The following banks and their clients will be honoured at an awards dinner at the Four Seasons hotel in Hong Kong on February 17. If you would like to book a table at the event, please contact Stephanie Cheung on +852 2122 5225 or [email protected].
BEST FIG HOUSE
Goldman Sachs
Two banks stood out in the financial sector this year and the fight between them for this award was as even as it was fierce. Goldman Sachs and Morgan Stanley both had coordinating roles on the three largest IPOs -- Agricultural Bank of China, AIA and Samsung Life Insurance -- both completed notable block trades and were active across geographies. Morgan Stanley had the edge on number of deals, while Goldman led on volume.
But after speaking to competing bankers and clients and taking a closer look at the top deals, we have become convinced that Goldman had more of a driving role on the IPOs for both ABC and AIA. On AIA it got elevated to joint global coordinator after advising AIG on the sale of AIA to Prudential (which subsequently collapsed), having acted as a joint bookrunner on the first attempt at an IPO in the first quarter. Once mandated it took the lead in facilitating the communication between the senior management, the joint global coordinators and other syndicate members and the cornerstone investors, led the drafting and positioning of AIA’s unique equity story and was responsible for the preparation of the analyst and roadshow presentations. It also acted as the stabilisation agent.
The bank had similar responsibilities together with CICC on ABC’s IPO where their work was recognised through a slightly greater share of the economics than the other banks involved. Again it acted as the stabilisation agent.
Goldman also worked on the rights offerings for Bank of Communications and China Merchants Bank, which paved the way for the state-owned banks later in the year, and in India it helped Standard Chartered become the first foreign company to list Indian depositary receipts.
Among its key M&A mandates, it advised Ping An Insurance Group on the $4.3 billion acquisition of a near 30% stake in Shenzhen Development Bank, which made Ping An the first Chinese insurer to become the largest shareholder of a Chinese nationwide bank. And it worked on ICBC’s $1.4 billion privatisation of its Hong Kong subsidiary, ICBC (Asia).
Also helping to tip the scale in favour of Goldman was the fact that it didn’t work on any FIG sector deals that failed or had to be withdrawn this year – a further testament of its strong execution capabilities.
BEST TMT HOUSE
Goldman Sachs
This was a tough call this year. Many banks, including Citi, Credit Suisse and Standard Chartered, closed some good deals. The confusion was compounded by the finger-pointing competitors did at the banks on the China Mobile trade, of which Goldman was one. But we thought one of the more honest comments we heard this season was from a TMT banker who cited that trade as the one he missed -- despite the outcome. His succinct summing up: “Who can honestly say they didn’t want to advise Vodafone on a deal of this magnitude?” As our house awards recognise the relationships banks have, we agree that whatever the P&L outcome, Goldman Sachs has cemented its relationship with Vodafone.
Goldman closed 33 deals for its clients across nine countries. Every other contender named Goldman as competition in some product or vertical. It raised $4.7 billion in the equity markets across 17 deals, and given that wallets were driven by the equity product, this focus seems fair. Goldman was one of three bookrunners on China Unicom, the largest CB ever in Asia ex-Japan, and the winner of our best equity-linked award this year.
Repeat business from various clients, including two Hutchison mandates, is further testimony to the strength of its relationships. Goldman’s strategy of focusing on established relationships, and on mandates with fewer bookrunners, is a compelling one, especially at a time when a proliferation of banks on deals is whittling away at the fee pool.
Goldman’s business was reasonably balanced across technology, media and telecoms. In terms of the country balance, we’d note that China was heavy and India light – but given which deals were the large fee payers, we find it difficult to fault that strategy this year.
BEST GIG HOUSE
Morgan Stanley
This was another tough category this year, which isn’t surprising given that both the equity and debt markets are boasting record volumes and in light of the broad spread of sectors included under the general industries group (GIG) umbrella. Consequently most banks have done a lot of deals that fit into this sector. We were particularly intrigued by Citi’s strong finish to the year and the sizeable revenues that it claims to have earned from its GIG franchise by prioritising deals that pay “real” fees.
