Miguel Azevedo, Citigroup's head of investment banking for the Middle East and Africa, explains how the acceleration of mergers and acquisitions has helped the bank to overtake JP Morgan.
Countries in Europe’s periphery are looking for foreign investment in the Middle East, according to Miguel Azevedo, Citigroup’s head of investment banking for the Middle East and Africa (excluding South Africa). The “charm actions” carried out with capital-exporting countries such as Qatar and the United Arab Emirates (UAE) serve to raise investment at a time when governments and entrepreneurs are preparing for post-pandemic economic recovery.
After Citigroup overtook JP Morgan as the first investment bank in the Middle East and Africa in 2020, Miguel Azevedo, in a written interview with ECO, explained that Africa was severely affected by the coronavirus, but mergers and acquisitions (M&A) in the Middle East even accelerated. Along with the strong market dynamism, the leadership in the region’s operations, reported by Bloomberg, was driven by the return of the investment bank to Saudi Arabia, from where it had left in 2013.
On the investors’ side, is there interest and capital flows to Africa and the Middle East, particularly from Portugal?
Unfortunately, both in one region and in another, the presence of Portuguese investors is not noticeable because, in fact, Portugal is an importer and not an exporter of capital. On a slightly different note, it should be stressed that some European countries in the periphery have been engaging in ‘charm actions’ in the Middle East and more particularly in capital-exporting countries (Qatar and UAE) to raise investment for their own countries.
Which countries are these? Do you think it is the result of the pandemic or has it happened before?
I can’t elaborate any further, because I am involved. It came from behind, but it accelerated with the pandemic and after a meeting between Heads of State.
In the Middle East, it was a record year as we are in the midst of a transition to a more efficient and more sustainable economy, both environmentally and economically.”
What is so positive about this year for Citi? Which operations do you highlight as having been most important?
This performance in 2020 is a continuation of 2019 and an enhanced investment in teams in Africa and the Middle East. In the Middle East, it is important to mention DP World’s take-private transaction for a total of US$9 billion, as well as the ADNOC Distribution’s US$1 billion share offering.
In Africa, it is worth highlighting the support given to Network International in the purchase of DPO, a Fintech company in Kenya for US$288 million, as well as the US$243 million share offering from Jumia, known as Africa’s Amazon.
How has the pandemic influenced IPOs and M&E in the Middle East and Africa regions?
Africa was severely affected as virtually all countries lost access to capital markets. In the Middle East, it was a record year as we are in the midst of a transition to a more efficient and more sustainable economy, both environmentally and economically. The pandemic has only accelerated the need for this same transformation, and so it has become an ‘accelerator’ in the M&A field as well.
What is very important for Africa is to have access to capital markets and to have more capital investment, not debt.”
What are the prospects for 2021? After a year of pandemic, is there still room for more business?
In Africa, I believe that 2021 could be a more favourable year as markets are more stable and the need to raise equity is huge. In the Middle East, I think it will be another very strong year for the same reasons that have been mentioned above.
Can economic recovery in other regions overshadow the Middle East and Africa?
The Middle East is not in a euphoric phase of growth and M&A and equity raising activity has less to do with growth than with the reorganisation of the various economies and downsizing of the oil industry, and is still essentially an oil exporter and, in the case of Dubai, a platform for the movement of goods, people and financial funds, the region will always be ultra correlated with world growth.
In Africa, growth will also correlate with commodity exports, but I believe we will see more investment in the domestic market and import substitution opportunities and, therefore, perhaps less correlated with the rest of the world. What is very important for Africa is to have access to capital markets and to have more capital investment, not debt.