Thomson Reuters on Sunday released its full year investment banking analysis for the Middle East region in 2013.
During 2013, Middle Eastern investment banking fees reached $722.2 million. According to the report, the value of announced M&A transactions with any Middle Eastern involvement reached US$43.4 billion during 2013, 7% more than the US$40.7 billion witnessed in the region during 2012, and marking the best full year total since 2010.
“Middle Eastern companies raised US$4.2 billion of equity during 2013, a 39% decline from 2012 (US$6.9 billion), while Middle Eastern debt issuance reached US$8.1 billion during fourth quarter of 2013, up 82% from the previous quarter. Despite the quarterly uptick, only one-third of 2013 activity was seen during the second half of the year,”
Nadim Najjar, Managing Director, Middle East, Africa and Russia, said.
Najjar said out that the investment banking fees increased by 20% over the $602.6 million seen during 2012 recording the highest annual total in the region since 2010.
“Investment banking fees from completed M&A transactions totalled $212.8 million, up 22% from 2012 (US$174.0 million), and accounting for 29% of the overall fee pool. Fees from debt capital markets underwriting reached $144.1 million up 44% from US$100.0 million during the previous year and marking the best annual total for DCM fees in the Middle East since 2010. Equity capital markets underwriting fees totalled US$62.4 million, down 43% from 2012 (US$108.9 million) and the lowest annual total since 2003. Investment banking fees from syndicated lending increased 38% to US$303.0 million accounting for 42% of total Middle Eastern fees, the highest share since 2004.”
Najjar noted that HSBC earned the most investment banking fees in the Middle East during 2013, a total of US$61.6 million for an 8.5% share of the total fee pool. HSBC topped the Middle Eastern completed M&A fee league table, as well as both the DCM and Loans underwriting fee rankings. The National Bank of Abu Dhabi took first place in the Middle Eastern ECM fee ranking with a 10.3% cut.
In respect to Mergers and Acquisitions, Najjar pointed out that 2013 marked the best full year total since 2010. “Bolstered by the US$7.5 billion merger of 2 UAE state-owned aluminium producers in June, materials sector was the most targeted, accounting for 23% of activity. Energy & Power and Telecoms deals also helped drive activity during 2013, with each sector accounting for 21% of Middle Eastern involvement M&A,” he said.
“Inbound M&A totalled US$6.1 billion, down 3% from the previous year. Egypt was the most popular target, while China registered the highest value of inbound M&A deals targeting the Middle East. Outbound M&A increased 11% from this time last year to total US$14.8 billion. As sole advisor on the aluminium merger, Morgan Stanley topped the 2013 announced any Middle Eastern involvement M&A league table with US$12.7 billion.”
In the area of equity capital markets, he pointed out that Middle Eastern companies raised US$4.2 billion during 2013, a 39% decline from 2012 (US$6.9 billion), led by an 80% drop in follow-on offerings.
“Follow-ons accounted for 23% of equity issuance in the region during 2013, compared to 69% the previous year. Despite the fall in overall equity issuance, Initial public offerings recorded the highest level since 2008, with US$2.7 billion accounting for 66% of ECM activity in the region. The strong IPO total was supported by Asiacell Telecommunication’s US$1.3 billion stock market debut at the beginning of the year. The United Arab Emirates was the most active nation, accounting for 45% of total equity issuance in the Middle East during 2013. As sole bookrunner on the Asiacell IPO, Rabee Securities took first place in the 2013 Middle Eastern ECM ranking with 31% of the market,” he noted.
“Despite the quarterly uptick, only one-third of 2013 activity was seen during the second half of the year. Debt issuance in the region throughout 2013 totalled US$38.6 billion, nearly levelling 2012’s total of US$38.8 billion. Investment grade corporate debt totalled US$27.4 billion and accounted for 71% of the annual total,” Najjar said.
“The United Arab Emirates was the most active nation accounting for two-fifths of activity, followed by Saudi Arabia with 22%. International Islamic debt issuance declined 11% from 2012 to reach US$32.5 billion during 2013.
HSBC took the top spot in the Middle Eastern bond ranking during 2013 with a 16% share of the market.”