Awards for Excellence 2020
|
|
In a transformative year for capital markets in the Middle East, HSBC stands out as the region’s best investment bank, reclaiming the title it last won in 2017.
A strong franchise across all investment banking products means that the bank has played a leading role in many of the region’s largest and most important deals.
But what really stands out is both the pivotal role the bank has played in developing the Gulf’s capital markets, as well as its expertise in M&A and advisory, which will become vital as the region embarks on a period of adjustment in reaction to the Covid-19 pandemic and the slump in oil prices.
HSBC has been integral in deepening regional capital markets, advising and supporting both Saudi Arabia and Kuwait in joining the MSCI indices.
|
|
|
Gareth Thomas |
Another landmark in the opening up of Saudi’s market was the IPO of Saudi Aramco. HSBC played a critical role as the only international bank in the syndicate with the capacity to market and deliver to local, regional and international investors.
Its input has not only financed but shaped these markets.
“[This was] built on the fact that we have the widest equity coverage among international banks in the region, but we can also help with the plumbing and things like actual market support,” says Gareth Thomas, head of global banking for the Middle East, north Africa and Turkey (Menat). “We have the biggest custody business in Saudi.”
Last year saw HSBC further cement its commitment to banking in Saudi Arabia. It increased its holding in HSBC Saudi Arabia to 51% and will now run global banking and markets equally across two regional hubs in Riyadh and Dubai.
The bank has been a key player in M&A over the review period, finishing second in the Dealogic league table behind JPMorgan, working on 15 deals with a total value of $20 billion, to give it a 25% market share.
The bank sees itself as a “bridge between Saudi and the rest of the world,” says Samer Deghaili, co-head of capital markets, Menat.
It is also the largest shareholder in the Saudi British Bank, which merged with Al Alawwal in 2018 to create the third-largest commercial bank in Saudi Arabia.
Key priorities
Diversification and private-sector development are key priorities for Gulf governments and HSBC has proved itself well placed to deliver. It advised Chinese state-owned State Grid International Development (SGID) on the acquisition of a 49% equity stake in Oman Electricity Transmission Company, a standout deal that was closed during the Covid-19 crisis. The deal raised around $1 billion and is the first time China’s SGID has invested in the Middle East and north Africa (Mena) region.
In Saudi, HSBC acted as financial adviser to the Public Investment Fund of Saudi Arabia (PIF) on the sale of its 70% stake in Saudi Basic Industries Corp (Sabic) to Saudi Aramco. The transaction valued Sabic at $69.1 billion, making it the largest deal ever in the Middle East. HSBC was also joint bookrunner and lead arranger on a $10 billion bridge facility for PIF.
The bank also recently advised on the Qatari government’s acquisition of the largest wind farm in Australia.
Trade finance operations have also been essential in helping clients in the Middle East during the Covid crisis, and HSBC has processed a huge increase in trade finance volumes around medical equipment and food through this period, ensuring these essential transactions are processed in less than half the usual time.
HSBC has also pioneered the use of blockchain technology to transform the future of trade finance in the Middle East.
It also continues to grow in the region and remains profitable. HSBC’s Menat global banking and markets business brought in $722 million profit before tax in 2019. Its return on tangible equity was best in class for the group, says Thomas.
Although present in the region for 131 years, the bank continues to reaffirm its commitment there; in 2019, it carved out the Middle East, alongside Asia, as one of the two areas for accelerated investment.
