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MidEast M&A value slips 67% in Q1 2016

April 2016

April 20, 2016 | 12:45 | Dubai

The value of announced M&A transactions with any Middle Eastern involvement reached $4.7 billion during the first quarter of 2016, a decline of 67% compared to the first quarter of 2015 and the slowest first quarter for deal making in the region since 2014, According to estimates from Thomson Reuters / Freeman Consulting. Middle Eastern investment banking fees reached $178.2 million during the first quarter of 2016, a 17% decline compared to the value recorded during the first quarter of 2015 and the lowest annual start for investment banking fees in the region since 2014.

“Middle Eastern equity and equity-related issuance totalled $228.0 million during the first quarter of 2016, a 92% decline from the first quarter of 2015 and the slowest opening period for equity capital markets issuance since 2011. Middle Eastern debt issuance reached US$5.5 billion during the first quarter of 2016, a 22% decrease compared to the value raised during the first quarter of 2015 and the slowest opening period for DCM issuance since 2009. ” Nadim Najjar, Managing Director, MENA, Thomson Reuters, said. Equity capital markets underwriting fees declined 84% compared to last year, while debt capital markets fees totalled $5.2 million, down 66% from 2015. Fees from combined debt and equity capital markets underwriting accounted for 6% of the overall fee pool in the region during the first quarter, the lowest percentage since the first quarter of 2009.

In respect to Equity Capital Markets, two initial public offerings raised US$200.6 million and accounted for 88% of first quarter 2016 activity in the region.  Follow-on offerings accounted for the remaining 12% of activity.  Arabian Food Industries Co raised $126.9 million in an initial public offering in March, the largest equity offering in the region during the quarter. Samba capital took first place in the first quarter 2016 Middle Eastern ECM ranking with 32.3% market share.

As for Debt Capital Markets, Bahrain was the most active nation in the Middle East accounting for 30% of overall activity, followed by Saudi Arabia and Kuwait. International Islamic debt issuance increased 14% year-on-year to reach $10.2 billion during the first quarter of 2016, the largest first quarter for issuance in two years. Morgan Stanley took the top spot in the Middle Eastern bond ranking during the first quarter of 2016 with an 11.9% share of the market, while CIMB Group took the top spot for Islamic DCM issuance with a 17.3% share.

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