Thomson Reuters, the world's leading source of intelligent information for businesses and professionals, today released the quarterly investment banking analysis for the Middle East region.
During the first nine months of 2014, Middle Eastern investment banking fees reached US$138.2 according to estimates from Thomson Reuters/Freeman Consulting, 60% less than the value recorded during the previous quarter.
In respect to the Mergers and Acquisitions (M&A) activity, the value of announced M&A transactions with any Middle Eastern involvement reached US$11.8 billion during the third quarter of 2014, an 18% decline from the value registered during the previous quarter.
Nadim Najjar, Managing Director, Middle East & North Africa, Thomson Reuters, said: “Middle Eastern equity and equity-related issuance during the first nine months of 2014 totalled US$5.1 billion, a 43% increase in activity from the same period in 2013 (US$3.6 billion).”
He added: “Middle Eastern debt issuance reached US$6.3 billion during the third quarter of 2014, down 68% from the record-breaking second quarter total of US$19.7 billion. Boosted by the strong second quarter, bonds issued so far during 2014 increased 5% from the same period last year, to US$32.8 billion.”
Despite the quarterly downturn, fees earned so far during 2014 saw a slight uptick from last year, from US$631.7 million during the first nine months of 2013 to US$633.1 million, marking the best first nine months for Middle Eastern fees since 2008.
Equity capital markets underwriting fees totalled US$134.5 million, up 183% from the same period last year (US$47.5 million), and marking the best first nine month total for ECM fees in the Middle East since 2009. ECM fees accounted for 21% of the fee pool. Fees from completed M&A transactions totalled US$143.9 million, down 14% from the same period in 2013 and accounting for 23% of this year’s overall Middle Eastern fee pool. Fees from debt capital markets underwriting declined 20% year-on-year to US$95.3 million, while syndicated lending fees fell 13% to US$259.4 million.
HSBC earned the most investment banking fees in the Middle East during the first nine months of 2014, a total of US$38.3 million for a 6.1% 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 Mizuho Financial Group took the top spots in the Middle Eastern DCM and loans fee rankings, respectively.
Speaking about the M&A activity, Mr. Najjar said: “Despite the quarterly downturn, M&A during the first nine months of 2014 increased 2% from the same period last year to US$29.9 billion. Domestic and inter-Middle Eastern M&A declined 44% to US$8.3 billion during the first nine months of 2014. Inbound M&A also declined, falling 7% to US$5.0 billion. Outbound M&A drove activity, up 67% from this time last year to reach US$10.7 billion, the highest first nine month total since 2011.”
“Qatar’s overseas acquisitions accounted for 45% of Middle Eastern outbound M&A activity, while acquisitions by UAE and Saudi Arabian companies accounted for 25% and 22%, respectively.
The largest deal during the third quarter of 2014 was a US$3.2 billion offer for pay TV operator Orbit Showtime Network by an undisclosed US-based private equity firm. Bank of America Merrill Lynch topped the 3Q 2014 announced any Middle Eastern involvement M&A league table with US$4.3 billion,” he noted.
Mr. Najjar commented on the ECM activity during the first nine months of 2014. He pointed out that eight initial public offerings raised US$3.2 billion and accounted for 62% of activity in the region. Follow-on and convertible offerings accounted for 18% and 19%, respectively.
“Dubai's Emaar Properties announced plans to list its shopping malls & retail subsidiary at the end of September. The US$1.6 billion Emaar Malls Group IPO is the largest Middle Eastern IPO since Saudi Arabian Mining Co (Ma'aden) raised $2.5 billion from its debut on the Saudi stock exchange in 2008. Qatar National Bank took first place in the 3Q 2014 Middle Eastern ECM ranking,” he added.
Speaking about debt capital markets, Mr. Najjar pointed out that the investment grade corporate debt totalled US$29.1 billion and accounted for 89% of the first nine month total. The United Arab Emirates was the most active nation accounting for 45% of activity, followed by Saudi Arabia with 34%. International Islamic debt issuance increased 48% year-on-year to reach US$29.9 billion.