x Abu Dhabi, UAEMonday 22 January 2018

Qatari expansion in Mena gathers pace

Qatari companies are on an acquisition spree, with Qatar National Bank's takeover of National Société Générale Bank the latest expansion drive from the country's rapidly growing corporate sector.

Qatari state-linked companies are expanding rapidly throughout the Middle East and North Africa (Mena) region to capitalise on disposals by European companies facing economic uncertainty in their home markets.

Qatar National Bank (QNB) announced a US$2.5 billion (Dh9.18bn) deal that will result in it taking full control of National Société Générale Bank (NSGB), an Egyptian lender.

QNB acquires a 77.1 per cent stake in NSGB from its parent Société Générale, France's second-biggest lender.

The deal culminates a year of expansion for QNB, after acquisitions in Libya, Iraq and the UAE. The bank said it was also still seeking to expand in Turkey, despite being outbid earlier this year in an acquisition of DenizBank by Sberbank, Russia's biggest lender.

QNB's expansion was announced the same day as Doha Bank opened its first branch in Abu Dhabi, adding to its existing branch in Dubai, as the Qatari institution seeks to boost its lending to small businesses and participate in the capital's oil diversification drive.

The expansion was a necessary part of Doha Bank's global ambitions as its customer base travels farther in pursuit of business opportunities, said R Seetharaman, the chief executive of Doha Bank.

"The local market is becoming global," he said. "So you go global. Cross-border is integral to the overall economic expansion."

The move is a natural fit, since Qatar's single largest trading relationship is with the UAE, said Mr Seetharaman.

"There are Emiratis doing business in Qatar, Qataris doing business here. Cross-border banking and finance is the way forward."

Awash with cheap capital as a result of its gas-fuelled economic expansion, Qatar's government bond yields have fallen to close to zero once inflation is accounted for.

Qatar's 10-year government debts currently yield 2.6117 per cent, only a few basis points above the country's consumer price inflation of 2.6 per cent.

Qatar Telecom, also known as Qtel, said it had raised $1bn in 10-year funding yesterday with a coupon rate of 3.25 per cent.

The company has sought expansions in the wider Middle East to offset a challenge from Vodafone Qatar in its home market.

Qtel has boosted stakes in mobile operators in Iraq and Kuwait this year, taking its stake in Wataniya Telecom Kuwait to 92 per cent, and has expressed interest in acquiring Morocco's Maroc Telecom.

Qtel is looking "very closely" at Morocco, where a majority stake in Maroc Telecom that is held by France's Vivendi "might be in play", the chief strategy officer Jeremy Sell told Bloomberg News in October. JPMorgan is advising Qtel on the deal, according to sources close to the company.