MENAFN - Khaleej Times
Second life bankers thrive as boutiques increase fees
(MENAFN - Khaleej Times) After two decades as an investment banker at Goldman Sachs and Bank of America Corp, Ziad Awad figured he could do more deals striking out on his own.
"Banks were facing constraints such as the increased cost of capital and reduced risk appetite," Awad, head of Boardroom Metrics Arabia and founder of merger and acquisition firm Awad Advisory, said by phone. "Banks wanted to do fewer but bigger deals at a higher fee, while I wanted to do more and more."
Awad is among a rising number of Middle Eastern bankers starting their own firms or joining boutique investment houses to exploit what they see as a profitable niche in the market: advising on the smaller M&A deals overlooked by larger rivals. The share of fees for independent advisory firms in the region rose to 36 per cent last year, up from 22 per cent in 2011, according to New York-based research firm Freeman & Co. That coincided with a 16 per cent drop in fees for the global banks.
Banks from Credit Suisse Group to UBS cut jobs in Dubai as deals dried up. The 10 biggest investment banks, including JPMorgan Chase & Co, Deutsche Bank and Citigroup have lost about 11,000 front-office staff globally in the past two years, analytics firm Coalition said in May. Morgan Stanley, the top-ranked adviser for M&A in the Middle East and Africa, also cut jobs.
Shrinking deal sizes "have forced larger investment banks to rethink their strategy with respect to M&A," said Phil Gandier, head of transactions for Ernst & Young in the Middle East. "Bulge bracket banks increasingly use M&A to win more lucrative balance sheet and capital markets business."
The average value of M&A deals in the region fell 36 per cent to 192 million in the first half, from 300 million a year earlier, according to the consulting firm.
Ali Asghar, former head of Lazard Ltd's Dubai office, recently left to set up his own boutique emerging markets-focused firm, according to a person familiar with the matter, asking not to be identified as the move wasn't announced. That's after helping drive the Hamilton, Bermuda-based bank to the top of the list of independent advisers in the region this year, ranking 10th among all banks after working on five deals worth 5.5 billion, according to data compiled by Bloomberg. "Companies want to work with people they know and who are there for the long term," Christopher Wheeler, a London-based analyst with Mediobanca said in a telephone interview from the city. "Some of the bankers at the boutiques have been there longer than some of the bankers who fled."
Lazard has climbed the tables recently. Last year, it ranked 13th, up from 15th in 2011, the data show.
The bank is advising French media firm Vivendi on the sale of its majority stake in Morocco's Maroc Telecom for ‚4.2 billion (5.6 billion) to Abu Dhabi's Emirates Telecommunications Co. It also advised Qatar Holding, the investment arm of the Gulf state's sovereign wealth fund, in negotiations with Glencore International.
"The Middle East remains an important participant in the global M&A marketplace," Mian Zaheen, chairman of Lazard Middle East said in an e-mailed response to questions. Moelis & Co, founded by former UBS investment bank president Kenneth Moelis in 2007, ranks 20th among companies advising on regional M&A this year, up from 43rd a year earlier, according to data compiled by Bloomberg. The company is advising the Emirates Investment Authority on its 60 per cent-owned affiliate etisalat's attempted acquisition of Maroc Telecom.
Merger and acquisition deals valued at 43.2 billion have been announced in the Middle East and Africa this year, the highest since the same period in 2007 and 24 per cent higher than a year earlier, according to data compiled by Bloomberg.
"Many seasoned bankers from larger investment banks join boutiques," Jameel Akhrass, a partner at Perella Weinberg Partners and former investment banking head at Nomura Holdings in the Middle East and North Africa, wrote in e-mailed comments. They "bring with them not only years of experience, but also client relationships that they have fostered over their careers."
Perella advised Emirates NBD, Dubai's largest bank, on its acquisition of BNP Paribas' Egyptian unit for 500 million in December. It also advised Qatar on its acquisition of Italy's Valentino Fashion Group.
Awad, 40, says his own firm has mainly worked on cross-border sell-side deals, declining to provide more details. Previously, he worked at Goldman Sachs for 13 years in London, Paris and Dubai, including as head of debt financing for the Mena region. He joined Merrill Lynch in Dubai in 2007, where he was a managing director after it was taken over by Bank of America, and stayed until resigning last year.
"We've had a steady growth in mandates," he said. "The reason is that they're smaller deals. They're in the sweet spot of what companies in this region want to do."
A Bank of America spokeswoman in Dubai, who asked not to be named citing corporate policy, declined to comment.
M&A activity is picking up as the family-owned businesses seek to grow. Companies are favouring smaller deals as confidence remains low because of regional political turmoil, said Ernst & Young's Gandier. Sovereign wealth funds are also more focused on managing existing assets rather than new deals, he said.
To be sure, independent firms are also still trailing their larger competitors in the league tables. Morgan Stanley is the region's top M&A adviser so far this year, working on about 18.2 billion of deals, more than triple Lazard's share. The New York-based bank advised Abu Dhabi's Mubadala Development Co when Dubai and Abu Dhabi agreed to merge their aluminium smelting companies to create a 15 billion joint venture.
MENA News Headlines
|Dec 13 2013||ME airlines to post USD1.6b profits in 2013 ,MENAFN|
|(MENAFN) Airlines from the Middle East are expected to make a net profit of USD1.6 billion this year,and USD2.4 billion next year, Arabian Business reported.
