Equity capital markets (ECM) issuance in the Middle East had reached $8.9 billion during the first three quarters of 2011, a 68 percent increase compared to the corresponding period in 2010 when volumes reached $5.3 billion, Thomson Reuters said Wednesday in its third quarter 2011 investment banking analysis for the Middle East region. The review examines the performance of the Middle East investment banking industry in the region's debt and equity capital markets, both conventional and Islamic. It includes dedicated regional rankings of banks and advisors operating in the Middle East based on their deals and fees. The report noted that investment banking fees reached $316.6 million, a 35 percent decline. Mergers and acquisitions reached $7.8 billion, a 48 percent decrease. Equity capital issuance increased 68 percent at $8.9 billion. However, debt issuance fell 36 percent at $14.2 billion. Although equity issues were up 68 percent, this failed to lift overall investment banking (IB) fees, which declined 35 percent from $483.8 million in 2010 to $316.6 million for the same nine month period in 2011. Fees for mergers and acquisitions (M&A) totaled $165.1 million during the first three quarters of 2011, down from $277.48 million during the same period in 2010. DCM fees dropped 45 percent to $54.5 million, year-on-year for the first three quarters, while fees from syndicated lending and ECM totaled $33.3 million and $63.7 respectively. Goldman Sachs topped the M&A fee rankings during the first three quarters of 2011 with $14 million. Russell Haworth, Managing Director, Middle East & Africa at Thomson Reuters, said: “Combined ECM and DCM fees now make up 37 percent of total fees, with M&A activity accounting for 52 percent of that in the Middle East. But the gap is closing, revenue from M&A fees has now dropped 41 percent year-on-year.” Middle East M&A activity reached $7.8 billion, a 48 percent decrease compared to the first nine months of 2010 when activity totaled $15.1 billion. Real estate is still the most targeted industry in the Middle East with $2.3 billion, 30 percent of the activity down from $4.5 billion during the first three quarters of 2010. The UAE is the most active country in the Middle Eastern with $2.3 billion, 30 percent of overall activity, but down from $4.5 billion during the same period in 2010. BNP Paribas topped the Any Middle Eastern Involvement M&A ranking with $10.1 billion, with Goldman Sachs in second place with $9.3 billion. Bank of America, Merill Lynch, Credit Suisse, HSBC and JP Morgan all shared top spot in the Middle Eastern target M&A rankings. In the equity capital markets issuance follow-ons accounted for 62 percent of quarterly activity, while the top Middle Eastern ECM transaction was $3.5 billion follow-on from Qatar National Bank (QNB). Financials was the most active industry (75 percent of all activity), with real estate, materials and energy & power, together accounting for 21 percent of ECM activity. Al Rajhi Banking & Investment topped the Middle Eastern equity capital markets rankings, as sole-lead bookrunners for Saudi-based Jabal Omar Development's $688 million follow-on offering. Middle Eastern debt issuance reached $14.2 billion during the first three quarters of 2011, down 36 percent from the corresponding period last year. Investment grade corporate debt accounted for 68 percent of all Middle Eastern DCM activity during the first nine months of 2011. Islamic debt issuance reached $14.9 billion from 38 issues up 31 percent when compared to the same 2010 period which recorded levels of $11.3 billion. Islamic bond financing activity in Q3 was down 34 percent compared with Q3 2010 and down 58 percent on the second quarter. The top Islamic issuer is again Malaysia with 76 percent of the activity. Issuers in the financial sector accounted for 70 percent of the DCM issuance in the Middle East during the first three quarters.
