Advisories: Seeking counselling

24 March 2006
GCC financial advisory mandates predictably proliferated during 2005, as a result of the boom in project activity. Saudi petrochemicals deals provided a particularly rich seam. And while the usual suspects continue to reign supreme, MEED's annual league table also includes some newer players, regional and international.

HSBC was the most active adviser in 2005, holding both the largest number of live mandates and those with the greatest aggregate value. Its strength in the Saudi market, through local affiliate Saudi British Bank and a newly established investment banking subsidiary, is already evident and bodes well for 2006 activity, when the kingdom is poised to dominate the project finance market. HSBC advised Water & Electricity Company (WEC) on the debut Shuaibah independent water and power project (IWPP) and is advising on the Shuqaiq IWPP, currently out to bid, and the Ras al-Zour IWPP, due to be tendered by the end of the year. The bank also holds a suite of Saudi petrochemicals mandates.

Royal Bank of Scotland (RBS) drops from first to second in the rankings, due to a lower value of deals coming out of Qatar - the heart of its GCC operations - in 2005. However, these remained at a not-insignificant $21,500 million. However, the bank is expected to look further afield in the region in the year ahead, as the massive Qatari energy deals, for which RBS has become famous, tail off. Before then, it has Qatargas 4 to handle.

RBS does not hold a monopoly over Doha's liquefied natural gas (LNG) financings. Last year, Societe Generale advised on the $2,800 million Qatargas 3 deal. The other key mandate propelling the French bank to number three in the rankings is its longstanding Olefins II advisory in Kuwait. After a lengthy wait, the preliminary information memorandum (PIM) on a $2,900 million debt package was released to banks in late February.

Its compatriot BNP Paribas had a relatively quiet year. However, the value of the projects on which it holds advisory mandates still brings the bank in at number four. BNP built on its 2004 role advising on Bahrain's debut private power project, Al-Ezzal, by winning the mandate to advise on the brownfield Hidd IWPP in 2005. Its other major mandates are for the Sohar olefins project in Oman, which is now expected to cost about $4,000 million, and for the estimated $3,600 million Qatalum smelter in Qatar.

Citigroup closed two deals during 2005, both in Oman, for the Qalhat LNG and Sohar smelter projects. Its activity in 2006 is set to be concentrated elsewhere. The bank is advising on the much-awaited Marafiq IWPP in Saudi Arabia and on financing options for the expansion of Abu Dhabi International Airport.

Sumitomo-Mitsui Banking Corporation moves up the 2005 table, solely on the back of the spiralling costs associated with the integrated refining and petrochemicals complex at Rabigh, on which it is the adviser. Materials inflation, a tight engineering, procurement and construction (EPC) market and an expanded project scope have seen costs more than double to some $9,900 million. Standard Chartered Bank also scores highly from work planned in the kingdom, through its longstanding mandate to advise on the Saudi Arabian Mining Company (Maaden) integrated mining, phosphates and aluminium project and National Propylene Production Company (Alfasel) scheme, which went to market during 2005.

The 2005 table also shows the continuing development by regional banks of advisory capabilities. Arab Banking Corporation is currently advising on two industrial projects in Bahrain, while Bank Muscat, Qatar National Bank, Riyad Bank, Samba Financial Group and Saudi Hollandi Bank are all carrying out advisory work in their home markets.


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