Mideast M&A market reaches $37.4bn in 9 months

Middle Eastern investment banking fees reached $580.7 million during the first nine months of 2016, an 11 per cent increase compared to fees recorded during the same period in 2015, according to estimates from Thomson Reuters / Freeman Consulting.

Nadim Najjar, Managing Director, Mena, Thomson Reuters, said: “The value of announced M&A transactions with any Middle Eastern involvement reached $37.4 billion during the first nine months of 2016, 19 per cent more than the value recorded during the first nine months of 2015 and the highest first nine month total in the region since 2010.”

“Middle Eastern equity and equity-related issuance totalled $1.5 billion during the first nine months of 2016, a 72 per cent decline from the first nine months of 2015 and the slowest opening nine-month period for equity capital markets issuance since 2004. Bolstered by a record-breaking second quarter, Middle Eastern debt issuance reached $43.8 billion during the first nine months of 2016, a 75 per cent increase compared to the value raised during the first nine months of 2015 and the strongest first nine months for DCM issuance since records began in 1980,” he added.

In respect to investment banking fees, fees generated from completed M&A transactions totalled $158.3 million during the first nine months of 2016, a 23 per cent decrease compared to a year ago and the slowest first nine months for M&A fees in the region since 2012.  Equity capital markets underwriting fees declined 64 per cent to $29.1 million, marking the slowest first nine month period since 2009, while debt capital markets fees increased 64 per cent to $83.2 million.

Syndicated lending fees accounted for 53 per cent of the overall Middle Eastern investment banking fee pool, the highest first nine months share since 2002.  Completed M&A advisory fees accounted for 27 per cent of fees in the region, while debt and equity capital markets underwriting fees accounted for a combined 19 per cent.

Powered by syndicated lending fees, Mitsubishi UFJ Financial Group earned the most investment banking fees in the Middle East during the first nine months of 2016, a total of $36.5 million for a 6.3 per cent share of the total fee pool.

Rothschild topped the completed M&A fee rankings with 12.9 per cent of advisory fees, while HSBC was first for DCM underwriting, up from second place a year ago.  ECM underwriting was lead by Sambacapital with $13.0 million in ECM fees, or 45 per cent share.  Mitsubishi UFJ Financial Group took the top spot in the Middle Eastern syndicated loans fee ranking with $32.2 million in fees for 10.4 per cent of the market.

As for M&A deals, the $14.1 billion merger of National Bank of Abu Dhabi and First Gulf Bank was the largest deal to be announced in the region so far this year, it is the largest domestic Middle Eastern deal of all time.  Boosted by this deal, domestic and inter-Middle Eastern M&A increased 149 per cent year-on-year to $20.5 billion. Outbound M&A activity fell 24 per cent from first nine months 2015 to reach $11.4 billion.

Overseas acquisitions from Qatar accounted for 41 per cent of Middle Eastern outbound M&A activity, while acquisitions by companies based in Saudi Arabia and United Arab Emirates accounted for 34 per cent and 11 per cent, respectively.  Inbound M&A fell 53 per cent to $2.2 billion.   Financials was the most active sector, accounting for 45 per cent of Middle Eastern involvement M&A, followed by Technology and Real Estate. Credit Suisse, which advised the Abu Dhabi banking merger with UBS, topped the first nine months 2016 announced any Middle Eastern involvement M&A league table.  UBS ranked second.

In respect to Equity Capital Markets, six initial public offerings raised $811.9 million and accounted for 54 per cent of first nine months 2016 activity in the region.  Follow-on offerings accounted for the remaining 46 per cent of activity.  Sambacapital took first place in the first nine months 2016 Middle Eastern ECM ranking with 31 per cent market share.

As for Debt Capital Markets, Qatar was the most active nation in the Middle East accounting for 36 per cent of overall activity, followed by United Arab Emirates and Oman.  International Islamic debt issuance increased 26 per cent year-on-year to reach $28 billion during the first nine months of 2016.

JP Morgan took the top spot in the Middle Eastern bond ranking during the first nine months of 2016 with 9.2 per cent share of the market, while CIMB Group took the top spot for Islamic DCM issuance with a 14.76 per cent share.