Regional mergers and acquisitions value touches $35.2b in the first 9 months
October 18, 2017 | 5:47 PM
by Times News Service
Reuters file picture

Muscat: Total value of merger and acquisitions (M&As) with any Middle Eastern involvement reached $35.2 billion during the first nine months of 2017, according to estimates from Thomson Reuters.

Driven by Tronox’s $2.2 billion acquisition of a Saudi Arabian titanium dioxide business and Chinese stake acquisitions in Abu Dhabi’s giant onshore oil concession, inbound M&A stands at an all-time high of $7.3 billion, up 220 equity capital markets from this time last year.

Domestic and inter-Middle Eastern M&A declined 70 equity capital markets year-on-year to $6.2 billion, while outbound M&A activity dropped 31 equity capital markets to $8.2 billion. Energy and power deals accounted for 50.7 equity capital markets of Middle Eastern involvement in M&A by value, while the financial sector was dominated by the number of deals.

With the Qatar Investment Authority’s involvement, China CEFC Energy Co.’s acquisition of Rosneft Oil is the biggest deal with Middle Eastern involvement so far this year. The Chinese company acquired a 14.2 equity capital market stakes in the Russian crude petroleum and natural gas producer.

China International Capital and VTB Capital shared first place in the third quarter of 2017 announced many Middle Eastern involvements in the M&A league table, with HSBC taking third place.

Middle Eastern equity and equity-related issuance totalled $1.2 billion during the nine months of 2017, a 20 equity capital markets decline year-on-year and the lowest first nine months for issuance in the region since 2004. Eight initial public offerings raised $694.4 million and accounted for 57 equity capital markets of the first nine months ECM activity in the region. Malath Coop Inc. Co. SJSC follow-on offering raised $101.3 million and stands out as the biggest deal for the third quarter of 2017.

National Bank of Kuwait took first place in the third quarter of the 2017 Middle Eastern ECM ranking with a 20.5 per cent market share.

“Bolstered by Saudi Arabia’s $12.4 billion international Islamic bond in September, Middle Eastern debt issuance reached $84.1 billion during the first nine months of 2017,” Nadim Najjar, managing director, Middle East and North Africa (MENA), Thomson Reuters, said.

“This is 82 per cent more than the proceeds raised during the same period last year and by far the best annual start in the region since records began in 1980,” Najjar added.

Saudi Arabia was the most active nation in the Middle East, accounting for 36.1 per cent of activity by value, followed by the United Arab Emirates with 15.9 per cent. International Islamic debt issuance increased 44 per cent year-on-year to reach $41.4 billion so far during 2017.

JP Morgan took the top spot in the Middle Eastern bond ranking during the first nine months of 2017 with a 14.5 per cent share of the market, while HSBC took the top spot for Islamic DCM issuance with an 11.2 per cent share.

Meanwhile, the Middle Eastern investment banking fees totalled an estimated $669.2 million during the first nine months of 2017, 4 per cent less than the value of fees recorded during the same period in 2016, according to estimates from Thomson Reuters.

“Fees from debt capital markets underwriting were up 118 per cent year-on-year, totalling $193.8 million, which makes it the highest first nine months total in the region since our records began in 2000,” said Najjar.

Equity capital markets fees increased 48 per cent to $43.2 million, with fees generated from completed M&A transactions totalling $145.9 million, reflecting a 23 per cent decrease from last year and the lowest first nine month total since 2012. Syndicated lending fees declined 26 per cent year-on-year to $286.2 million, with debt capital markets fees accounting for 29 per cent of the overall Middle Eastern investment banking fee pool, the highest first nine months share since 2001. Syndicated lending fees accounted for 43 per cent, while completed M&A advisory fees and equity capital markets underwriting fees accounted for 22 per cent and 6 per cent, respectively.

HSBC earned the most investment banking fees in the Middle East during the first nine months of 2017, a total of $52.8 million for a 7.9 per cent share of the total fee pool. Credit Suisse topped the completed M&A fee rankings with 15.8 per cent of advisory fees, while JP Morgan was first for Debt Capital Markets (DCM) underwriting. Equity capital markets (ECM) underwriting was led by EFG Hermes with $12.4 million in ECM fees, or a 28.7 equity capital markets share. The Industrial and Commercial Bank of China took the top spot in the Middle Eastern syndicated loans fee ranking.

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