The International Air Transport ...|
|Dec 13 2013||Qatar's energy sector is main contributor to GDP ,MENAFN|
|(MENAFN) The Qatari energy sector in the past year witnessed many achievements, allowing the hydrocarbon industries' contribution to the country's gross domestic product (GDP) to remain in the range ...|
|Dec 13 2013||Qatar Shell inks deals with 3 local providers ,MENAFN|
|(MENAFN) Qatar Shell inked a deal to add three more local companies to its supply chain for Qatar Shell and their partner Qatar Petroleum at the Pearl Gas to Liquids (GTL) plant, The Peninsula ...|
|Dec 13 2013||Dubai's Kaloti to build USD60m gold refinery ,MENAFN|
|(MENAFN) Dubai's Kaloti Jewellery Group said that it hired a contractor to construct a precious metals refinery, Arabian Business reported.
United Engineering Construction (UNEC) has been hired to ...|
|Dec 12 2013||Exxon offers gasoil contract from Saudi Arabia ,MENAFN|
|(MENAFN) Exxon Mobil Corp. made an offer for gasoil cargoes through a rare term tender from its joint-venture refinery in Saudi Arabia, Arab News reported.
Exxon Mobil offered up to 6 million ...|
|Dec 12 2013||Construction projects worth USD159b in KSA ,MENAFN|
|(MENAFN) The construction sector in Saudi Arabia is a key component of the country's economy development as projects worth a total of USD159 billion are underway or in the planning, Arab News ...|
|Dec 12 2013||Poland eyes investments from Qatar ,MENAFN|
|(MENAFN) Qatar and Poland looked at opportunities to sustain cooperation in and improve trade ties between the two, The Peninsula reported.
Polish President met officials from Qatar Chamber and ...|
|Dec 12 2013||Qatar becomes pioneer in helium exports ,MENAFN|
|(MENAFN) Qatar has become the the world"s largest helium exporter as with the inauguration of the Helium 2 plant, The Peninsula reported.
The plant incorporates the largest refining facility and ...|
|Dec 12 2013||Etihad to decide on Alitalia investment soon ,MENAFN|
|(MENAFN) Abu Dhabi-based Etihad Airways is looking at the data room of Alitalia and is expected to decide on whether to invest in the Italian carrier by the end of the year, Arabian Business ...|
|Dec 12 2013||Habtoor Leighton to build USD395m residential towers ,MENAFN|
|(MENAFN) Habtoor Leighton Group announced that it had won a contract with the Al Habtoor Group worth USD395 million for a residential towers project, Arabian Business reported.
Al Habtoor ...|
|Dec 12 2013||Emaar signs first deal for Expo 2020 project ,MENAFN|
|(MENAFN) Emaar Properties signed a memorandum of understanding with Dubai World Central for an urban centre and golf destination at the home of the Expo 2020 site, Arabian Business reported.
|Dec 12 2013||Dubai Economy Advances in 2013 ,Qatar News Agency|
|(MENAFN - Qatar News Agency) The year of 2013 will be remembered as a breakthrough year for Dubai as the emirate won the bid to host World Expo 2020, while witnessing strong backwinds in the field of ...|
|Dec 12 2013||UAE - Man shoots his wife over family dispute in Ras Al Khaimah ,Khaleej Times|
|(MENAFN - Khaleej Times) The 55-year-old man opened fire after a heated argument with his wife at their house at about 10.30pm.
An Emirati man shot and wounded his 47-year-old wife following a ...|
|Dec 12 2013||UAE - Cruise control fails at 140kmph, woman driver rescued ,Khaleej Times|
|(MENAFN - Khaleej Times) She was unable to bring the vehicle to a stop and called the Fujairah Police Operations Room for help.
An Emirati woman was rescued by Fujairah cops after the car's ...|
|Dec 12 2013||Police deny report of assault at Dubai airport ,Khaleej Times|
|(MENAFN - Khaleej Times) The Dubai Police have denied the news in some sections of the media regarding an alleged assault of a Saudi national at the Dubai International Airport.
A top police ...|
|Dec 12 2013||Ozonegroup plans to open office in Dubai ,Khaleej Times|
|(MENAFN - Khaleej Times) The increasing demand from the UAE and Gulf-based NRIs for the Ozone brand projects in India will be catered through the presence of Ozonegroup's local office.
|Dec 12 2013||UAE - Etisalat launches new mobile packages for high data users ,Khaleej Times|
|(MENAFN - Khaleej Times) Users with either voice Data only SIMs can now take advantage of a completely unlimited mobile data package for Dh999, which is not capped at a maximum usage amount. Postpaid ...|
|Dec 12 2013||New season to bring 75 cruise ships to Abu Dhabi ,Khaleej Times|
|(MENAFN - Khaleej Times) The Abu Dhabi Tourism and Culture Authority (ADTCA) sees these passengers as future tourists for the emirate. Mohammed Al Dhaheri, strategy and policy director at ADTCA, ...|
|Dec 12 2013||Islamic finance to drive next phase of growth in Mena region ,Khaleej Times|
|(MENAFN - Khaleej Times) Rapidly-growing Islamic-based finance will drive the next phase of economic growth across the Middle East and North Africa (Mena), financial leaders have said at the ...|
|Dec 12 2013||Dubai to hostâ€¨ 11 international congresses ,Khaleej Times|
|(MENAFN - Khaleej Times) Dubai World Trade Centre, or DWTC, is set to welcome 11 international congresses in 2014, spanning a number of strategic industry sectors, which is expected to deliver an ...|