ME equity issuance totals $5.1 billion in nine months

UAE tops with 45%, followed by Saudi Arabia with 34% of activity

By Issac John – Associate Business Editor

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Published: Fri 24 Oct 2014, 11:14 PM

Last updated: Tue 7 Apr 2015, 10:44 PM

Dubai: Equity and equity-related issuance in the Middle East during the first nine months of 2014 surged 43 per cent to $5.1 billion as debt issuance edged up five per cent to $32.8 billion, according to a quarterly investment banking analysis for the region.

During the first nine months of 2014, eight initial public offerings raised $3.2 billion. — KT file photo

During the first nine months of 2014, Middle Eastern investment banking fees reached $138.2 million, according to estimates from Thomson Reuters/Freeman Consulting, 60 per cent less than the value recorded during the previous quarter.

Nadim Najjar, managing director, Middle East and North Africa, Thomson Reuters, said Middle Eastern equity and equity-related issuance during the first nine months of 2014 totalled $5.1 billion, a 43 per cent increase from $3.6 billion for the same period in 2013.

Debt issuance reached in the Middle East in the third quarter slumped 68 per cent to $6.3 billion from the record-breaking second quarter total of $19.7 billion. Boosted by the strong second quarter, bonds issued so far during 2014 increased five per cent from the same period last year, to $32.8 billion.

Najjar pointed out that the investment grade corporate debt totalled $29.1 billion and accounted for 89 per cent of the first nine month total. The UAE was the most active nation accounting for 45 per cent of activity, followed by Saudi Arabia with 34 per cent. International Islamic debt issuance increased 48 per cent year-on-year to reach $29.9 billion

The report noted that despite the quarterly downturn, fees earned so far during 2014 saw a slight uptick from last year, from $631.7 million during the first nine months of 2013 to $633.1 million, marking the best first nine months for Middle Eastern fees since 2008.

Equity capital markets underwriting fees totalled $134.5 million, up 183 per cent from the same period last year ($47.5 million), and marking the best first nine month total for ECM fees in the Middle East since 2009. Equity capital market (ECM) fees accounted for 21 per cent of the fee pool. Fees from completed M&A transactions totalled $143.9 million, down 14 per cent from the same period in 2013 and accounting for 23 per cent of this year’s overall Middle Eastern fee pool. Fees from debt capital markets underwriting declined 20 per cent year-on-year to $95.3 million, while syndicated lending fees fell 13 per cent to $259.4 million, the analysis said.

HSBC earned the most investment banking fees in the Middle East during the first nine months of 2014, a total of $38.3 million for a 6.1 per cent share of the total fee pool. Lazard topped the Middle Eastern completed M&A fee league table, while Qatar National Bank was first in the ECM underwriting fee rankings. HSBC and Mizuho Financial Group took the top spots in the Middle Eastern DCM and loans fee rankings, respectively.

Najjar said despite the quarterly downturn, M&A during the first nine months of 2014 increased two per cent from the same period last year to $29.9 billion. Domestic and inter-Middle Eastern M&A declined 44 per cent to $8.3 billion during the first nine months of 2014. Inbound M&A also declined, falling seven per cent to $5.0 billion. Outbound M&A drove activity, up 67 per cent from this time last year to reach $10.7 billion, the highest first nine month total since 2011.

Qatar’s overseas acquisitions accounted for 45 per cent of Middle Eastern outbound M&A activity, while acquisitions by UAE and Saudi Arabian companies accounted for 25 per cent and 22 per cent, respectively, said the report.

Najjar said the largest deal during the third quarter of 2014 was a $3.2 billion offer for pay TV operator Orbit Showtime Network by an undisclosed US-based private equity firm. Bank of America Merrill Lynch topped the 3Q 2014 announced any Middle Eastern involvement M&A league table with $4.3 billion.

During the first nine months of 2014, eight initial public offerings raised $3.2 billion and accounted for 62 per cent of activity in the region. Follow-on and convertible offerings accounted for 18 per cent and 19 per cent, respectively.

He saidthe $1.6 billion Emaar Malls Group IPO is the largest Middle Eastern IPO since Saudi Arabian Mining Co raised $2.5 billion from its debut on the Saudi stock exchange in 2008. Qatar National Bank took first place in the third quarter 2014 Middle Eastern ECM ranking, he added.

— issacjohn@khaleejtimes.com



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