M&As in MENA decline in H1 2020; investment banking fee drops by 25% - Refinitiv

Government & Agency fees accounted for 36% of total investment banking fees earned in the region, up from 24% during the same period last year

  
Traders monitor stocks at the Dubai Stock Exchange in the Dubai World Trade Center.

Traders monitor stocks at the Dubai Stock Exchange in the Dubai World Trade Center.

REUTERS/Ahmed Jadallah

The value of announced M&A transactions with any MENA involvement reached $50.7 billion during the first six months of 2020, which is 55 percent less than the value recorded during the same period in 2019, according to global data provider Refinitiv.

M&A transactions reached a record high in the first six months of 2019 with Saudi Aramco’s agreement to buy a stake in Saudi Basic Industries Corp for $69.1 billion.

According to Refinitiv, the number of deals declined 9 percent from last year to a three-year low.  The value recorded during the first half of 2020 is the third highest first half total of all-time after 2019 ($112.7 billion) and 2007 ($58.5 billion).

After merger activity fell to a seven-month low of $1.9 billion in April, M&A increased in volume and in value for two consecutive months and reached $27.5 billion in June as Saudi Arabia’s National Commercial Bank announced plans to acquire Samba Financial Group for US$15.6 billion and a consortium of investors agreed to buy ADNOC gas pipeline assets for US$10.1 billion.

These deals are the largest to be announced in the region so far during 2020 and boosted the value of M&A in June to the second highest monthly total since our records began in the 1980s.

Investment banking fees

Investment banking fees in the MENA region reached an estimated $522.1 million during the first half of 2020, down 25 percent from last year and a three-year low with declines recorded across equity underwriting, M&A advisory, and syndicated lending, Refinitiv data revealed.

Equity capital markets underwriting fees declined 62 percent to US$17.1 million, marking the lowest first half year total for equity fees in the region since 2009.

Advisory fees earned from completed M&A transactions generated $206.4 million, down 7 percent year-on-year, while syndicated lending fees fell 50 percent to a five-year low of $137.7 million.

Debt capital markets underwriting fees increased 6 percent year-on-year to $161.0 million, the highest first half total since our records began in 2000.

Government & Agency fees accounted for 36 percent of total investment banking fees earned in the region during the first half of 2020, up from 24 percent during the same period last year.

Saudi Arabia generated the most fees in the region during the first six months of the year, a total of $206.0 million accounting for 39 percent, followed by the UAE with 29 percent.

HSBC earned the most investment banking fees in the region during the first six months of 2020, a total of $58.5 million or an 11.2 percent share of the total fee pool.

(Writing by Seban Scaria; editing by Daniel Luiz)

(seban.scaria@refintiv.com)

#Mergers #Acquisitions #MENA #INVESTMENT

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© ZAWYA 2020


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