Middle East M&A transactions reaches $9.5 billion in Q1, 2015
The value of announced M&A transactions with any Middle Eastern involvement reached $9.5 billion during the first quarter of 2015, less than half the value registered during the previous quarter, but marking a 152 per cent increase from the first three months of 2014 and the best annual start since 2012.
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, Thomson Reuters said in a statement on Monday.
Compared to the same period in 2014, Middle Eastern ECM (equity capital markets) 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.
The UAE 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 $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.
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. Cite topped the 1Q 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 PJSC 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 first quarter of 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.
Sovereign funds to drive deals:
Barclays Plc sees local firms and sovereign wealth funds driving Middle East deals after advising on about $15 billion of equity and M & A transactions in the first quarter, Bloomberg said in a report.
“M&A will continue to be active and there’ll be some interesting outbound deals,” Makram Azar, chairman for the bank in the Middle East and North Africa, said in a telephone interview to Bloomberg. “Unlike in the past, sovereign wealth funds from the region will look at more return-generating assets such as for example infrastructure, favouring annual cash returns.”
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Oil’s near 50 per cent drop in 2014 prompted speculation that Middle East transactions would slow as countries such as Saudi Arabia and the UAE curbed spending. Instead, Azar said, increased volatility in the markets and demand for liquidity among clients in the region is leading to an increase.
The UK lender ranks No. 1 for M & A and equity-linked deals in the Middle East this year, according to data compiled by Bloomberg. The value of mergers and acquisition deals in the Middle East and Africa region is up 92 per cent this year to $19.6 billion, according to data compiled by Bloomberg.
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