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January 13, 2013

Middle East M&A activity reaches US$20 billion in 2012 recording the strongest annual total since 2008

  • Middle Eastern investment banking fees reached US$536.1 million during 2012, a 19% increase over 2011
  • Equity capital markets issuance reached US$9.4 billion during 2012 to finish 5% down from 2011
  • Debt issuance reached US$38.6 billion in 2012, a 26% increase over 2011
     

DUBAI - Thomson Reuters today released its investment banking analysis for the Middle East region for 2012.

According to the report, Middle Eastern investment banking fees reached US$536.1 million during 2012, a 19% increase over 2011. Equity capital markets issuance reached US$9.4 billion during 2012 while total debt issuance reached US$38.6 billion in 2012, a 26% increase over 2011.

Russell Haworth, Managing Director, Middle East & North Africa at Thomson Reuters, commented: “M&A transactions with Middle Eastern targets reached US$20.0 billion during 2012, double the activity seen in the region during 2011 (US$9.8 billion), and the strongest annual total since 2008. Telecoms was the most targeted industry in the Middle East with 30% of the activity during the year, followed closely by Financials with 27%. Egypt was the most targeted Middle Eastern country during 2012, while Qatar was the most active Middle Eastern acquiror. ”

Mr. Haworth added: “The United Kingdom is the most popular target for outbound Middle Eastern M&A transactions, followed by Brazil and India.” Goldman Sachs topped the 2012 Announced Any Middle Eastern Involvement M&A Ranking with US$5.9 billion, while Credit Suisse took second place with US$5.0 billion. Morgan Stanley topped the Middle Eastern target M&A Ranking with a market share of 22% of the market. The largest deal with Middle Eastern involvement during 2012 was the US$2.0 billion stake acquisition of Centennial Asset Brazilian Equity Fund by Abu Dhabi state investment fund Mubadala.

In respect to Middle Eastern investment banking fees, Mr. Haworth pointed out that these fees reached US$536.1 million during 2012, a 19% increase over 2011 when fees reached US$452.3 million. M&A fees totaled $157.9 million during 2012, up 23% from the previous year (US$128.8 million), and accounting for 29% of the overall fee pool. Fees from equity capital markets underwriting totaled US$99.5 million, a 23% increase over 2011.

Fees from debt capital markets underwriting in the region totaled US$93.8 million for the year, up 26% from the US$74.7 million seen during 2011. Fees from syndicated lending totaled US$185.0 million, a 10% increase over 2011 and accounting for 34% of the overall fee pool. Barclays topped the Middle Eastern completed M&A fee rankings for 2012, earning 9% of the fee pool. Saudi Fransi Capital took first place in the Middle Eastern ECM fee rankings with a 20% cut of the fees. Standard Chartered and National Commercial Bank topped the debt capital markets and syndicated lending fee league tables, respectively.

Mr. Haworth noted that Equity Capital Markets (ECM) issuance reached US$9.4 billion during 2012 to finish 5% down from 2011 (US$9.9 billion). Follow-ons accounted for 77% of ECM activity during the year, while IPOs accounted for 21%. The largest Middle Eastern ECM transaction during 2012 was Qtel’s follow-on in May, which raised US$1.9 billion. Bolstered by this deal, and a US$1.6 billion follow-on from Mobile Telecommunications Co Saudi Arabia, Telecoms was the most active sector in the Middle East during 2012. Qatar National Bank topped the 2012 Middle Eastern Equity Capital Markets ranking with 28% of the market.

Mr. Haworth concluded: “Middle Eastern debt issuance reached US$13.5 billion during the fourth quarter of 2012. It took 2012 DCM activity to U$38.6 billion, a 26% increase over 2011, and the strongest annual total in the region since 2009. Investment grade corporate debt accounted for 82% of Middle Eastern DCM activity during the year.”

Islamic debt issuance reached US$37.1 billion from 91 issues during 2012, an increase of 11% from 2011, and marking the all-time strongest year for Islamic debt activity. The global top Islamic debt issuer nation during 2012 was Malaysia with 48% of the activity, while the strongest industry was the financial sector. HSBC took the top spot in the Middle Eastern bond ranking for 2012 with a 13% share of the market.


Notes for Editors
Middle East includes the following countries: Bahrain, Egypt, Iraq, Iran, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syria, United Arab Emirates and Yemen.

Deal fees are calculated using Freeman Consulting’s proprietary algorithm where spreads or fees are not disclosed. Deal fees are on a gross basis before all expenses. Each underwriter or advisor is allocated its share of deal fees using Freeman Consulting’s allocation methodology, based on the number of underwriters or advisors on the deal and their role. No fees are allocated to syndicated members. Industry totals include fees on deals with undisclosed advisors.

A financial glossary of terms and concepts related to the financial markets can be found at glossary.reuters.com


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