M&A value up 30% in ME

The value of announced mergers and acquisition, or M&A, transactions with Middle Eastern targets reached $14.7 billion during the first half of 2013, up 30 per cent compared with $11.3 billion witnessed in the region during the same period last year, and marking the best first half since 2008, according to an investment banking analysis released on Monday.

By Issac John

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Published: Wed 17 Jul 2013, 10:40 PM

Last updated: Tue 7 Apr 2015, 8:01 PM

The key driver of this surge was the $7.5 billion merger of two UAE state-owned aluminium producers, Russell Haworth, managing director, Middle East & North Africa at Thomson Reuters, said. Materials was the most targeted industry during the first half, accounting for 64 per cent of activity.

The UAE was the most active Middle Eastern country, being both the most targeted and the most acquisitive country in the region so far this year.

India was the most popular target for outbound Middle Eastern M&A transactions, while the United States registered the highest value of inbound M&A deals targeting the Middle East.

In the broader Middle East and Africa (Mena) region, M&A activity rose 35.9 per cent to $30.2 billionin the first half of 2013, up from $22.2 billion in the same period last year, findings from a Mergermarket report show. M&A activity picked up with the second quarter in 2013 sporting a 46 per cent increase from the first quarter, with a deal value of $17.9 billion.

According to a report by Ernst & Young, Mena’s M&A deals in first quarter, 2013 increased 100 per cent in value but declined three per cent in number. The UAE topped the region in terms of both the value of domestic deals ($2.2 billion) and number of acquisitions with 11 deals.

A Thomson Reuters report shows that during the first half of 2013, Middle Eastern investment banking fees reached $356.6 million while equity issuance by Middle Eastern companies raised $3.2 billion from 12 issues. According to the report, Middle Eastern debt issuance reached $26.0 billion during the first half of 2013, a 40 per cent increase over the same period last year.

Haworth pointed out that Middle Eastern investment banking fees reached $356.6 million during the first half of 2013, a 28 per cent increase over the same period last year ($277.5 million), and the best first half for fees in the region since 2010.

Completed M&A fees totalled $83.6 million, up 56 per cent from the first six months of 2012 and accounting for 23 per cent of the overall fee pool.

Fees from debt capital markets underwriting in the region hit $102.2 million, up 125 per cent from $45.4 million during the same period last year, and marking the best first half for DCM fees in the Middle East of all time. Equity capital markets underwriting fees totaled $43.1 million, down 35 per cent from the same period last year ($66.7 million), while fees from syndicated lending reached $127.6 million, up 14 per cent over 2012 and accounting for 36 per cent of the first half fee total.

Deutsche Bank earned the most investment banking fees in the Middle East during the first six months of 2013, a total of $27.4 million for a 7.7 per cent share of the total fee pool. JP Morgan topped both the Middle Eastern completed M&A and the equity capital markets fee league tables. Deutsche Bank took first place in the Middle Eastern DCM fee ranking with a 14 per cent cut, while Mitsubishi UFJ Financial Group topped the syndicated lending fee ranking during the first half.

According to the report, equity issuance by Middle Eastern companies raised $3.2 billion from 12 issues during the first half of 2013, a 15 per cent decline from the same period in 2012 ($3.7 billion), and marking the slowest first half since 2010. Initial public offerings, worth a combined total of $2.0 billion, accounted for 63 per cent of equity capital market, or ECM, activity in the region. Three follow-on offerings totalling $702 million accounted for 22 per cent, while convertible issuance accounted for the remaining 15 per cent.

Middle Eastern debt issuance reached $26 billion during the first half of 2013, a 40 per cent increase over the same period last year, and the strongest first half in the region on record. Investment grade corporate debt totalled $20.8 billion and accounted for 80 per cent of Middle Eastern DCM activity. International Islamic debt issuance reached $16.4 billion from 44 issues during the first six months of 2013, an increase of six per cent from the same period in 2012, said Haworth.

issacjohn@khaleejtimes.com



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