However, the large volume of transactions executed by Morgan Stanley and the fact that it was involved in many of the deals that we consider key this year weighed over in the end. These include the IPOs for Petronas Chemicals and Tiger Airways, Thai Union’s acquisition of MW brands, and Guangzhou Auto’s privatisation of Denway, which have all won FinanceAsia deal awards this year. Morgan Stanley also advised PetroChina on its and Shell’s $3.4 billion acquisition of Arrow Energy; China National Petroleum Corp subsidiary BGP on its landmark investment in US-listed ION Geophysical Corp; and China Investment Corporation on its $2.2 billion investment in AES, CIC’s first investment into a listed US company outside the financial services sector.
With one month left of 2010, the bank topped the GIG league tables for both equity and completed M&A, although the competition was snapping at its heels.
The perennial criticism of Morgan Stanley is that it is weak in debt. However, we would argue that while it is particularly strong in equity – which the competition agrees has been driving revenues this year – it also plays a significant role in M&A and does enough debt business to remain relevant, such as the first investment grade bond out of China since 2008 for China Resources Power.
The bank’s decision a couple of years ago to focus on wind power and healthcare in Asia also started to pay off in earnest this year, with several notable IPOs in each sector.
BEST REAL ESTATE HOUSE
J.P. Morgan
This is the third year in a row that this award goes to J.P. Morgan, but the competition is getting tougher and several banks closed interesting transactions this year. Morgan Stanley advised Orient Overseas International on the $2.2 billion sale of its Chinese real estate subsidiary to CapitaLand; Goldman Sachs was the sole bookrunner on Hang Lung Development’s $1.4 billion follow-on, which ranks as the largest ever real estate follow-on in Asia ex-Japan, and led the largest ever Reit IPO in Singapore for MapleTree Industrial Trust together with Citi, DBS and Standard Chartered.
A key sector theme was the large number of high-yield bond issues by Chinese real estate developers, but most of them followed a similar format and every bank had their share of deals. Another theme was that of large and groundbreaking IPOs in various markets and this is where J.P. Morgan stood out. Its constant pushing of boundaries, together with an ability and willingness to think out of the box to come up with tailored solutions to suit its clients, convinced us that J.P. Morgan once again deserves this award.
The US firm led six real estate IPOs out of Asia ex-Japan, including the $3.0 billion IPO of GIC-backed Global Logistics Properties, which was the largest real estate IPO globally and the largest listing in Singapore. It also played a leading role on the largest IPO by a real estate investment trust in Malaysia for Sunway Reit and led the $251 million listing of Augung Podomoro in Indonesia, which set a new record for property listings in that market.
Outside IPOs, it pioneered a bridging dealer mechanism for listings by introduction in Hong Kong to facilitate the dual listing of Fortune Reit in April. The mechanism ensured a successful debut by helping to stabilise the share price and has been used on all major listings by introduction in Hong Kong since. J.P. Morgan was also involved in the structuring of the first every perpetual convertible security in Asia for Sino-Ocean Land, allowing the Chinese developer to raise $900 million from an instrument that counts as equity from day one. The deal was copied by Franshion Properties a couple of months later, with J.P. Morgan as part of the bookrunner line-up.
BEST EQUITY BROKERAGE
Credit Suisse
We’ve been watching Credit Suisse consolidate its position in brokerage. In 2008 it positioned itself as a preferred counterparty on the back of a largely unimpaired balance sheet. Last year it lured high-profile bankers from rival firms, enticing them with the continued strength of its platform. The Swiss bank has continued to invest in technology to stay cutting-edge in delivery and it has added a retail focus to its already well-defined institutional franchise.
This year we came away from the pitch season convinced that on the back of its efforts in earlier years, in 2010 Credit Suisse enjoyed an edge over its competitors.
Trading across Asian markets is still not back to the peak levels before the 2008 credit crisis. However, Credit Suisse has cornered a reasonable share of the volume traded in each Asian market. In derivatives, Credit Suisse’s hires last year have ensured it has momentum across equity, convertibles and fund-linked products. And in cash equities, Credit Suisse has earned accolades for its research calls as well as its execution.
