The value of Middle Eastern mergers and acquisitions (M&Ss) reached $9.5 billion during the first quarter (Q1) of 2015, marking a 152 per cent increase from the first three months of 2014 and the best annual start since 2012, a report said.

However, Q1 figures are less than half the value registered during the previous quarter (Q4 2014), said Nadim Najjar, managing director, Mena, Thomson Reuters, commenting on the quarterly investment banking analysis for the Middle East region by Thomson Reuters, a leading source of intelligent information for businesses.

“Middle Eastern equity and equity-related issuance totalled $2.5 billion during the first three months of 2015, 59 per cent less than the value recorded during the previous quarter,” Najjar said.

“Compared to the same period in 2014, Middle Eastern ECM increased 179 per cent and marked the best first quarter by proceeds raised since 2008.  Initial public offerings raised $224.6 million and accounted for 9 per cent of activity in the region.”

According to estimates from Thomson Reuters / Freeman Consulting,  Middle Eastern investment banking fees reached $182.0 million during the first quarter of 2015, 5 per cent more than the value recorded during the previous quarter and a 20 per cent increase from the same period in 2014.

Najjar pointed out that Middle Eastern debt issuance reached $6.5 billion during the first quarter of 2015, 62 per cent more than the value raised during the previous quarter.  Compared to the first quarter of 2014, bond issuance decreased 15 per cent and marked the lowest first quarter total since 2011.

He noted: “The United Arab Emirates was the most active nation accounting for 78 per cent of activity, followed by Saudi Arabia with 16 per cent.  International Islamic debt issuance declined 13 per cent year-on-year to reach US$8.9 billion. HSBC took the top spot in the Middle Eastern bond ranking during the first quarter of 2015 with a 13 per cent share of the market.”

In respect to investment banking, syndicated lending fees saw the most growth from last year, increasing 91 per cent to $52.2 million.  Fees from completed M&A transactions totalled $73.8 million, a 13 per cent increase from last year and the best annual start since 2009.

M&A fees accounted for 41 per cent of the overall first quarter Middle Eastern investment banking fee pool.  Equity capital markets underwriting fees totalled $37.0 million, down 2 per cent from the first three months of 2014, while fees from debt capital markets underwriting declined 12 per cent year-on-year to $19.1 million.

Citi earned the most investment banking fees in the Middle East during the first quarter of 2015, a total of $22.5 million for a 12.3 per cent share of the total fee pool.  Citi topped the Middle Eastern completed M&A fee league table, while Deutsche Bank was first for ECM underwriting and Emirates NBD was first in the DCM underwriting fee rankings.  Banque Saudi Fransi took the top spot in the Middle Eastern syndicated loans fee ranking.

Outbound M&A drove activity, up 161 per cent from the same period in 2014 to reach $4.0 billion, the highest first quarter total since 2011.

Qatar’s overseas acquisitions accounted for 48 per cent of Middle Eastern outbound M&A activity, while acquisitions by UAE and Saudi Arabian companies accounted for 27 per cent and 14 per cent, respectively.  Domestic and inter-Middle Eastern M&A increased 261 per cent year-on-year to $2.4 billion.  Inbound M&A also saw a marked increased, up 129 per cent to US$1.2 billion.   Industrials was the most active sector, accounting for 33 per cent of Middle Eastern involvement M&A.

The largest deal with Middle Eastern M&A involvement during the first quarter of 2015 was the $1.9 billion offer for the remaining stake in Canary Wharf Group Plc by Stork Holdings Ltd, jointly owned by Qatar Investment Authority and Brookfield Property Partners. Citi topped the Q1 2015 announced any Middle Eastern involvement M&A league table with $4.3 billion.

As for equity capital markets, follow-on and convertible offerings accounted for 5 per cent and 86 per cent, respectively.  United Arab Emirates Aabar Investments raised $2.2 billion from a convertible bond in March.  The bonds can be exchanged for shares in UniCredit SpA.

Five banks shared first place in the 1Q 2015 Middle Eastern ECM ranking as bookrunners on the Aabar Investments convertible – Barclays, BNP Paribas, Bank of America Merrill Lynch, Deutsche Bank and Societe Generale. – TradeArabia News Service