Thursday’s Headlines: Will Private Equity Be the Great Hope for Middle East M&A?

Private equity may save the Middle East’s M&A market. Or so says a Reuters article which notes that mergers and acquisitions volume in the region fell 43 percent in 2011 to $10.1 billion, while fee income from advising clients on deals fell 37 percent to $221 million.

While last year the Middle East saw just one major private equity deal – the $336 million sale of Dubai's Maritime Industrial Services by Abu Dhabi-based Gulf Capital and Saudi Arabia's Amwal AlKhaleej to London-listed Lamprell – 2012 brings signs of a pickup. Recent announcements include:

• Abu Dhabi-based Centurion bought a 40 percent stake in the regional foreign exchange UAE Exchange in a deal worth $2 billion.
• Egyptian private equity firm Citadel Capital areed to sell National Petroleum Co. Egypt to the Canadian-listed Sea Dragon Energy in a $147.5 million deal.
• Carlyle bought a 42 percent stake in Saudi Arabia's Alamar Foods, the master franchise operator for Domino's Pizza and Wendy's restaurants in the Middle East and North Africa.

Reuters explains the trend: Perceptions of companies' values among buyers and sellers diverged dramatically during the global financial crisis, and widened further after last year's Arab Spring uprisings introduced political uncertainty into the equation.The gap is now closing, partly because of growing optimism about Gulf economies' ability to weather the global crisis and partly because North African countries hit by the Arab Spring have held democratic elections smoothly, even though full political stability has not yet been achieved, industry executives say. That is encouraging deal flow.

Also, private equity funds have been sitting on cash for a long time and are under growing pressure to deploy it in investments. There is pressure from shareholders to monetize some of their existing investments.

If you're interested in exploiting this opportunity, you may want to read one of our guest commentaries that discussed how one investment banker switched to private equity.

 

Other News:

Credit Suisse posted its first quarterly profit in three years. [NY Times]

ING’s Q4 profit jumped to 1.19 billion euros from 130 million on one-time asset sales. [WSJ]

Prudential’s Q4 profit more than tripled on non-U.S. earnings and narrower losses from investments and derivatives. [Bloomberg]

The mortgage unit of Ally Financial is talking to firms including the Fortress, Cerberus and Centerbridge about selling itself through a prearranged bankruptcy. [Bloomberg]

KKR’s Q4 profit was down 68 percent. [DealBook]

Visa posted a 16 percent increase in fiscal first-quarter profit on consumers' increased use of plastic. [Businessweek]

Thomson Reuters swung to a $2.6 billion Q4 loss on lower sales of its financial information products. [Financial Times]

TD Bank has become one of the top 10 U.S. lenders since opening here in 2004 – despite refusal to do subprime lending. [Businessweek]

Three years after Barclays took over the North American operations of Lehman, the division has not yet become the hoped-for “premier global investment bank.” [WSJ]

Hana Financial finished its $3.9 billion takeover of the Korea Exchange Bank from Lone Star Funds and the Export Import Bank of Korea. [Bloomberg]

Putnam’s RIA head Cathy Saunders offers advice to advisers on ways to capture and keep female clients. [Investment News]