Middle Eastern investment banking fees rise 18% to reach $820.8 mn

According to estimates from Thomson Reuters/Freeman Consulting, Middle Eastern investment banking fees reached $820.8 million during 2016, an 18% increase compared to fees recorded during 2015 and the highest annual fee total in the region since 2008.

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Nadim Najjar, managing director, MENA, Thomson Reuters

Nadim Najjar, managing director, MENA, Thomson Reuters, said: “Bolstered by Saudi Arabia’s $17.2 billion bond sale in October, Middle Eastern debt issuance reached $77.8 bn during 2016, a 145% increase compared to the value raised during 2015 and by far the highest annual total in the region since records began in 1980.”

Saudi Arabia was the most active nation in the Middle East, accounting for 29% of overall activity, followed by the UAE and Qatar.  International Islamic debt issuance increased 24% year-on-year to reach $37.9 bn during 2016.

HSBC took the top spot in the Middle Eastern bond ranking during 2016 with a 13.3% share of the market, while CIMB Group took the top spot for Islamic DCM issuance with a 13.5% share.

M&A transactions

M&A

“The value of announced M&A transactions with any Middle Eastern involvement reached $46.9 billion during 2016, 16% less than the value recorded during 2015 and the lowest annual total in the region since 2013. Middle Eastern equity and equity-related issuance totalled $2.6 billion during 2016, a 55% decline year-on-year and the lowest annual issuance total in the region since 2004,” Najjar said.

In respect to investment banking fees, syndicated lending fees increased 50% year-on-year to $444 mn, a nine-year high, while debt capital markets fees more than doubled to $134.1 mn.

Fees generated from completed M&A transactions totalled $200.9 mn during 2016, a 20% decrease compared to 2015 and the lowest annual total for M&A fees in the region since 2012.  Equity capital markets underwriting fees declined 51% to $41.8 mn, the lowest in 12 years.

Fees

US dollars

Syndicated lending fees accounted for 54% of the overall Middle Eastern investment banking fee pool, the highest annual share since 2004.  Completed M&A advisory fees accounted for 24% of fees in the region, while debt and equity capital markets underwriting fees accounted for 16% and 5%, respectively.

HSBC earned the most investment banking fees in the Middle East during 2016, a total of $43.4 mn for a 5.3% share of the total fee pool. Rothschild topped the completed M&A fee rankings with 16% of advisory fees, while HSBC was first for DCM underwriting.

ECM underwriting was lead by Sambacapital with $13 mn in ECM fees, or 31% share.  Sumitomo Mitsui Financial Group took the top spot in the Middle Eastern syndicated loans fee ranking.

As for M&A deals, the $14.1 bn merger of National Bank of Abu Dhabi and First Gulf Bank was the largest deal to be announced in the region during 2016, it is the largest domestic Middle Eastern deal of all time.

Boosted by this deal, domestic and inter-Middle Eastern M&A increased 151% year-on-year to $22 bn. Outbound M&A activity fell 24% from 2015 to reach $14.7 bn.

Overseas acquisitions by Qatar accounted for 33% of Middle Eastern outbound M&A activity, while acquisitions by companies based in Saudi Arabia and the UAE accounted for 28% and 20%, respectively. Inbound M&A fell 30% to $4 bn.

Sectors

Finance

Financials was the most active sector, accounting for 35% of Middle Eastern involvement M&A, followed by energy & power and real estate. UBS, which advised the Abu Dhabi banking merger with Credit Suisse, topped the 2016 announced any Middle Eastern involvement M&A league table.  Credit Suisse ranked second.

In respect to equity capital markets, eight IPOs raised $891.7 mn and accounted for 35% of 2016 ECM activity in the region.  Follow-on offerings accounted for the remaining 65% of activity. Emirates NBD took first place in the 2016 Middle Eastern ECM ranking with a 32% market share.

 

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