Saudi Aramco's $69.1bn SABIC acquisition leads MENA M&A transactions in first half of 2019

Saudi Aramco's $69.1bn SABIC acquisition leads MENA M&A transactions in first half of 2019
Published: 15 July 2019 - 7:15 a.m.
By: Carla Sertin

Refinitiv today released the 2019 Q2 investment banking analysis for the Middle East. According to the report, Middle Eastern & North African investment banking fees totalled an estimated $504.8mn so far during 2019, 12.7% less than the value of fees recorded during the first half of 2018. Debt capital markets underwriting fees totalled $147.6mn, up 1.7% year-on-year the second highest fee volume for the region since our records began in 2000.

Equity capital markets fees decreased 64.8% to $24mn, a 10-year low. Fees generated from completed M&A transactions totalled $207.4mn, a 232% increase from last year to the second highest level on record. Syndicated loan fees reached $125.8mn, down 58.4% from YTD 2018. Debt capital markets fees accounted for 29.2% of the overall Middle Eastern & North African investment banking fee pool, the second highest market share since YTD 2001.

Syndicated lending fees accounted for 24.9% while the share of completed M&A advisory fees raised to the highest YTD level on record, accounting for 41.1% of the market. Equity capital markets underwriting fees accounted for 4.8%, a 10-year low. HSBC earned the most investment banking fees in the Middle East & North Africa so far during 2019, a total of $65.8mn for a 13% share of the total fee pool.

As to Mergers and Acquisitions (M&A), driven by state-owned Saudi Aramco’s $69.1 bn acquisition of SABIC, the value of announced M&A transactions with any Middle Eastern & North African involvement at an all-time high reaching $112bn in the first half of 2019, 231% more than the value recorded during YTD 2018. Additionally, both Middle Eastern and North African target and Inter-MENA/Domestic transactions currently stand at all-time highs rising to $101.2bn and $86.1bn, up 375% and 699% from YTD 2018, respectively.

While MENA inbound M&A also stands at a YTD all-time high of $15.1bn, outbound M&A decreased from $6.5bn in YTD 2018 to $4.6bn so far during 2019, the lowest volume since YTD 2004. Energy & Power deals currently account for 80% of Middle Eastern and North African involvement M&A by value, followed by the financial sector with a 13.7% market share but counting with 44 transactions, 18 more than the 26 recorded in the Energy & Power industry.

As to Equity Capital Markets, Middle Eastern and North African equity and equity-related issuance totalled $1.1bn so far during 2019, a 73% decrease year-on-year to the lowest level since YTD 2004. With $923.2mn, IPOs represent 88% of the region's ECM issuance, up from 16% during YTD last year. Arabian Centres Co Ltd IPO raised $658.6mn and stands out as the biggest deal so far this year.

Despite showing a 12% decreased compared to YTD 2018, debt issuance in the Middle Eastern and North African region currently stands at the third highest level since our records began, reaching $53.1bn so far this year. Saudi Arabia was the most active nation in the region accounting for 40.5% of activity by value, followed by the Qatar with 29.6% while Governments and Agencies account for 48.3% of issuance so far this year.

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