M&A activity in the Middle East is increasing. Maybe
If they can’t see anything tangible, investment bankers will always eye talk of a healthy pipeline of M&A deals with an air of scepticism. However, some sort of optimism around the sector is needed, and Barclays is attempting to provide it.
Barclays’ vice chairman of investment banking, Makram Azar, told Bloomberg that the bank is likely to earn more fee revenue this year and that M&A activity is “picking up and our deal pipeline feels much better than two or three years ago”. Sovereign wealth funds “need to put their cash to work, particularly outside the region, in emerging and high growth markets or in opportunistic deals in Europe where valuations are depressed.”
On the latter point, Azar should be considered something of an authority. He was originally brought to the region by Lehman Brothers in 2008 to increase its links with SWFs in the region, and was recruited by Barclays in 2010 to do the same.
M&A bankers certainly need some hope to grasp – teams have largely been cut back to the bone in recent months as deals have dried up. Bloomberg says that 194 deals worth $29.7bn have been announced in the MENA region so far this year, compared to 219 deals with $31.4bn during the same period in 2011.
In the first half of 2012, investment banking fees for M&A were $54m, compared to $83m in the same period of 2011 and £116m in 2010.
From a recruitment perspective, Barclays is one of the few international banks talking up expansion. However, much of this is focused on its corporate bank. It’s widely believed that the appointment of Antony Jenkins as its new chief executive will either slow growth in, or start to shrink, its investment bank.
