Deutsche Bank sees revival in Mideast deals after 'subdued' 2016

[DUBAI] Deutsche Bank AG expects mergers and acquisitions to pick up in the Middle East and Africa next year after a "subdued" 2016, according to the head of the company in the region, Jamal Al Kishi.

Deals and initial public offerings will add to accelerating debt sales as governments seek to fill budget gaps caused by the oil slump, Mr Al Kishi said in an interview in Dubai. Rising borrowing costs and slower growth will encourage private sector consolidation and fundraising, he said.

Next year "looks promising and there is a healthy pipeline of debt capital markets deals, mergers and acquisitions, and even some initial public offerings," Mr Al Kishi said. By contrast, 2016 has "been a fairly subdued year for the investment banks in the region." Bond sales in the region have been among the bright spots for securities firms and Deutsche Bank in particular, as IPOs and deals have been declining. The lender's market share for bond and Sukuk sales in the Middle East and Africa has increased even as the investment bank slid in its home territory. Deutsche Bank has struggled to stem a slide in its shares and maintain client confidence since the US Department of Justice requested US$14 billion in September to settle a probe tied to sales of mortgage-backed securities.

IPOs in the Middle East and Africa are on track for the lowest value in at least three years, with just $5.3 billion raised this year, according to data compiled by Bloomberg. The value of completed deals has dropped 48 percent from last year.

Bond sales, meanwhile, have benefited as energy exporters from Qatar to Abu Dhabi seek to buttress their finances. Debt sales in the Middle East and North Africa reached US$73 billion this year, the most since Bloomberg began compiling data in 2005. Deutsche Bank was one of the bookrunners on Saudi Arabia's debut US$17.5 billion bond last month, the biggest emerging-market issue this year.

BLOOMBERG