Investment Banking

Despite delays stemming from the pandemic, SICO Investment Banking remained the advisor of choice for equity and debt capital markets transactions and high-profile listings and M&A deals in the Kingdom of Bahrain in 2020.

Investors ended the year on an high note as the world looked forward to economic recovery in the wake of vaccine rollout.

Pharmaceutical companies worldwide sprinted to create a COVID vaccine with Pfizer, Moderna, Astra Zeneca, and China’s Sinopharm announcing breakthroughs and regulatory approvals to begin global vaccine rollout at the end of 2020.

Overview

SICO Investment Banking is a market leader in the Kingdom of Bahrain, backed by a team of highly experienced professionals delivering a comprehensive suite of tailored financial services. For over two decades, SICO Investment Banking has been the trusted partner of regional corporations and key public sector clients due to its unmatched on-the-ground knowledge of the Bahraini market and investment landscape.

Having executed deals across a wide spectrum of sectors, including construction, tourism, real estate, telecoms, banking, insurance, and consumer finance, SICO Investment Banking is the Bahraini market’s go-to house for equity and debt capital market transactions, IPOs, M&A deals, and advisory services. From arranging primary and secondary issuances to deal structuring, valuations, and corporate and family business advisory services, SICO Investment Banking offers unparalleled insights, textbook execution, and a flexible platform that provides innovative and fit-for-purpose solutions.

2020 Operational Review

Despite a volatile year for global equity and debt capital markets, SICO Investment Banking handily maintained its position as the Bahraini market’s preferred partner on landmark transactions. In recent years, SICO has found itself at the forefront of a wave of dynamic M&A activity in the Bahrain and GCC banking sectors. In January 2020, the Investment Banking division closed its mandate as issue execution adviser, receiving agent, and allotment agent on the acquisition of Bahrain Islamic Bank (BISB) by National Bank of Bahrain (NBB). The transaction, one of Bahrain’s largest to date, involved two of the Kingdom’s leading financial institutions and concluded with NBB acquiring a controlling 78.81% stake in BISB, leaving the latter with a market capitalization of approximately BD 124 million.

In February 2020, SICO Investment Banking was appointed by Kuwait Finance House (KFH) as Bahrain receiving agent, Bahrain execution adviser, and cross-listing adviser in KFH’s offer to acquire Ahli United Bank (AUB). The cross-border listing marks the division’s first-ever cross-listing of a prominent GCC Islamic bank on the Bahrain Bourse and promises to create a USD 104 billion regional banking powerhouse that would be the world’s largest Islamic bank by asset value. As the receiving agent and execution adviser, SICO will manage the process of AUB shareholders participating in the offer, including the announcement of satisfied conditionality thresholds, advise KFH on the various processes required for successful closure, while also settling payment and share issuance by KFH. The Bank’s selection by KFH is a clear vote of confidence in SICO’s proven execution capability, with the transaction involving simultaneous execution in Bahrain and Kuwait, as well as a 100% share exchange structure and substantial offer conditions, requiring significant synchronization with numerous stakeholders.

KFH obtained permission from the Central Bank of Bahrain (CBB) in April 2020 to postpone the acquisition due to the COVID-19 pandemic and is looking to kickstart the process again once market conditions are favorable in 2021.

In March 2020, SICO exited its role as sub-investment manager on the Eskan Bank Realty Income Trust (REIT), Bahrain’s first public REIT, which SICO structured and took public in 2016, marking the end of a three-year involvement. SICO continues to support the REIT with its ongoing investment in the trust.

SICO’s position as the go-to investment bank for global capital market players seeking to deepen their Bahraini footprint was once again on display in 2020. The year saw SICO continue its appointment as Bahrain placement agent by one of the world’s largest asset management firms for the launch of one of their new funds, as it seeks to grow its exposure to the Kingdom’s equity capital market.

Additionally, the Investment Banking team’s expertise in providing discrete private advisory services remained in high demand during the year. In 2020, SICO was approached by an entity seeking alternative sources of capital following its involvement in global debt markets over recent years. SICO Investment Banking has conducted the requisite studies and proposed a number of equity transactions utilizing innovative financing structures that conform to the entity’s financial objectives. SICO’s advisory services were also tapped by Mumtalakat Holding Company as financial advisor to examine a potential merger between General Poultry Company, a leading supplier of locally produced fresh table eggs in Bahrain, wholly owned by Mumtalakat, and Delmon Poultry Company, a leading provider of fresh and frozen poultry products listed on the Bahrain Bourse.

2021 Outlook

Pending a global economic recovery and commercial normalization, SICO Investment Banking expects an uptick in equity and debt capital market activity during 2021. The division will work to capture any potential growth in M&A and capital market transactions during the year, leveraging a long track record of successful partnerships with market participants.

The division is continuously studying opportunities to profitably expand its operations to new locations across the region and broaden its base of clients for its comprehensive suite of investment banking and advisory services. To this end, SICO has partnered with an Omani financial institution in a bid to provide structuring, advisory, placement, and cross-listing services on a REIT vehicle that is in the works in the Sultanate.

In the Bahraini market, SICO Investment Banking will remain committed to increasing awareness of Bahraini capital markets and encourage dynamic Bahraini firms to pursue public listing in partnership with SICO as a sponsor and financial adviser.