3 minute read
Seeing strong growth potential in the Middle East
Rouzbeh Fazlinejad, managing director and head of oil and gas for the Middle East and Africa at leading global investment bank Houlihan Lokey, discusses the expansion of the bank’s oil and gas team in the Middle East.
What was the rationale behind establishing the oil and gas team in the Middle East?
Oil and gas is a global industry and we want to offer clients a full suite of advisory services across the entire energy value chain, in all major oil and gas hubs and jurisdictions around the world. We currently have more than 80 oil and gas investment bankers based in Houston, Dallas, New York, London, and Hong Kong, and with the potential for further growth in the Middle East, we now have a dedicated team based in Dubai servicing the region.
How important is the Middle East region in terms of your global business?
Oil and gas are a strong focus for the bank. I joined the team earlier this year to lead the firm’s first industry group in the region.
Since opening an office in Dubai in 2017, our team has advised on some of the largest and most complex transactions in the Middle East, covering corporate finance and financial restructuring. We are investing in growing our physical presence in the region because we see the growth potential for our investment banking services. The region is an important financial centre, and as it matures further there is greater need for specialisation.
Globally, Houlihan Lokey is the number 1 investment bank for M&A transactions, having closed over 550 deals in 2021. We are also the number 1 global M&A fairness opinion advisor and have the largest financial restructuring group among investment banks. In the USA, we are the leading investment bank for all energy and power transactions and combined with our international market knowledge and strong local network, we are looking to firmly establish ourselves in the Middle East.
How are you hoping to expand your client offering in the region, and what do you see as promising areas for development?
Houlihan Lokey is the only investment bank in the region with a dedicated team of oil and gas specialists based here. Our team in Dubai has decades of experience across corporate finance, M&A, capital markets, and financial restructuring and can advise clients in the Middle East throughout the entirety of the energy value chain.
How do you view the M&A market currently?
In the current climate we are seeing large and small companies, both
Rouzbeh Fazlinejad, managing director and head of oil and gas for the Middle East and Africa, Houlihan Lokey.
private and government-controlled, consider strategic alternatives. Typically, we have seen these include strategic acquisitions or divestiture of their assets or portfolio in the traditional hydrocarbon space, or net additions to pursue energy transition, whether through expansion of downstream/petrochemicals or the acquisition of renewable assets.
Traditionally, M&A does not like volatility and the commodity markets of the past few months have seen substantial movements in the price of oil and gas. In the current environment, we are seeing many companies generating strong cash flow, making a strategic divestiture difficult. In addition, buyers are less willing to underwrite projections based on current prices. We are observing a ‘keep vs. sell’ dilemma in some of our current mandates. We are, however, seeing deal flow pick up and are encouraged by our pipeline of potential transactions in the region. For those owners who choose to keep rather than sell, we are seeing an increase in capital markets activity, as availability for recapitalisations (including for dividends) has been reinvesting in the industry. n
