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Middle East Saw Boost in Merger and Acquisition Activity in 2010

Middle East : 13 January 2011

There was a surge in merger and acquisition activity (or M&A) throughout the Middle East region in 2010 as over 500 deals were announced. Thomson Reuters’ Investment Banking Analysis for the Middle East 2010 stated that this figures reaches a record level.

The review of the Mid East region covers the M&A as well as debt levels and the equity capital market in the region’s investment banking sector.

Included in the review are bank rankings as well as rankings for the advisers that are working with the Middle East region. These rankings take into account the deal activities and fee structure, providing a uniquely independent market assessment.

M&A in the Middle East with figures based on target countries hit $31 billion in 2010, which was over twice the amount recorded for 2009.

Out of the industries that were targeted, telecommunications held the leading spot and saw $13.2 billion in activity. Out of the Middle East nations that saw activity, Kuwait had the highest amount reaching 46 percent of the activity seen annually.

Institutions that were involved in Middle East M&A included Morgan Stanley, an investment bank, and UBS. Morgan Stanley accounted for $29.3 billion and the UBS was involved in $28.4 billion.

When looking at the figure for advisory assignment, Goldman Sachs had $15.4 billion and was at the top with the leading target M&A ranking.

Targeted deals were led by the plan for Etisalat to acquire 46 percent of Zain Group, a $13 billion transaction.

The fees for investment banking rose above the level seen in 2009, moving up $2.5 million to reach $567.2 million.

Nearly 50 percent of those fees were due to M&A activities.

In debt capital markets the activities resulted in $137.1 million in fees for 2010. Around 13 percent of the overall fees for investment banking in 2010 were due to syndicated loans.

Issuance in the debt capital market declined by 7 percent to reach $37.1 billion and corporate debt of the investment grade accounted for 60 percent of that annual total.

Specific debt capital markets such as the supranational and sovereign markets saw activities of $12.9 billion that made up 35 percent of the overall amount.

Leading sectors that had debt actively issued included telecommunications, energy and power, as well as the financial sector.

For 2010 the HSBC had the highest amount of bonds issued totaling 21. The highest Middle Eastern bond, valued at $3.5 billion, was issued by Qatari Diar Finance.

When looking at borrowers in the Middle East, activities involving syndicated loans totaled $30.3 billion over the course of 2010, which is an increase of 90 percent over the total activity in 2009 of $15.9 billion.

The financial industry, as well as energy and power, saw the highest amount of activity in loan issuance through the Middle East.

In the rankings for syndicated lending throughout the Middle Eastern region, HSBC was at the top, as were BNP Paribas and JP Morgan.

All three of these firms were bookrunners for 2010’s biggest Middle Eastern syndicated loan, the finance package put together for Saudi Aramco totaling $4 billion.

Russell Haworth, the managing director for Thomas Reuters covering the Middle East and Africa, stated that after the worldwide downturn seen in 2009 the Middle East’s investment banking industry strengthened over the course of 2010.

Haworth also said that the gains and forward movement seen in 2010 throughout the Middle East were expected to continue over 2011. Hopefully that means more jobs in investment banking as well.

Paul Holdsworth, Staff Writer, Gulf Jobs Market News
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