Middle East M&A reach $4.7 billion in Q1 2016

Middle Eastern investment banking fees reached $178.2 million during the first quarter of 2016, a 17 per cent decline compared to the value recorded during the first quarter of 2015 and the lowest annual start for investment banking fees in the region since 2014, according to estimates from Thomson Reuters / Freeman Consulting.

Nadim Najjar, Managing Director, Mena, Thomson Reuters, said: “The value of announced M&A transactions with any Middle Eastern involvement reached $4.7 billion during the first quarter of 2016, a decline of 67 per cent compared to the first quarter of 2015 and the slowest first quarter for deal making in the region since 2014.”

“Middle Eastern equity and equity-related issuance totalled $228.0 million during the first quarter of 2016, a 92 per cent decline from the first quarter of 2015 and the slowest opening period for equity capital markets issuance since 2011. Middle Eastern debt issuance reached $5.5 billion during the first quarter of 2016, a 22 per cent decrease compared to the value raised during the first quarter of 2015 and the slowest opening period for DCM issuance since 2009. ” he added. 

In respect to investment banking fees, Fees from completed M&A transactions totalled $54.4 million during the first quarter of 2016, a 22 per cent decrease compared to a year ago and the slowest first quarter for M&A fees since 2013.  Syndicated Lending fees accounted for nearly two-thirds of the overall Middle Eastern investment banking fee pool, the highest first quarter share since fee records began in 2000. 

Equity capital markets underwriting fees declined 84 per cent compared to last year, while debt capital markets fees totalled $5.2 million, down 66 per cent from 2015.  Fees from combined debt and equity capital markets underwriting accounted for 6 per cent of the overall fee pool in the region during the first quarter, the lowest percentage since the first quarter of 2009.

As for M&A deals, Outbound M&A activity fell 85 per cent from the first quarter of 2015 to reach $1.3 billion, the lowest first quarter total since 2010. Overseas acquisitions from the United Arab Emirates accounted for 39 per cent of Middle Eastern outbound M&A activity, while acquisitions by companies based in Bahrain and Saudi Arabia accounted for 29 per cent and 23 per cent, respectively.

Domestic and inter-Middle Eastern M&A decreased 36 per cent year-on-year to $1.8 billion.  Inbound M&A fell 52 per cent to $558.8 million, a two-year low.   Industrials was the most active sector, accounting for 31 per cent of Middle Eastern involvement M&A. 

The largest deal with Middle Eastern involvement during the quarter was the $1.1 billion acquisition of Denmark-based Icopal A/S by GAF Corp from Bahrain-based Investcorp Ltd. 

Lazard topped the first quarter 2016 announced any Middle Eastern involvement M&A league table with $1.4 billion from advising on the top two deals of the quarter.

In respect to Equity Capital Markets,  two initial public offerings raised $200.6 million and accounted for 88 per cent of first quarter 2016 activity in the region.  Follow-on offerings accounted for the remaining 12 per cent of activity.  

Arabian Food Industries Co raised $126.9 million in an initial public offering in March, the largest equity offering in the region during the quarter. Sambacapital took first place in the first quarter 2016 Middle Eastern ECM ranking with 32.3 per cent market share.

As for Debt Capital Markets, Bahrain was the most active nation in the Middle East accounting for 30 per cent of overall activity, followed by Saudi Arabia and Kuwait. 

International Islamic debt issuance increased 14 per cent year-on-year to reach $10.2 billion during the first quarter of 2016, the largest first quarter for issuance in two years.  Morgan Stanley took the top spot in the Middle Eastern bond ranking during the first quarter of 2016 with an 11.9 per cent share of the market, while CIMB Group took the top spot for Islamic DCM issuance with a 17.3 per cent share.

 

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