Gulf investment bankers are exploring alternative career paths
Investment banking activity has been subdued in the MENA region for a few years now, but 2011 was undoubtedly something of an annus horribilis for the sector.
Equity capital markets have suffered in particular, and the latest MENA IPO report from Ernst & Young underlines this point – regional capital markets raised $843.9m in 2011, compared to $2.8bn in 2010, or a decline of nearly 70%. In Q4 alone, IPO funds slumped by a massive 83.5% year-on-year.
Elsewhere, investment banking advisory work has been thin on the ground. The latest figures from Thomson Reuters show that the value of M&A deals completed in the Middle East fell to $11.7bn, or a 25.6% drop year-on-year.
To those working in the industry in the Gulf, these figures will not be surprising. Senior ECM bankers in international banks have been relocated back to other financial centres, divisions have been slimmed down, equity research teams have been decimated and job prospects are shaky to say the least.
We've suggested before that more GCC-based bankers have been vying for opportunities in Asia. This may not be such a smart move – investment banking fees in the Asia-Pacific fell by 12.5% last year, says Thomson Reuters, a larger decline than EMEA (2.4%) and the Americas (3%).
A better option may be to consider what alternatives there are available locally, something increasing numbers of people working in investment banking are doing, according to financial services headhunters in Dubai.
"An increasingly common path for investment bankers with a strong technical background is to take on a consultancy position within a private bank, supporting the relationship managers to offer advice and provide opportunities for cross-selling the banks' products," says Peter Greaves, executive vice president at headhunters DHR International in Dubai.
A less obvious route that some senior investment bankers are taking is moving into a chief financial officer role within large Middle Eastern family offices.
"Some multi-vertical family offices are recruiting investment bankers for senior positions as they look to raise capital for expansion," says Greaves. "While most firms maintain a financial director role, investment bankers are being taken on in the position of CFO, COO or CIO to undertake these more strategic projects."
If you're able to keep hold of your current position, however, there's a chance that deal activity could pick up.
Phil Gandier, MENA head of transaction advisory services at Ernst & Young. "Investors and issuers in the region remain concerned over the volatility of capital markets and this will likely continue in the next quarter. However, the number of announced IPOs continues to grow across the region. The moment economic conditions and investor sentiment improves, we could see a flood of IPOs in the regional bourses."
Similarly, speaking on an M&A discussion panel late last year, Shadi Zubeidi, managing director and head of corporate finance at Qatar First Investment Bank, suggested that there remains an appetite for transactions in the region, even if current conditions are making deals difficult to conclude.
"Ideally speaking, the Arab world should eventually reap the benefits of political and economic reforms, capital injections, improved legal systems and friendlier environments for foreign investors," he said.
