According to a senior official at Citigroup the financial institution expects to turn in the best performance in a decade this year with regards to investment banking in Africa and the Middle East. The top-performing country is likely to be Saudi Arabia which is engaged in efforts aimed at diversifying its economy away from oil.
Other countries that are also likely to do well include United Arab Emirates, Egypt and Nigeria, according to the investment banking head at Citigroup, Miguel Azevedo. The main drivers of growth will be public share listings, mergers and acquisitions as well as bond sales.
“The pipeline in the Middle East and Africa is as good as we have seen since the global financial crisis of 2008. GDP growth for advanced economies this year is between 2.5 and 3 percent, while for emerging markets it is between 4.5 and 5 percent,” said Azevedo in an interview with Reuters.
Investment banking license
Last month Citigroup disclosed that the Capital Market Authority of Saudi Arabia had granted the lender approval to start an investment banking unit. The lender quit the country more than a decade ago after having had a presence in the region since 1955. The first board meeting of Citigroup Saudi Arabian subsidiary was held last month in Riyadh.
A couple of international lenders are eyeing Saudi Arabia due to the emergence of opportunities following the reforms that are being initiated in a bid to reduce overreliance on oil. Privatization of state enterprises is one area such as the case of Saudi Aramco where 5% of the oil giant will be publicly listed.
Saudi Aramco IPO
According to sources, Citigroup was one of the investment banks that received an invitation to pitch for the initial public offering of the oil giant. To boost its Saudi presence Citigroup has recruited a former executive of Saudi Fransi Capital, Majed al-Hassoun, as the chief of investment banking business in the country.
Citigroup is also expecting robust business in Nigeria which enjoys low debt levels. The most populous country in Africa is expected to make a comeback to bond markets this year. Nigerian companies are also expected to launch IPOs as well issue bonds.
Last year in November, Africa’s biggest economy issued a 2-part international bond worth $3 billion. The deal was jointly managed by Standard Chartered and Citigroup. Following the currency devaluation of 2016 the outlook in Egypt has also been positive. Initial Public Offerings are thus expected in various sectors including financial services, manufacturing, consumer, and industrial.