UBS
There has been considerable activity involving financial institutions groups (FIG) this year, but volume-wise the majority of that has centred around bailout capital for banks. Advisers have received league table credit in some instances but generally deals were negotiated on a principal-to-principal basis and the adviserÆs involvement was limited.
There were also few equity deals which meant that M&A activity drove revenues. On the M&A front, UBS acted as adviser to one of the two families who sold their controlling 53% stake in Wing Lung Bank to China Merchants Bank for $2.5 billion. The deal valued Wing Lung at $4.7 billion, the highest price-to-book valuation ever for a Hong Kong bank acquisition, at 3.1 times, and marked the largest bank M&A in Hong Kong in seven years. UBS also advised Philippine National Bank on its $608 million acquisition of Allied Banking Corp, which will create the fourth largest bank in the Philippines. In Taiwan, it guided DBS on its first investmentû the takeover of Bowa BankÆs ôgood bank assetsö through a government auction.
What sets UBS apart from the competition this year, however û and what makes it worthy of our top recognition in this space û is the capital it has raised for ChinaÆs financial institutions in the local bond market. Since its Beijing Securities joint venture received all the necessary licences in the first half of 2007, UBS has made significant inroads into this market and in 2008 ranks as the top arranger of renminbi-denominated bond issues for Chinese financial institutions - ahead of all the longer-established domestic firms. The five transactions it closed include a Rmb30 billion ($4.4 billion) lower-tier 2 bond for China Merchants Bank, a Rmb7.8 billion lower-tier 2 offering for insurance firm PICC Property and Casualty and a Rmb6 billion lower-tier 2 bond for Shenzhen Development Bank. UBS also underwrote a $1.7 billion private placement for Hua Xia Bank in the domestic market, which was the largest such placement in the China market in 2008 - in any sector.
Apart from UBS the only other foreign investment bank currently able to operate in ChinaÆs domestic bond and equity markets is Goldman Sachs, but the Swiss firm has clearly taken the lead over its US competitor with respect to renminbi bond issuance. And with ChinaÆs domestic market being one of the few debt markets in the region that remained opened into December, there is no question that the decision to focus on this part of the market was the right call.
BEST GIG HOUSE
J.P. Morgan
The award for the house which has had the best year across the general industries group (GIG) is always tricky: the category is broad as a number of sectors fall here and banks slice the universe differently with, for example, gaming counted as GIG for one and TMT for another. Even so, J.P. Morgan shines through for the deals it closed this year across the equity, debt and M&A products.
The firm had a good year in China outbound M&A beginning with advising Wuxi PharmaTech on its $163 million acquisition of AppTec Laboratory Services and going on to advising China Oilfield Services, along with Lehman Brothers, on its $3.8 billion acquisition of Norwegian drilling rig owner Awilco. J.P. Morgan was also buy-side adviser to our deal of the year - the acquisition of Australian miner Midwest by Chinese state-owned enterprise Sinosteel. The majority of J.P. MorganÆs revenues were derived from M&A as it also worked with clients on M&A deals across India, Korea, Malaysia and the Philippines, again with the cross-border theme the main focus.
J.P. Morgan also played a leading role on the only two high-yield debt issues to be completed in Asia in 2008: a $500 million bond by Noble Group, which attracted demand from all three continents and a high-quality book, as well as a $1.25 billion issuance by Vedanta Resources, which was the largest high-yield out of Asia ever and delivered a very favourable outcome for a demanding client.
In a thin year for equity issuance J.P. Morgan helped its clients access the stock markets. It was one of the lead managers on the largest ever initial public offering out of India, Reliance PowerÆs $2.96 billion capital raising; acted as sole bookrunner on a $260 million convertible bond offering from Philippines-based power generation company First Gen; and came in late but worked effectively to ensure a successful execution of department store operator Maoye InternationalÆs IPO.
J.P. Morgan stuck to a strategy of focusing on clients who are either market leaders or emerging leaders and who will provide repeat business. Over the recent past its ability to win share of wallet from these clients has been helped by the fact that the firm has been less affected by the subprime situation than some of its competitors.
J.P. Morgan has also put in place a strategy to selectively start pursuing principal investments in the region. ItÆs anyoneÆs guess what the coming year will bring, but we believe J.P. MorganÆs GIG group is well-poised for 2009.
BEST TMT HOUSE
Citi
This pitch season, more than ever before, bankers discussed profitability and how much share of wallet they had achieved. But nowhere was the focus on fees more evident than in the telecoms, media and technology (TMT) sector.
It has been a lean year for TMT. Volatile capital markets resulted in few equity deals and while TMT has always been a sector favoured by financial sponsors, this was a slow year for sponsor activity in general and the two large potential private equity deals launched this year did not fructify due to valuation differences.
Not surprising then that the TMT group at every investment bank has a few M&A deals to its credit, both completed and announced, as well as a number of attempted deals. But unlike previous years when the closure of most deals was just a matter of timing, this year the financing for some of the announced deals remains a question mark. In this environment, CitiÆs TMT franchise played to its strengths and pulled off a number of closures, in addition to the announcements. The bank put its expertise in the region across the telecom and technology sectors, as well as its relationships, to work to help execute mandates for global clients.
