fees accounted for 64 per cent, the highest share of the regional fee pool since our records began in 2000. On the other hand, the share of completed M&A advisory fees fell to its lowest level, only accounting for 6 per cent of the market. Equity capital markets underwriting fees accounted for 3 per cent, the lowest since 2011.

Standard Chartered earned the most investment banking fees in the Middle East & North Africa during Q1 2018, a total of $25.8 million for a 10.6 per cent share of the total fee pool; also leading in the DCM underwriting league table. Moelis & Co topped the completed M&A fee rankings with 23.2 per cent of advisory fees, while ECM underwriting was led by Al Rajhi Banking & Investment with $3.1 million in ECM fees, or a 19.1 per cent share. HSBC took the top spot in the Middle Eastern syndicated loans fee ranking.

“The value of announced M&A transactions with any Middle Eastern & North African involvement reached $13.9 billion during Q1 2018, 7 per cent more than the value recorded during Q1 2017 and a 3-year high,” added Najjar. “Deals with a Middle Eastern and North African target reached an 8-year high rising to $11.2 billion, up 50 per cent from the same period in 2017 while inter-MENA or domestic deals reached a 5-year high, also up 42 per cent from year-on-year.”

Driven by Total SA’s acquisition of 20 per cent of Umm Shaif and Nasr concession of Emirati state-owned Abu Dhabi National Oil Co for $1.1 billion, MENA inbound M&A currently stands at an all-time high. At the same time, outbound M&A decreased from $3.3 billion in Q1 2017 to $779 million so far this year.

Energy & Power deals accounted for 54 per cent of Middle Eastern and North African involvement M&A by value and despite having the same number of transactions as the financial sector, the latter only accounts for 10.7 per cent of the region’s M&A activity. Goldman Sachs currently leads the Q1 2018 announced any Middle Eastern and North African involvement M&A league table. Rothschild and Morgan Stanley follow in second and third place.

Middle Eastern and North African equity and equity-related issuance totalled $1.4 billion during Q1 2018, a 158 per cent increase year-on-year. Out of the 6 transactions announced so far this year, 5 have been follow-on offerings, raising a total of $1.3 billion and accounting for 92 per cent of the quarter’s ECM activity in the region. Orange Egypt follow-on raised $866 million and stands out as the biggest deal for Q1 2018. EFG Hermes leads the Middle Eastern and North African ECM ranking with a 63.4 per cent market share.

Despite showing a 25 per cent decrease compared to Q1 2017, debt issuance in the Middle Eastern and North African region is at its second highest level since our records began, reaching $23.9 billion so far this year. The UAE was the most active nation in the region accounting for 33.3 per cent of activity by value, followed by Oman with 29 per cent. International Islamic debt issuance increased 9 per cent from Q1 2017 to reach $13.6 billion so far during 2018.

Standard Chartered currently leads in the Middle Eastern and North African bond ranking for Q1 2018 with a 16 per cent share of the market, while CIMB Group Holdings took the top spot for Islamic DCM issuance with a 15 per cent share.