Refinitiv released the 2020 first half investment banking analysis for the Middle East and North Africa. According to the report, investment banking fees in the Middle East and North Africa reached an estimated $522.1 million during the first half of 2020, down 25% 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 62% to $17.1 million, marking the lowest first half year total for equity fees in the region since 2009. Advisory fees earned from completed M&A transactions generated $206.4 million, down 7% year-on-year, while syndicated lending fees fell 50% to a five-year low of $137.7 million. Debt capital markets underwriting fees increased 6% year-on-year to US$161.0 million, the highest first half total since our records began in 2000.
Government & Agency fees accounted for 36% of total investment banking fees earned in the region during the first half of 2020, up from 24% during the same period last year. Saudi Arabia generated the most fees in the region during the first six months of the year, a total of $206.0 million accounting for 39%, followed by the United Arab Emirates with 29%.
HSBC earned the most investment banking fees in the region during the first six months of 2020, a total of $58.5 million or an 11.2% share of the total fee pool.
As for Mergers and Acquisitions (M&A), the value of announced M&A transactions with any MENA involvement reached $50.7 billion during the first six months of 2020, 55% 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 Corp for $69.1 billion. The number of deals declined 9% 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 ($112.7b) and 2007 ($58.5b).
After merger activity fell to a seven-month low of $1.9 billion in April, M&A increased in volume and in value for two consecutive months and reached $27.5 billion in June as Saudi Arabia’s National Commercial Bank announced plans to acquire Samba Financial Group for $15.6 billion and a consortium of investors agreed to buy ADNOC gas pipeline assets for $10.1 billion. 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 72% decline from last year to US$24.0 billion, again due to the Aramco / Sabic deal. Inbound M&A, involving an acquiror from outside of the region, increased 13% to an all-time first half high of $17.0 billion, while outbound M&A declined 12% to $4.8 billion. Deals in the financial sector accounted for 41% of MENA target M&A activity during the first half of 2020. Saudi Arabia was the most targeted nation, followed by The United Arab Emirates (25%) and Egypt (11%).
Morgan Stanley topped the any MENA involvement announced M&A financial advisor league table during the first six months of 2020 with a 51% market share.
As to equity capital markets, MENA equity and equity-related issuance totaled US$875.7 million during the first half of 2020, 58% 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.
Saudi Arabian private healthcare operator, Dr. Sulaiman Al Habib Medical Group, raised $699.7 million on the Saudi Stock Exchange at the beginning of March, while Emerald Real Estate Investment raised $13.1 million on the Egyptian Stock Exchange in February. EFG Hermes, Jadwa Investment Co, and Riyadh Bank Ltd shared first place in the MENA ECM league table during the first half of 2020.
As to debt capital markets, MENA debt issuance reached an all-time first half high of $69.5 billion during the first six months of 2020, up 26% from the value recorded during the same period in 2019. After a strong start, with over $9 billion raised in both January and February, March issuance slowed to just $571.9 million. $51.8 billion was recorded during the second quarter of 2020, an all-time quarterly high in the region.
The United Arab Emirates and Saudi Arabia were the most active issuer nations during the first half of 2020 with $23.3 billion and $19.1 billion in bond proceeds, respectively. Standard Chartered took the top spot in the MENA bond underwriter ranking during the first six months of 2020 with $12.5 billion of related proceeds, or an 18% market share.