Middle Eastern M&A reaches $18.7bn in H1

Updated 23 July 2016
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Middle Eastern M&A reaches $18.7bn in H1

DUBAI: According to estimates from Thomson Reuters/Freeman Consulting, Middle Eastern investment banking fees reached $416.8 million during H1 2016, an 8 percent increase compared to fees recorded during the first six months of 2015, and the strongest period for investment banking fees in the region since 2014.

Thomson Reuters, the world's major source of intelligent information for businesses and professionals, released its quarterly investment banking analysis for the Middle East region on Thursday, with a statement from Nadim Najjar, MD, MENA, Thomson Reuters.
Najjar said: “The value of announced mergers and acquisitions (M&A) transactions with any Middle Eastern involvement reached $18.7 billion during H1, 2016, a decline of 29 percent compared to H1 2015 and the slowest first six months for deal making in the region since 2014.”
“Middle Eastern equity and equity-related issuance totaled $1.1 billion during H1, 2016, an 80 percent decline from the first half of 2015 and the slowest opening six-month period for equity capital markets issuance since 2004. Bolstered by a record-breaking second quarter, Middle Eastern debt issuance reached $32.9 billion during the first half of 2016, a 45 percent increase compared to the value raised during the first half of 2015 and the strongest first half for DCM issuance since records began in 1980,” he added.
Regarding investment banking fees, the fees from completed M&A transactions totaled $104 million during the first half of 2016, a 24 percent decrease compared to a year ago and the slowest first half for M&A fees since 2012.
Syndicated Lending fees accounted for just over 55 percent of the overall Middle Eastern investment banking fee pool, the highest first half share since 2002.
Equity capital markets underwriting declined 77 percent compared to last year, while debt capital markets fees totaled $63.7 million, up 48 percent from 2015.
Fees from combined debt and equity capital markets underwriting accounted for 30 percent of the overall fee pool in the region during the second quarter of 2016, up significantly from the 6 percent recorded during the first quarter of the year.
Powered by M&A and DCM fees, JP Morgan earned the most investment banking fees in the Middle East during the first half of 2016, a total of $20.6 million for a 4.9 percent share of the total fee pool.
Rothschild topped the completed M&A fee rankings with 19.7 percent of advisory fees, while HSBC was first for DCM underwriting, up from second place a year ago.
ECM underwriting was led by Emirates NBD PJSC with $4.4 million in ECM fees, or 24.4 percent share.
Mitsubishi UFJ Financial Group took the top spot in the Middle Eastern syndicated loans fee ranking with $12.8 million in fees for 5.6 percent of the market.
As for M&A deals, outbound M&A activity fell 22 percent from H1 2015 to reach $9.2 billion, the lowest first half total since 2014.
Overseas acquisitions from Saudi Arabia accounted for 42 percent of Middle Eastern outbound M&A activity, while acquisitions by companies based in Qatar and the UAE accounted for 31 percent and 11 percent, respectively.
Domestic and inter-Middle Eastern M&A decreased 22 percent year-on-year to $6.1 billion. Inbound M&A fell 76 percent to $809.8 million, a seven-year low.
Technology was the most active sector, accounting for 22 percent of Middle Eastern involvement M&A.
The largest deal with Middle Eastern involvement during the half-year was the $3.5 billion investment in the US-based Uber Technologies by Saudi Arabia’s Public Investment Fund.
JP Morgan, which advised Uber Technologies, topped the H1, 2016, and features in the Middle Eastern involvement in M&A league table.
Jones Lang LaSalle and CBRE Holding, which advised BlackRock on the $2.5 billion sale of its Asia Square Tower to Qatar Investment Authority, ranked second and third respectively.
Regarding equity capital markets, six initial public offerings raised $379.7 million and accounted for 35 percent of H1, 2016 activity in the region.
Follow-on offerings accounted for the remaining 65 percent of activity.
Dubai Parks & Resorts raised $456.9 million in a follow-on offering in May, the largest equity offering in the region during the first half. Emirates NBD PJSC took first place in the first half 2016 Middle Eastern ECM ranking with 38.3 percent market share.
As for debt capital markets, Qatar was the most active nation in the Middle East accounting for 41 percent of overall activity, followed by the UAE and Oman.
International Islamic debt issuance increased 10 percent year-on-year to reach $ 19.4 billion during H1 2016, the largest first half for issuance since records began.
JP Morgan took the top spot in the Middle Eastern bond ranking during H1, 2016 with 11.3 percent share of the market, while CIMB Group took the top spot for Islamic DCM issuance with a 15.6 percent share.


Oil prices near 2019 highs after US ends all Iran sanction exemptions

Updated 25 min 31 sec ago
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Oil prices near 2019 highs after US ends all Iran sanction exemptions

  • Iran’s main oil buyers initially received sanction exemptions
  • US reiterates its goal to cut Iran oil exports to zero

SINGAPORE: Oil prices were near 2019 highs on Tuesday after Washington announced all Iran sanction waivers would end by May, pressuring importers to stop buying from Tehran.
Brent crude futures were at $74.40 per barrel at 0239 GMT, up 0.5 percent from their last close and not far off a 2019 peak of $74.52 reached on Monday.
US West Texas Intermediate (WTI) crude futures hit their highest level since October 2018 at $65.95 per barrel before edging back to $65.89 by 0239 GMT, which was still up 0.5 percent from their last settlement.
The United States on Monday demanded that buyers of Iranian oil stop purchases by May 1 or face sanctions, ending six months of waivers which allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes.
Before the reimposition of sanctions last year, Iran was the fourth-largest producer among the Organization of the Petroleum Exporting Countries (OPEC) at almost 3 million barrels per day (bpd), but April exports have shrunk well below 1 million bpd, according to ship tracking and analyst data in Refinitiv.
Barclay’s bank said in a note following the announcement that the decision took many market participants by surprise and that the move would “lead to a significant tightening of oil markets.”
The British bank added that Washington’s target to cut Iran oil exports to zero posed a “material upside risk to our current $70 per barrel average price forecast for Brent this year, compared with the year-to-date average of $65 per barrel.”
ANZ bank said in a note on Tuesday that “the decision is likely to worsen the ongoing supply woes being felt with Venezuelan sanctions, the OPEC supply cut, and intensifying conflict in Libya.”
The move to tighten Iran sanctions comes amid other sanctions Washington has placed on Venezuela’s oil exports and also as producer club OPEC has led supply cuts since the start of the year aimed at tightening global oil markets and propping up crude prices.
Ellen Wald, non-resident senior fellow at the Global Energy Center of the Atlantic Council, said the United States “seem to expect” Saudi Arabia and the United Arab Emirates to replace the Iranian oil, but she added “that this is not necessarily the way Saudi Arabia sees it.”
Saudi Arabia is the world’s biggest exporter of crude oil and OPEC’s de-facto leader. The group is set to meet in June to discuss its output policy.
“Should OPEC decide to end their supply cut program going into the second half of the year, this could limit oil’s upside in the coming months,” said Lukman Otunuga, analyst at futures brokerage FXTM.
Meanwhile, the Atlantic Council said the US move would hurt Iranian citizens.
“We’re going to see their currency collapse more, more unemployment, more inflation,” said Barbara Slavin, director for the Future of Iran Initiative at the Atlantic Council, adding that the US sanctions were “not going to bring Iran back to the (nuclear) negotiating table.”