Goldman Sachs and Morgan Stanley may still be top of mind in prime services but Credit Suisse has had the strongest momentum, as even competitors concede. And a strategy of being selective about signing up hedge fund clients and then cornering the lion’s share of their business will yield dividends.
Revenues at Credit Suisse have grown through both market share gains and a larger pie. For example, private banking clients are getting more active and open architecture encourages them to shop for product. But to the credit of the Swiss bank, it was ready for the opportunities a changing market environment presented – and has capitalised on them.
BEST ISLAMIC FINANCE HOUSE
HSBC
This award goes to HSBC for its efforts to broaden the financial services available to clients seeking Islamic finance. This year, not only did it strengthen its established leadership in the sukuk market, it expanded product offerings through bespoke client solutions in areas such as project finance, Islamic derivatives, real estate investment trust (Reit) offerings and private equity.
As its own bankers said, the aim was to elevate Islamic finance from its niche position to an industry mainstay. On the sukuk front, it helped structure for the National Bank of Abu Dhabi the first Malaysian ringgit sukuk issued by a foreign bank. It was also a joint bookrunner for the largest ever US dollar-denominated global sovereign sukuk, issued by the government of Malaysia. These were transactions that a top sukuk house in Asia had to be on.
But it was its innovation in other areas of finance that set it apart, and proved it is serious about integrating Islamic finance with its global financing platform. It was joint lead arranger on the first-ever Islamic cross-border project-finance bond in Asia, which it structured for Trans Thai-Malaysia, a joint-venture company that owns an offshore pipeline in the Gulf of Thailand. Not only was this novel, the transaction achieved a financing tenure that is longer than US dollar-denominated project financing available in Thailand or Malaysia.
In late November, HSBC acted as the sole financial adviser for the $491 million IPO of Sabana Shar’iah Compliant Reit. An owner of industrial properties in Singapore, Sabana is the first Islamic Reit in Singapore and the largest shar’iah-compliant property trust in the world. While it is not the first in the region (three small Islamic Reits are trading in Kuala Lumpur), Sabana is reported to have chosen to adopt a strict interpretation of shar’iah compliance so as to appeal to the Islamic investment community in the Middle East, as well as in Malaysia. In other words, HSBC isn't afraid to do the more difficult structuring.
HSBC is demonstrating that a strong on-the-ground team in each of the key Islamic finance markets working together with its traditional financing group, can offer products to both Islamic finance-only consumers and mainstream banking clients.
BEST CASH MANAGEMENT BANK
Citi
Citi’s cash management franchise built on a strong 2009 to deliver an even better 2010. New transaction services sales of over $500 million during the first nine months of the year, including more than $200 million of cash management sales, on the back of a 91% deal win rate helped revenues rise by 10% year-on-year, despite the difficult market environment and low interest rates. The bank’s 44,000 plus clients placed more than $110 billion on the bank’s balance sheet in Asia-Pacific, up 10% from the first quarter 2010.
Citi continued its policy of investing heavily to enhance its services in 2010, pumping $1 billion into new technology, including pre-paid offerings, commercial cards and client services. The latter includes its treasury diagnostics service, which enables clients to benchmark their treasury and cash management operations against worldwide best practices. Citi also established notional bank pooling in Thailand, pulling funds and consolidating information through local bank infrastructure, something which Citi says it is uniquely positioned to do because of its multibank access.
Citi performed well on the mobile technology front as well. One notable development was the introduction of a first-of-its-kind mobile solution for a major beverage company that enables it to unwind its existing 200,000 monthly cash collections. Citi also launched Cash2Mobile, which develops mobile phones as global payments devices and effectively eliminates the need for physical cash transactions, as it also allows for collections via mobile devices. This programme was piloted in South Korea and will be rolled out across several markets in 2011 and 2012. Another breakthrough for the bank was its first cash management deal in Vietnam in the form of a collection and payment solution for a supermarket chain.
