Middle East Inbound mergers and acquisitions (M&A) registered an all-time high of $7.3bn, which marks a 220% increase compared to the same period in 2016. While domestic and inter-Middle Eastern M&A declined by 70% year-on-year (y-o-y) to reach around $6.2bn, and outbound M&A activity decreased by 31% to register at $8.2bn, according to Thomson Reuters’ quarterly investment banking analysis for the Middle East released on Wednesday.
Moreover, the report indicates that the value of the announced M&A reached $35.2bn in the same period of 2017, decreasing by 7% less than the value recorded in 2016. The main driver behind the change was Tronox’s $2.2bn acquisition of a Saudi Arabian titanium dioxide business and Chinese stake acquisitions in Abu Dhabi’s giant onshore oil concession.
Furthermore, in terms of value, energy and power deals accounted for 50.7% of Middle Eastern involvement M&A, while the financial sector dominated in terms of number of deals. With Qatar Investment Authority’s involvement, China CEFC Energy Co’s acquisition of Rosneft Oil Co is the biggest deal with Middle Eastern involvement so far this year. The Chinese company acquired a 14.2% stake of the Russian crude petroleum and natural gas producer.
While China International Capital and VTB Capital shared first place in the third quarter (Q3) 2017 announced any Middle Eastern involvement M&A league table, with HSBC taking third place.
On the other hand, Middle Eastern investment banking fees accounted for an estimated $669.2 m in the first nine months of 2017, marking a 4% decrease from the same period in 2016.
Moreover, debt capital markets underwriting fees reached a total of $193.8m, increasing by 118% y-o-y, which marks the region’s highest ever first nine months since 2000, said Nadim Najjar, managing director of Thomson Reuters in the Middle East and North Africa region.
The report indicates that equity capital markets fees increased 48% to reach $43.2 m, with fees generated from completed M&A transactions reaching a total of $145.9m, decreasing by 23% from 2016, marking the lowest first nine month since 2012.
While syndicated lending fees were down by 26% y-o-y to account for $286.2m, with debt capital market fees accounting for 29% of the total Middle Eastern investment banking fees, which make it the highest first nine months share since 2001.
Moreover, the report indicates that Middle Eastern equity and equity-related issuance reached a total of $1.2bn during the nine months of 2017, declining by 20% y-o-y reaching the lowest recorded rate for first nine months for issuance in the region since 2004. While the Eight initial public offerings raised $694.4 m and accounted for 57% of the total first nine months ECM activity in the region. Malath Coop Ins Co SJSC’s follow-on offering raised $101.3m and stands out as the biggest deal for Q3 2017.
National Bank of Kuwait took first spot in the Q3 2017 Middle Eastern ECM ranking with a 20.5% market share.
According to Najjar Middle Eastern debt issuance reached a total of $84.1bn supported by Saudi Arabia’s $12.4bn international Islamic bond issued in September, which qualify it to be the best annual start in the region since the beginning of the records in 1980.
Saudi Arabia was the most active nation in the Middle East, accounting for 36.1% of activity by value, followed by the UAE with 15.9%. International Islamic debt issuance increased 44% y-o-y to reach $41.4bn so far during 2017.
On the other hand, JP Morgan took the top spot in the Middle Eastern bond ranking during the first nine months of 2017 with a 14.5% market share, while HSBC took the top spot for Islamic DCM issuance with an 11.2% market share.