Mena M&A deals hit $50bn in six months

MANAMA: The value of announced mergers and acquisitions (M&A) transactions with any Middle East and North Africa (Mena) involvement reached $50.7 billion during the first six months of 2020.

This is 55 per cent less than the value recorded during the same period in 2019 which reached a record high with Saudi Aramco’s agreement to buy a stake in Saudi Basic Industries Corporation (Sabic) for $69.1bn.

According to Refinitiv’s 2020 first half investment banking analysis for the region, the number of deals declined 9pc from last year to a three-year low.

The value recorded during the first half of 2020 is the third highest first half total of all-time after 2019 ($112.7bn) and 2007 ($58.5bn).

After merger activity fell to a seven-month low of $1.9bn in April, M&A increased in volume and in value for two consecutive months and reached $27.5bn in June as Saudi Arabia’s National Commercial Bank announced plans to acquire Samba Financial Group for $15.6bn and a consortium of investors agreed to buy ADNOC gas pipeline assets for $10.1bn.

The deals are the largest to be announced in the region so far during 2020 and boosted the value of M&A in June to the second highest monthly total since our records began in the 1980s.

Despite scoring the second highest first half total of all-time, domestic M&A registered a 72pc decline from last year to $24bn, again due to the Aramco/Sabic deal.

Inbound M&A, involving an acquirer from outside of the region, increased 13pc to an all-time first half high of $17bn, while outbound M&A declined 12pc to $4.8bn.

Deals in the financial sector accounted for 41pc of Mena target M&A activity during the first half of 2020. Saudi Arabia was the most targeted nation, followed by the UAE (25pc) and Egypt (11pc).

Morgan Stanley topped the Mena involvement M&A financial adviser league table during the first six months of 2020 with a 51pc market share.

Investment banking fees in Mena reached an estimated $522.1 million during the first half of 2020, down 25pc from last year and a three-year low with declines recorded across equity underwriting, M&A advisory, and syndicated lending.

Equity capital markets underwriting fees declined 62pc to $17.1m, marking the lowest first half year total for equity fees in the region since 2009.

Advisory fees earned from completed M&A transactions generated $206.4m, down 7pc year-on-year, while syndicated lending fees fell 50pc to a five-year low of $137.7m.

Debt capital markets underwriting fees increased 6pc year-on-year to $161, the highest first half total since Refinitisv’ records began in 2000.

Government and agency fees accounted for 36pc of total investment banking fees earned in the region during the first half of 2020, up from 24pc during the same period last year.

Saudi Arabia generated the most fees in the region during the first half, a total of $206m accounting for 39pc, followed by the UAE with 29pc.

HSBC earned the most investment banking fees in the region, a total of $58.5m or an 11.2pc share of the total fee pool.

As for equity capital markets, Mena equity and equity-related issuance totalled $875.7m during the first half of 2020, 58pc less than the value recorded during the same period last year and the lowest first half total since 2004.

Just two initial public offerings were recorded during the first six months of 2020.




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