The Middle East saw a big decline in merger and acquisition and equity issuance in the first quarter of the year according to the Thomson Reuters investment banking league tables, as unrest swept through the region.
Thomson Reuters review of the Middle East investment banking industry for the first quarter of 2011 covers the region’s M&A, debt and equity capital markets. The review includes rankings of banks and advisors operating in the Middle East, based on deal activity and fees and provides an independent assessment of the market.
Middle Eastern M&A based on target nation reached US$4.9 billion in the first quarter, 42% lower than the first quarter of 2010. The most targeted industry in the region was the financial sector which accounted for 34% of the activity. The UAE is the most active Middle Eastern country based on target with US$3.1 billion or 63% of annual activity.
Goldman Sachs topped the “any Middle Eastern involvement M&A ranking” with US$7.4 billion. The top Middle Eastern targeted deal for Q1 involved the Government of Abu Dhabi’s investment in certain properties of UAE based Al-Dar Properties.
The two top “any Middle Eastern involvement M&A transactions” involved Middle Eastern investment funds investing in Spanish Energy & Power targets with IPIC’s US$7.4 billion in CEPSA and Qatar Holdings Luxembourg’s US$2.7 billion investment in Iberdrola SA.
Middle Eastern Equity Capital Markets issuance also declined during Q1, down 13% year on year to US$1.3 billion. Follow-ons accounted for 23% of quarterly activity, while the top Middle Eastern ECM transaction was a US$980.2 million convertible bond from UAE-based first Gulf Bank PJSC.
Financials was the most active industry during the first quarter, accounting for 80%, while Energy and Power and Industrials together accounted for 18% of ECM activity during Q1. Joint book runners ING and Mirabaud Securities topped the Middle Eastern equity capital markets rankings for the UAE-based Exillon Energy PLC’s US$150.7 million follow-on offering.
Debt Issuance for Q1 in the Middle East declined 2% year on year to reach US$5.5 billion, with investment grade corporate debt accounting for all activity. There were 9 issues of Islamic debt totaling US$3.2 billion which was an 84% increase on the same period in 2010. Malaysia was the top Islamic issuer, accounting for 78% of the activity.
All of the DCM issuance during the first quarter of 2011 was in the financial and real estate sectors. Deutsche Bank took the top spot in the Middle Eastern bond ranking during the first quarter, raising US$929 million with two issues. The top Middle Eastern bond during Q1 was the US$4.3 billion issue by IPIC.
According to data from Thomson Reuters LPC, syndicated loan activity decreased by 78% in the first quarter compared to the same period last year to reach US$2.0 billion. Telecommunications and retail were the most active industries for loan issuance in the Middle East accounting for 76% of the activity. Citi, Credit Agricole and Standard Chartered top the first quarter ranking for syndicated lending in the Middle East, after serving as bookrunners on the largest syndicated loan, a US$1.3 billion financing package for Kuwait-based Zain Group.
Fees in the Middle East reached US$48.8 million during the first quarter of 2011, 58% less than the same period last year. Of the fees, M&A totaled $16.7 million, down 66% on the same period in 2010. DCM fees rose 19% in Q1 to reach US$25.5 million compared with Q1 2010. Fees from syndicated loans reached US$4.5 million and ECM issues reached US$2.1 million.
Deutsche Bank topped the DCM fee ranking for the first quarter with US$4.1 million, while BDO International topped the completed M&A rankings for fees with US$2.1 million.
Managing Director of Thomson Reuters Middle East & Africa, Russell Haworth commented: “Clearly the unrest in the Middle East has impacted the investment banking industry in the region during the first quarter, with very few deals being completed compared to the same period last year. The hardest hit appears to be M&A and equity issues. On the other hand, debt capital markets issuance has been stable both for conventional and Islamic finance.”