Sovereign wealth funds spell M&A hiring

Gulf states look set to continue their international acquisitions spree, and recruiters say demand for M&A bankers in the GCC is increasing as a result.

Last year 173 corporate transactions representing $83bn petro-fuelled dollars took place - twice that of 2006 - according to mergers and acquisitions tracker Zepher. However, a further 108 cross-border deals were not disclosed.

Recent high-profile capital injections into financial institutions include the Abu-Dhabi Investment Authority's $7.5bn investment in Citigroup and a mystery Middle Eastern investor's $1.73bn stake in UBS.

Last year, Goldman Sachs topped the M&A league tables in the Persian Gulf and Morgan Stanley brought in the most investment banking revenues in the region.

Both banks operate M&A teams on the ground in the GCC, while others, such as Dresdner Kleinwort, work primarily out of London.

With the sovereign wealth phenomenon showing no sign of expiring any time soon, other banks are looking to boost their M&A teams on the ground. Gareth Clayton, director of Middle Eastern recruiters the Charterhouse Partnership, says: "We're seeing a number of remits for these skill sets from both the investment banks and sovereign wealth funds."

Historically, banks in the GCC have looked for senior M&A bankers with good local contacts and deals have been executed elsewhere. But Alex Cormack, director, head of Middle East at recruiters Sheffield Haworth, says contacts aren't as imperative as they were: "Some local firms are not always averse to hiring people without local experience because they have good networks themselves anyway. However, to the big international banks, a top-tier, highly skilled M&A banker with local experience is like gold dust."

Pay is increasing. Cormack says a junior M&A analyst can expect a pay packet in the range of $82k to $93k per annum with a typical 100% bonus; associate level positions range from $120k to $150k with a 100-200% bonus.

"Bonuses have been on the increase in the Middle East," says Cormack. "A VP would expect a total compensation anywhere from $500k to $1m. Meanwhile, a director would expect $750k to $1.5m and an MD $1.2m upwards, but this could be as high as $3m."

The biggest international M&A deal by GCC states in 2007 was the $11.6bn acquisition of US firm GE Plastics by SABIC (Saudi Basic Industries Corporation). According to the FT, this was managed by a banker in London.