March 2012

Interesting article arguing that PE model is inherently at odds with bank’s culture of maintaining liquidity. HSBC’s sale of its PE arm to company management (10 years after they sold it to HSBC) is further evidence of the claim that banks are notorious for disposing assets too cheaply in periods of crisis, which is diametrically opposed from the long-term ‘J Curve’ worldview of PE.

Link: http://www.arabianmoney.net/private-equity/2012/03/25/why-is-hsbc-selling-out-of-private-equity-in-the-middle-east/

The Middle East is seeking a gradual movement away from its dependency on oil and gas production to diversify its economy and create a positive environment for the development of its plastics industry, according to a new report by industry intelligence company GlobalData.

The new report suggests that the region has been witness to the emergence of an impressive upstream petrochemicals industry in the last decade, which is now the most competitive in the world thanks to its low-cost feedstock advantage. Aggregate capacity for basic petrochemical products in the Middle East grew at a CAGR of 11% over the last decade to reach 47 million tons per annum. This capacity is now expected to serve as a feedstock provider for the downstream industry, with its cost advantage directly transferred to the downstream industry. Several governments, especially Saudi Arabia and UAE are providing a range of benefits to downstream petrochemical industry, including soft loans, setting up cluster programs, etc.

Link: http://www.zawya.com/story/Oil_Loses_Out_to_Plastics_as_Middle_East_Diversifies_its_Economy-ZAWYA20120419145557/loklok145500120419/

The Middle East is set for a revival in mergers and acquisitions (M&As) this year following a long lull, according to a recent survey of business leaders by DLA Piper, a global law firm.

The study based on data from 90 online interviews with DLA Piper's regional database showed the Gulf will witness a strong revival in M&As largely driven by improved liquidity, a pick-up in bank lending and the growing financial requirements for regional firms to expand.

Nearly three quarters (71 per cent) of respondents said they expect the maximum number of deals to happen in the UAE, followed by Saudi Arabia and then Qatar.

Link: http://gulfnews.com/business/investment/middle-east-set-for-surge-in-mergers-and-acquisitions-1.994708

The Gulf Petrochemicals and Chemicals Association (GPCA) has said the volume of annual production of plastic industries in the GCC countries is set to grow by 73% in 2015 from the current levels of 13.6 million tonnes to 23.6 million tonnes, Arab News has reported. The share of Saudi companies is expected to fall from the current 75% to 66% by 2015, while the share of Abu Dhabi is set to increase to 4.2 million tonnes from its current level of 3 million tonnes, representing a CAGR rate of 71%, said GPCA secretary general, Abdulwahab Al-Sadoun. Abu Dhabi's total plastic production will grow by 18% to overall GCC production in 2015, thus doubling its current rate of 8%, he added.

Link: http://www.ameinfo.com/292934.html

Global sukuk issuance is expected to rise 50 per cent this year, with companies turning to capital markets as banks reach lending limits, says HSBC.

MrDaoud says about a third of sukuk issuance will come from the Middle East and Africa. As regional companies find banks unwilling to extend their credit, more of them will turn to capital markets, and especially sharia-compliant sukuk instruments. Cash-rich Islamic banks arelapping up issuances, with demand outstripping supply.HSBC, citing Bloomberg data, says global sukuk issuance raised $26.5bn last year, which is expected to rise to $44bn in 2012.

Link: http://www.ft.com/cms/s/0/45ab0896-6843-11e1-a8cc-00144feabdc0.html