Finally, Citi has strengthened its offering through a number of senior hires, including Sridhar Kanthadai, Asia-Pacific treasury and trade solutions head, Sandip Patil, regional head of payables and receivables, Raymond Hsiung, regional head of sales, Jason Tiede, regional head of wholesale cards, Sanjeev Jain, regional head of public sector and Munir Nanji, managing director, regional head of the bank services group.
BEST TRADE FINANCE BANK
HSBC
HSBC registered another strong year for trade finance in 2010, building on its powerful regional network, strong capital ratios and high deposit ratios. HSBC boasts a client base of more than 55,000 and has more than 2,000 trade and supply chain specialists across 20 countries in the region. Impressively, it has also won more than 4,500 deals in 2010, significantly up on last year. HSBC’s average financed trade assets continued to grow year-on-year, as did total trade turnover, illustrating the bank’s commitment to the region as a whole and to its constituent markets.
Structured finance solutions extended to two new clients in Singapore who deal with exchange traded base metals, are of particular interest. These deals not only increased the bank’s presence in the base metal sector in Singapore, but were also landmark cross-border deals between Singapore-incorporated borrowers and goods financed and assets/securities held overseas.
HSBC also has invested in a range of new products and services, from renminbi trade settlement to Islamic financing. The bank has the largest coverage of any foreign bank in China with more than 100 outlets across 26 major cities. This year has also seen it complete renminbi trade settlement on all six continents, and it was the first bank to complete cross-border renminbi trade settlement in all Asean countries.
In Malaysia, the bank’s clients may now enjoy a broadening range of HSBC’s market-leading Shar’iah-compliant trade finance products. The bank has also expanded HSBC Amanah, its international Islamic finance service, to eight branches and seven ATMs in Malaysia. In Vietnam, HSBC is one of the largest foreign banks with 12 outlets and was the first bank to launch dual-currency deposits to retail clients.
The bank already has the leading market share for forfeiting in Korea, but has now expanded these solutions into Hong Kong, Malaysia, Singapore, Thailand and Vietnam. HSBC has also introduced a new solution, its buyer-approved invoice finance (BAIF), to better manage client working capital and payment flows.
On the technology front, the bank has upgraded HSBCnet so that, for example, partial settlement instructions may be initiated online. In addition, HSBCnet-SCS enables clients trading on an open account basis with trading partners to outsource document management, while also allowing them to determine the flexibility of their own processing standards.
BEST FINANCIAL LAW FIRM
Linklaters
Picking our best law firm is a perennial challenge and 2010 has proven no different. Linklaters faced stiff competition from several of its rivals. In capital markets, Davis Polk was dominant on the year’s big dollar bond issues and Freshfields once again showed the strength of its China equity practice. Allen & Overy was also a frequent adviser on our winning deals. But Linklaters edged this award in the end for the range of work it advises on across the region and for its role in helping to create new markets.
Of our winning deals, Linklaters advised on AIA’s $20.5 billion IPO, L’Occitane’s $787 million IPO, Bharti’s $10.7 billion acquisition of Zain Africa and KNOC’s $2.8 billion acquisition of Dana Petroleum. It also advised on the financing of our best Thai deal, Thai Union’s $884 million acquisition of MW Brands, and on the Japanese aspects of Agricultural Bank of China’s $22.1 billion IPO.
Beyond our winning deals, Linklaters played a role in two important new trends in 2010: foreign companies listing in Hong Kong and the growth of the offshore renminbi bond market. We have covered both topics extensively during the year and Linklaters was at the forefront each time. It advised the banks on Rusal’s ground-breaking IPO at the start of the year and helped to pioneer the new dim sum bond market with its advice on the first offshore renminbi bond, issued by Hopewell Highway. It also advised on offers from Caterpillar, Sinotruk and China Resources Power.
It takes a firm with resources and a commitment to the region to play a pioneering role in new markets, and Linklaters has clearly demonstrated that in 2010. Next year could be a different story. With no end in sight to the flow of capital into the region, 2011 could present an even tougher choice for the winner of this award, particularly as Davis Polk’s new Hong Kong hires start to close deals and challenge the dominance of the UK firms in the Hong Kong IPO market.
