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Middle Eastern M&A activity records $5.7 billion in Q1 2014

June 1, 2014



During the first quarter of 2014, Middle Eastern investment banking fees reached $120.3 million, down 17 per cent from the previous quarter. The value of announced M&A transactions with any Middle Eastern involvement reached $5.7 billion during the first quarter of 2014, 15 per cent less than the $6.8 billion 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 billion from two initial public offerings (IPOs) 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'sArabian Cement Company raised $109 million in March. As sole book-runner on the Mesaieed Petrochemical Holdings IPO, Qatar National Bank took first place in the 1Q 2014 Middle Eastern ECM ranking."

Najjar said that Middle Eastern investment banking fees reached $120.3 million during the first quarter of 2014, down 17 per cent from the previous quarter and a two per cent decline compared to the first quarter of 2013.

He added: "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. 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."

Najjar pointed out that 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. Lazard earned the most investment banking fees in the Middle East during the first quarter of 2014, a total of $28.8 million for a 24 per cent 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, Najjar pointed out the value of announced M&A transactions with any Middle Eastern involvement reached $5.7 billion during the first quarter of 2014, 15 per cent less than the $6.8 billion 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 per cent decline in domestic and inter-Middle Eastern M&A which totalled just $674 million, the lowest first quarter total since 2006.

Najjar added, "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. Inbound M&A also increased, climbing 171 per cent to $506 million. 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 & 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 $740 million."

Speaking about the debt capital market activity in 2014, Najjar said, "Middle Eastern debt issuance reached $4 billion during the first quarter of 2014, down 67 per cent 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 $3.3 billion and accounted for 84 per cent of the first quarter total."

He concluded, "The United Arab Emirates was the most active nation accounting for 41 per cent of activity, followed by Saudi Arabia with 38 per cent. 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 of 2014 with a 17 per cent share of the market."

Middle Eastern debt issuance reached $4 billion during the first quarter of 2014, down 67 per cent from the same period in 2013 and the lowest quarterly total since the third quarter of 2011

The United Arab Emirates was the most active nation accounting for 41 per cent of activity, followed by Saudi Arabia with 38 per cent


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Source: Banker Middle East


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