MidEast investment banking fees hit $237m in Q2

New report reveals 72% rise compared to Q1 but half-yearly total saw drop of 19% to $376m

Middle Eastern investment banking fees reached $237.9 million during the second quarter of 2014, a 72 percent increase from the previous quarter, analysis by Thomson Reuters revealed on Monday.

Its quarterly investment banking report also showed that the value of announced M&A transactions with any Middle Eastern involvement reached $14 billion during Q2, 2.5 times the value registered during the previous quarter and the highest quarterly total since Q1 2011.

Nadim Najjar, managing director, Middle East & North Africa, said: "Middle Eastern equity and equity-related issuance during the first half of 2014 totalled $2.9 billion, a six percent increase in activity from the same period in 2013 ($2.8 billion).

"Middle Eastern debt issuance reached $18 billion during the second quarter of 2014, the all-time highest quarterly total recorded in the region."

Speaking about investment banking fees, Najjar said that despite the quarterly uptick, fees earned during the first half of 2014 registered a 19 percent decline from the same period in 2013 to $375.9 million.

Fees from completed M&A transactions totalled $110.9 million during the first six months of 2014, up three percent from the same period in 2013, and accounting for 29 percent of this year's overall Middle Eastern fee pool.

Equity capital markets underwriting fees totalled $99.4 million, up 187 percent from the amount registered during the first half of 2013 and marking the best first half total for ECM fees in the Middle East since 2009, the report said.

It added that fees from debt capital markets underwriting declined 39 percent year-on-year to $64.5 million, while syndicated lending fees fell 53 percent to $101.2 million.

Najjar said Lazard earned the most investment banking fees in the Middle East during the first half of 2014, a total of $29.4 million for a 29 percent share of the total fee pool.

Lazard topped the Middle Eastern completed M&A fee league table, while Qatar National Bank was first in the ECM underwriting fee rankings, the report said, adding that HSBC and National Bank of Abu Dhabi took the top spots in the Middle Eastern DCM and loans fee rankings, respectively.

Commenting on M&A transactions, Najjar said that the value of M&A deals during the first half of 2014 declined four percent from the same period last year to $19.7 billion.

Domestic and inter-Middle Eastern M&A declined 49 percent from the first half of 2013 to $6.9 billion during the first six months of 2014.

In respect to equity capital markets, Najjar said that seven initial public offerings raised $1.5 billion and accounted for 53 percent of activity in the region.

The largest IPO during the first six months of 2014 was the $905.3 million offering from Mesaieed Petrochemical Holding, a unit of state-owned Qatar Petroleum, Qatar's first IPO since 2010.

Speaking about the debt capital market activity in 2014, Najjar said: "Dragged down by a slow first quarter, bonds issued during the first half of 2014 fell 16 percent from the same period last year, to $22 billion. Investment grade corporate debt totalled $16.4 billion and accounted for 90 percent of the first half total."

The United Arab Emirates was the most active nation accounting for 55 percent of activity, followed by Saudi Arabia with 28 percent. International Islamic debt issuance declined 17 percent year-on-year to reach $14.1 billion, the lowest first half total since 2011.

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