Barclays sees extended ‘blow-out’ quarter for Middle East deals

A pedestrian walks past a branch of Barclays bank in Dubai (file). The UK lender ranks No 1 for M&A and equity-linked deals in the Middle East this year, according to data compiled by Bloomberg.Bloomberg/London/DubaiBarclays sees local firms and sovereign wealth funds driving Middle East deals after advising on about $15bn of equity and M&A transactions in the first quarter.“M&A will continue to be active and there’ll be some interesting outbound deals,” Makram Azar, chairman for the bank in the Middle East and North Africa, said in a telephone interview. “Unlike in the past, sovereign wealth funds from the region will look at more return-generating assets such as for example infrastructure, favouring annual cash returns.”Oil’s near 50% drop in 2014 prompted speculation that Middle East transactions would slow as countries such as Saudi Arabia and the UAE curbed spending. Instead, Azar said, increased volatility in the markets and demand for liquidity among clients in the region is leading to an increase.The UK lender ranks No 1 for M&A and equity-linked deals in the Middle East this year, according to data compiled by Bloomberg. The value of mergers and acquisition deals in the Middle East and Africa region is up 92% this year to $19.6bn, according to data compiled by Bloomberg.In January, Barclays worked on the Qatari sovereign wealth fund’s acquisition of Songbird Estates - the owner of London’s Canary Wharf - and last month advised Borse Dubai Ltd on the sale of its $2.1bn stake in London Stock Exchange Group. Barclays also advised OCI NV, controlled by billionaire Nassef Sawiris, on the listing of its construction business in the UAE and Egypt.“It’s been a blow-out first quarter for us, whether in the equity capital markets or in M&A,” Azar said. “It’s hard to predict the exact levels of activity in the market, but from where I am sitting now, looking at our pipeline, we feel confident there are going to be interesting transactions from the region.”Barclays is pursuing growth in emerging markets such as the Middle East and Africa as growing economies revive investor demand for share sales and mergers and acquisitions.Azar, who is also the vice chairman of the bank’s global investment banking business, was named chairman for the Middle East and North Africa in June last year, two months after John Vitalo left as chief executive officer for the region. The lender also last year named Khaled Eldabag and David Nataf as co-heads of the bank’s investment banking in the region.Azar also expects to see demand for equity-linked transactions, such as Abu Dhabi’s Aabar Investments which sold €2bn ($2.2bn) of unsecured exchangeable bonds over shares of UniCredit SpA last month.The bank has also been hired as an adviser by Emirates National Oil Co as it seeks to buy the remaining shares it doesn’t already own in Dubai-based explorer Dragon Oil.One area where activity in the Middle East is likely to be muted, though, is among companies mulling initial public offerings, Azar said, as sentiment among investors remains low. National Commercial Bank, the largest Saudi Arabian bank by assets, raised $6bn last year in the Middle East’s biggest IPO.Fleet manager Massar Solutions canceled an IPO in February, saying it will wait until oil prices are more stable. Emaar Properties, Dubai’s largest publicly traded real estate developer, will delay selling shares in the hotels unit to the second half, three people with knowledge of the matter said in January.