Middle East investment banking fees up 19%

Fees derived from investment banking in region hit US$536.1m during the year

Investment banking fees in the Middle East increased 19 percent last year to US$536.1m from 2011, according to Thomson Reuters.

Merger and acquisition fees, which jumped 23 percent to US$157.9m in 2012 from the previous year, accounted for 29 percent of the overall fee pool, according to a survey by the data and news provider. Equity capital markets underwriting related fees surged 23 percent to US$99.5m over 2011.

"M&A transactions with Middle Eastern targets reached US$20bn during 2012, double the activity seen in the region during 2011, and the strongest annual total since 2008,'' said Russell Haworth, managing director, MENA, Thomson Reuters. Telecoms was the most targeted industry in the Middle East with 30 percent of the activity during the year, followed by financial services. Egypt was the most targeted country during 2012.

Equity capital markets issues reached US$9.4bn during 2012 while total debt issues increased 26 percent in 2012 to US$38.6bn over 2011. Iraq's second largest mobile operator Asiacell, which Qatar Telecom (QTel) has a 54 percent stake in, aims to raise about US$1.3bn from an initial public offering on the Iraq Stock Exchange this month. The listing on the Baghdad bourse is one of three required listings by mobile companies in the country and is the region's largest since 2008.

Global investment banking services generated US$74.8bn last year, the lowest in three years, according to Thomson-Reuters. General Electric (GE) over the past three years paid out more in investment-banking services than any other company, spending US$278m in 2012, according to the financial-data provider. The company sold US$7bn of bonds in 2012 with JP Morgan, one of GE's advisors, earning US$5.6bn in fees last year followed by Bank of America Merrill Lynch was the next biggest earner, with US$4.9bn in fees.

The UK is the most popular target for outbound Middle Eastern M&A transactions, followed by Brazil and India, Haworth said. Goldman Sachs topped the 2012 'Announced Any Middle Eastern Involvement M&A Ranking' with US$5.9bn, followed by Credit Suisse with $5bn. Morgan Stanley topped the Middle Eastern targeted M&A Ranking with a market share of 22 percent. The largest deal with Middle Eastern involvement during 2012 was the US$2bn stake acquisition of Centennial Asset Brazilian Equity Fund by Abu Dhabi state investment fund Mubadala.

Fees from debt capital markets underwriting in the region climbed 26 percent to US$93.8m in 2012, while fees from syndicated lending increased 10 percent to US$185m. Barclays topped the Middle Eastern completed M&A fee rankings for 2012, earning 9 percent of the fee pool.

Equity capital markets issuance declined 5 percent to US$9.4bn during 2012 from the year before.

Islamic debt issuance increased 11 percent to US$37.1bn from 91 issues during 2012, the all-time strongest year for Islamic debt activity, according to Thomson-Reuters. The global top Islamic debt issuer nation during 2012 was Malaysia accounting for 48 percent of the activity, while the strongest industry was the financial sector. HSBC took the top spot in the Middle Eastern bond ranking for 2012 with a 13 percent share of the market.

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