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Sun 30 Oct 2011 11:40 AM

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Abu Dhabi buyers eyeing regional rivals

But tough credit markets may slow M&A activity, says top exec at Moelis & Co

Abu Dhabi buyers eyeing regional rivals
M&A activity is mostly inter-regional, said Moelis Augusto Sasso

Certain Abu Dhabi entities are looking at snapping up
regional competitors but tough credit markets and global uncertainty will slow
any M&A activity, a top executive at independent investment bank Moelis &
Co. said.

Augusto Sasso, co-head of Middle East and North Africa
(MENA) investment banking, said Abu Dhabi clients were "actively
looking" at acquisitions with the focus firmly on the MENA area.

"For the most part, the M&A activity that we're
involved in is mainly inter-regional," he said.

"It's not international acquisitions, it's buying
companies that are in similar markets. It's more localised than it has ever
been."

Sasso said any deal depends on how quickly access to capital
markets recovers, and transactions may not transpire for a year.

Among sectors ripe for M&A in general, the banker
expects the industrial sector to lead deal flow in the region and sees
aerospace, metals and mining, chemical firms and real estate as the sub-sectors
to potentially drive activity.

"Right now it's very tough to do an acquisition unless
it's a stock-based acquisition. We appreciate some of the things we're doing
now are probably early phase."

Moelis, which made its name in the region by advising the
Dubai government on the $25bn debt restructuring of conglomerate Dubai World and
its property unit Nakheel, is now focused on Abu Dhabi, the wealthier emirate
which bailed out Dubai in 2009.

"It's probably our No. 1 focus outside of Dubai,"
Sasso said. "We've got mandates in Abu Dhabi with sovereign wealth funds
and with private companies.

"The opportunities in Abu Dhabi are non-restructuring
related, they're M&A and capital markets related."

Sasso reiterated his forecast for a gradual recovery in
M&A activity in the Gulf Arab region.

The amount of fee income raised by investment banks from
mergers and acquisitions was $165.1m in the first three quarters of 2011, down
nearly 41 percent from the same period last year, according to Thomson Reuters
data.

Bankers are hoping sovereign funds will help revive the
market in the second half of the year.

"It'll be much more measured this time. Companies and
sovereign wealth funds will be much more careful about how they approach the
M&A market," Sasso said.

"You've got so much dislocation everywhere else in the
world. Abu Dhabi and Dubai, and certain countries in the Middle East, are kind
of a safe-haven right now financially."

The investment bank hired JPMorgan banker Yorick Van
Slingelandt as managing director and co-head of MENA investment banking this
year as it bids to snap up mandates across the Gulf, especially in Qatar,
Bahrain and Kuwait.

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