Citigroup Sees Surge In Middle East M&A Deals

Citigroup Inc is working on about seven M&A deals in the Middle East and North Africa as a rebound in oil prices pushes transactions to record levels.

The deals are “mainly in Saudi Arabia and the United Arab Emirates,” Naveed Kamal, the head of corporate banking in MENA, said in an interview. “Depending on how many of those are successful, it could be one of the best years for us; it could also be one of the best years for the market.”

Some of transactions are “sizable” and involve companies looking at acquisitions outside the region to build networks and diversify geographically, Kamal said. “Fundamentally, the increase in M&A activity is a sign of renewed confidence in the business environment.”

Acquisitions involving targets in the Middle East and North Africa are already at their highest level for at least six years, as far back as data compiled by Bloomberg goes. An increase of about 30 percent in oil prices since the start of the year is helping.

Saudi Aramco, the world’s biggest oil producer, last month agreed to buy a majority stake in chemical giant Saudi Basic Industries Corp for $69.1 billion, marking the Middle East’s largest deal.

That month Uber Technologies also agreed to buy Dubai’s Careem Networks for $3.1 billion in the region’s largest technology transaction.

Citigroup is the MENA region’s sixth most active M&A adviser over the past 12 months, according to Bloomberg League Tables, a list led by Morgan Stanley and Goldman Sachs Group Inc. Citigroup’s deals over the past year have included advising Sabic in Aramco’s acquisition of the company and working with Baker Hughes’ in its purchase of a 5 percent stake in Abu National Oil Co’s drilling unit, according to the data.

Still, the region’s syndicated loans business has got off to a slow start this year, with volumes down 39 percent to $25.3 billion from a year earlier, according to data compiled by Bloomberg. Citigroup was the fourth-biggest loan arranger in 2018 as volumes surged to a record $128 billion.

“We hope it will catch up because there are some very large transactions in the pipeline,” Kamal said. As well as Aramco’s planned borrowing for Sabic, there are “about four or five different transactions which are multi-billion dollars in size and some in the range of $8 billion to $10 billion,” he said.