In a slow year for European ECM, bankers have had to travel further to bring home the bacon. As they venture east, many are finding there is more to explore in the oil rich states of the Gulf.
According to Dealogic data, the UAE gathered the third largest client base in terms of fees for EMEA ECM, at just over USD 200m as of November. Saudi Arabia was the seventh largest at around USD 70m.
Italy topped the charts due to the two rights issues of Banca Monte dei Paschi di Siena [BIT:BMPS] and oil services firm Saipem [BIT:SPM]. Bankers, however, may still be doing the maths on those deals as underwriters were left holding chunks of stock likely at a loss, given recent share performance.
The addition of the UAE and Saudi Arabia to the top ten EMEA fee paying client nationalities shows the growing importance of the Gulf for investment bankers amidst an IPO wave in the region that saw deals like the USD 6bn listing of Dubai Electric and Water Authority (DEWA) [DFM:DEWA] in April draw investor attention to the region.
“The market for IPOs will continue to be healthy in the region, relative to other global markets and activity,” said Alex Reuter, a partner and co-head of investment banking at deNovo Group. “However, not every company will be able to go public – the focus will be on high quality companies with leading market positions, in particular privatizations from government such as DEWA in Dubai and others."
“The recent disappointing IPO of Taaleem could signal more difficult and selective IPO markets ahead,” he added.
The deal flow in the region is also set to continue, with numerous IPOs in the UAE and Saudi expected in 2023, notably Emirates Global Alumnium and Aramco Trading.
“I think this trend of high fees for banks will continue as both primary and secondary markets will continue to complement each other, liquidity remaining high and many government entities as well as private entities use the current scenario to list themselves,” said Faisal Hasan, the CIO at AL Mal Capital. “The major reasons are governments putting their entities on the exchange thus increasing the depth of the market and attracting international and regional flow. The good dividend play is attracting investors.”
With Europe still dealing with ever-rising interest rates, the Gulf will remain an important focus for EMEA ECM bankers. A land of plenty for dealmakers.
Dealogic Revenue Ranking Data: Dealogic uses a proprietary revenue model to estimate investment banking fees across four key products: M&A, equity capital markets (ECM), bonds or debt capital markets (DCM), and loans. Fees derived from each of the three regions indicate fees generated by client fee-payers in those markets.
