Middle East bankers see M&A activity jumping 20% in 2011

Bankers see 20% rise in M&A volumes to to between $28bn and $30bn this year, Saudi Arabia's mid-market sector seen most active
Middle East bankers see M&A activity jumping 20% in 2011
The value of deal activity in the Middle East is on average expected by the bankers to rise 20 percent this year to between $28bn and $30bn
By Staff writer
Sun 13 Feb 2011 05:04 PM

Mergers and acquisitions activity in the Middle East is
expected to show a rebound in 2011 despite there being some concerns over
buyers and sellers remaining at odds over prices, said a survey released on
Sunday.

The value of deal activity in the region is on average
expected by the bankers to rise 20 percent this year to between $28bn and
$30bn, according to the report released by M:Communications and business
information provider Zawya showed.

"Many people feel that the worst is over and a number
of investors expect growth is going to rise," Nicholas Lunt, managing
director of M:Communications said.

Qatar and Saudi Arabia are seen as the most active markets
with most bankers expecting the financial services sector to be the main area
for deals. Middle East M&A values fell sharply during and after the
financial crisis with buyers demanding better due diligence before making a
purchase and sellers sticking to valuations at pre-crisis levels.

"Quality of due diligence is a concern and there is
definitely a problem in the case of realistic valuations," Lunt said.

Investment banks operating in the Middle East earned
slightly higher fees in 2010, data showed, but overall
activity remained subdued and the region's share is still miniscule when
compared globally.

Mergers and acquisitions fees accounted for 47 percent of
the overall activity, down from 55 percent in the previous year.

The Middle East will see only a gradual pick-up in M&A
activity in 2011, as potential sellers wait for asset prices to recover
further, the head of investment bank Moelis & Company said in January.

Key drivers for deal activity in 2011 will be large-scale
restructurings of debt-laden firms in the region and sellers coming down to
realistic valuations, the M:Communications report said.

"The largest M&A revenue source for us has been in
restructuring: it's a very remunerative area, especially in the Middle East and
will most likely remain so in 2011," one international banker was quoted
as saying in the report.

"We can charge larger fees because it is a value-added
skill for which clients pay a premium and not many banks have focused on this
skill."

Other catalysts include regulatory and legal reforms and
political support for deals, bankers said in the survey.

HSBC Holdings, Europe's biggest bank, took the top position
in the investment league table for the region with total fees of $37.9m. Barclays
Capital followed with total fees of $31.5m.

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