Thomson Reuters released its first half 2011 investment banking analysis for the Middle East region, which examines the performance of the Middle East investment banking industry in the region’s debt and equity capital markets, both conventional and Islamic. It includes dedicated regional rankings of banks and advisors operating in the Middle East based on their deals and fees.
“These figures show that it has been a tough year so far throughout the region for investment banks, with banker fees comparable with 2004 levels. However confidence is returning to the market as regional economies continue to recover despite the Arab Spring, and the 81% increase in ECM issuance is indicative of that,” Russell Haworth, Managing Director Middle East and Africa at Thomson Reuters, said.
Investment banking fees in the Middle East reached $197 million during the first half of 2011, which was a 46 per cent decline compared with the same period a year earlier, when fees were calculated at $367.8 million. Mergers and Acquisitions (M&A) fees totalled $74.1 million during the first half, accounting for 39 per cent of the overall fee pool.
Debt Capital Markets (DCM) fee activity in the Middle East fell 31 per cent over the first half of 2010 to reach $50 million during the first half of 2011. Fees from syndicated lending and equity capital markets totalled $20.4 million and $53.3 million, respectively.
HSBC holds the top spot in the Middle Eastern DCM fee ranking for the first half 2011 with $7.8 million. Morgan Stanley topped the completed M&A rankings during first half 2011 with $5.5 million. Bank of America Merrill Lynch controlled nearly 20 per cent of equity capital markets fees in the Middle East during the first half of 2011, up from 4.7 per cent during the same time last year.
According to the review, Middle Eastern targeted M&A activity reached $7 billion, a 40 per cent decrease compared to the first half of 2010 when activity totalled $11.7 billion. Real estate is the most targeted industry in the Middle East with $2.3 billion, 33 per cent of the activity down from $4.5 billion during the first half of 2010.
The United Arab Emirates is the most active Middle Eastern country, based on target, with $3.7 billion for 53 per cent of annual activity. BNP Paribas topped the Any Middle Eastern Involvement M&A ranking with $10.1 billion, with Goldman Sachs in second place with $9.3 billion. Citi and Credit Agricole topped the Middle Eastern target M&A ranking with $950.2 million.
The two top Any Middle East Involvement M&A transactions involved Middle Eastern investment funds investing in Spanish Energy & Power targets, with IPIC’s $7.4 billion investment in CEPSA and Qatar Holding Luxembourg’s $2.7 billion investment in Iberdrola SA.
Equity capital markets issuance reached $8.3 billion during the first half of 2011, an 81 per cent increase compared to the first half of 2010 when volume reached $4.6 billion. Follow-on accounted for 67 per cent of quarterly activity, while the top Middle Eastern ECM transaction was $3.5 billion follow-on from Qatar National Bank (QNB).
Financials was the most active industry in the Middle East during the first half of 2011 with 83 per cent of this activity. The real estate and energy and power sectors together accounted for 17 per cent of ECM activity during the first half. Al Rajhi Banking and Investment topped the Middle Eastern equity capital markets rankings, as sole-lead book-runners for Saudi-based Jabal Omar Development’s $688 million follow-on offering.
Middle Eastern debt issuance reached $11.2 billion during the first half of 2011, down 16 per cent from the first half of 2010. Investment grade corporate debt accounted for 71 per cent of all Middle Eastern DCM activity during the first half.
Islamic debt issuance reached $11.5 billion from 24 issues up 85 per cent when compared to first half 2010 levels of $6.2 billion.
The second quarter of 2011 was the busiest three-month period for Islamic bond financing since the second quarter of 2008. The top Islamic issuer is Malaysia with 80 per cent of the activity. Issuers in the financials, energy and power and real estate sectors accounted for all of the DCM issuance in the Middle East during the half.
HSBC took the top spot in the Middle Eastern bond ranking during the first half of 2011 with eight issues, which raised $1.8 billion, while CIMB Group and HSBC Holdings control nearly 50 per cent of the Islamic bond market during the first half of 2011.