Middle Eastern Mergers & Acquisitions exceed US$14 billion in Q2 2014

Dubai, UAE (IraqiNews.com) Thomson Reuters today released its quarterly investment banking analysis for the Middle East region.

• Middle Eastern investment banking fees reached US$237.9 million during the second quarter of 2014
• M&A transactions with any Middle Eastern involvement reached US$14.0 billion during the second quarter of 2014
• Middle Eastern equity and equity-related issuance during the first half of 2014 totalled US$2.9 billion
• Middle Eastern debt issuance reached US$18.0 billion during the second quarter of 2014

Middle Eastern investment banking fees reached US$237.9 million during the second quarter of 2014, a 72% increase from the previous quarter. The value of announced M&A transactions with any Middle Eastern involvement reached US$14.0 billion during the second quarter of 2014, 2.5 times the value registered during the previous quarter and the highest quarterly total since 1Q’11.

Nadim Najjar, Managing Director, Middle East & North Africa, said: “Middle Eastern equity and equity-related issuance during the first half of 2014 totalled US$2.9 billion, a 6% increase in activity from the same period in 2013 (US$2.8 billion). Middle Eastern debt issuance reached US$18.0 billion during the second quarter of 2014, the all-time highest quarterly total recorded in the region.”

Speaking about investment banking fees, Mr. Najjar pointed out that despite the quarterly uptick, fees earned during the first half of 2014 registered a 19% decline from the same period in 2013 to US$375.9 million. Fees from completed M&A transactions totalled US$110.9 million during the first six months of 2014, up 3% from the same period in 2013, and accounting for 29% of this year’s overall Middle Eastern fee pool.

“Equity capital markets underwriting fees totalled US$99.4 million, up 187% from the amount registered during the first half of 2013 (US$34.6 million) and marking the best first half total for ECM fees in the Middle East since 2009. ECM fees account for 26% of the fee pool. Fees from debt capital markets underwriting declined 39% year-on-year to US$64.5 million, while syndicated lending fees fell 53% to US$101.2 million,” he added.

Mr. Najjar noted: “Lazard earned the most investment banking fees in the Middle East during the first half of 2014, a total of US$29.4 million for a 29% 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. HSBC and National Bank of Abu Dhabi took the top spots in the Middle Eastern DCM and loans fee rankings, respectively.”

Commenting on M&A transactions, Mr. Najjar pointed out that value of M&A deals during the first half of 2014 declined 4% from the same period last year to US$19.7 billion. Domestic and inter-Middle Eastern M&A declined 49% from the first half of 2013 to US$6.9 billion during the first six months of 2014.

He added: “Inbound M&A also declined, falling 19% to US$1.3 billion. Outbound M&A drove activity, up 83% from this time last year to reach US$7.6 billion, the highest first half total since 2011. Qatar’s overseas acquisitions accounted for 46% of Middle Eastern outbound M&A activity. The largest deal during the first half of 2014 was Labregah Real Estate Co’s purchase of a US$2.5 billion stake in Doha-based real estate development firm, Barwa Commercial Avenue Co. Boosted by this deal, Real Estate was the most targeted sector, accounting 29% of first half activity. Bank of America Merrill Lynch topped the 1H 2014 announced any Middle Eastern involvement M&A league table ith US$4.0 billion.”

In respect to Equity Capital Markets, Mr. Najjar pointed out that seven initial public offerings raised US$1.5 billion and accounted for 53% of activity in the region. Follow-on and convertible offerings accounted for 13% and 34%, respectively. The largest IPO during the first six months of 2014 was the US$905.3 million offering from Mesaieed Petrochemical Holding, a unit of state-owned Qatar Petroleum. It was Qatar’s first IPO since 2010. As sole bookrunner on the Mesaieed Petrochemical Holdings IPO, Qatar National Bank took first place in the 1H 2014 Middle Eastern ECM ranking.

Speaking about the debt capital market activity in 2014, Mr. Najjar said: “Dragged down by a slow first quarter, bonds issued during the first half of 2014 fell 16% from the same period last year, to US$22.0 billion. Investment grade corporate debt totalled US$16.4 billion and accounted for 90% of the first half total. The United Arab Emirates was the most active nation accounting for 55% of activity, followed by Saudi Arabia with 28%. International Islamic debt issuance declined 17% year-on-year to reach US$14.1 billion, the lowest first half total since 2011. HSBC took the top spot in the Middle Eastern bond ranking during the first half of 2014 with a 14% share of the market.”