Along with Credit Suisse, Citi executed a $1.1 billion block trade to help Royal Philips Electronics sell a 6.7% stake in LG Display. The deal was well-executed and achieved good pricing despite following soon after an earlier trade by Philips. Citi also acted as the sole bookrunner for IBM on another three sell-downs of its stake in Lenovo, timing the trades well.
Citi cemented its relationship with Emirates Telecommunications (Etisalat), the largest telecom operator in the United Arab Emirates, on the $900 million acquisition of a stake in India's Swan Telecom.
The bank also closed some deals which it began in 2007, including the $350 million acquisition by Taiwanese firm MediaTek of the wireless semi business of Analog Devices; the delisting by TaiwanÆs ASE of its Singapore subsidiary ASE Test; and the sale by Min Joo Lee and related parties of their collective 65.1% controlling interest in Korean broadcaster C&M for $1.5 billion following the sale of 35% by Goldman Sachs PIA.
It would be remiss not to mention the China telecom sector restructuring, which drove league tables this year. We believe some firms played a rubber-stamping role on these deals and accordingly received only a nominal fee. But others, including Citi, had a real involvement from inception and earned a healthy fee. And weÆre confident that will manifest itself in future business wins, in China and from the restructured telecom firms.
BEST REAL ESTATE HOUSE
J.P. Morgan
2008 was the year when the three-year wave of China property IPOs hit the dam and slowed to no more than a drip. Only two new listings by Chinese property companies slipped through the cracks, marking a noticeable shift in the type of business activity that came to define the year. Overall, real estate deal volumes fell by more than 80% across products and the focus shifted from Chinese developers going public to already listed property companies or real estate investment trusts (Reits) in the need of cash. Several banks picked up on this trend but because of the thin volumes no one bank was able to dominate.
J.P. Morgan receives this award for having been active across products and geographies; for timing its transactions well with two deals in January before the credit crunch took hold in earnest; and for maintaining its commitment to the sector throughout the downturn with no major cutbacks in its real estate coverage and research teams.
In terms of deals, the bank acted as the sole bookrunner for CapitaLandÆs record-breaking S$1.3 billion ($920 million) CB, and together with Citi and DBS opened the market for Singapore Reit issuance with a $134 million follow-on for CapitaRetail China Trust. J.P. Morgan did not bring any IPOs to market this year, arguing quite early that the window for new listings, particularly in Singapore, was shut. However, it did act as the exclusive financial adviser to Chinese developer Yingli International Real EstateÆs listing in Singapore through a $447 million reverse takeover, which was completed at the end of October.
It also advised Prime Development on the sale of an office tower in Korea to Ascendas Korea for about $281 million, achieving a price similar to that in the central business district - despite the fact that the location had historically had a poor image and that the building had a high vacancy level.
In the debt market, it teamed up with HSBC to help property conglomerate Swire Pacific raise a total of $500 million from a 10-year bond in April. The deal stands out not only because it was the first investment grade issue by an Asian corporate this year, but because of the way it was structured. Rather than go out with the full size straight away and risk giving investors the upper hand on pricing, the bookrunners initially sold only $400 million and then re-opened the issue a week later to raise another $100 million on the back of reverse inquiries.
In all, J.P. Morgan was able to tap various markets to deliver for clients across the region û which in the current environment is really the best anyone can ask for.
BEST EQUITY BROKERAGE HOUSE
J.P. Morgan
In one of the yearÆs bigger upsets, J.P. Morgan won this crown from UBS who has taken it home for the past six years. Even J.P. MorganÆs competitors concede that the US bank has won considerable market share this year. In Asian markets such as India and Korea, J.P. Morgan has made a quantum leap in its competitive position.
But it is not just taking market share from other banks that wins the firm our award.
The depth and breadth of J.P. Morgan's research is well-recognised among long-only investors and with the acquisition of Bear Stearns earlier this year it gained a prime broking franchise. Add in a strong balance sheet and it is no wonder J.P. Morgan is the name investors are currently chanting.
The bank has continued to invest in and strengthen its equity platform, despite the market volatility. Recognising the unique opportunity it has to become the preferred brokerage firm for investors concerned about counterparty risk, it strengthened its sales and sales trading teams as well as its electronic product capabilities. The US bank currently has 99 analysts covering 820 companies across 11 countries.
BEST ISLAMIC FINANCE HOUSE
CIMB Islamic
CIMB Islamic retains this title in part thanks to its dominance in the Islamic debt capital markets. The bank has arranged and managed sukuk transactions for 13 issuers, including a $550 million exchangeable bond for Khazanah Nasional. That was the first exchangeable sukuk launched concurrently with an overnight block trade using accelerated bookbuilding. It was also the first international Islamic exchangeable sukuk with a zero periodic payment (Islamic finance terminology for coupon) despite Middle East investorsÆ preference for more fixed income-like instruments that pay regular coupons. The deal is distinguishable from KhazanahÆs first two exchangeable sukuk in that the structure accommodates share borrowing and lending, an avenue for hedging the equity option, that was not available in the earlier sukuk. Tight pricing was achieved despite challenging and volatile market conditions as global market indices fell going into the launch of the transaction.
CIMB Islamic also led the way in Islamic finance engineering with regard to treasury products, including offering Islamic equity total return swaps, Islamic FX forwards and Islamic equity options. On the commercial banking front, the introduction of its ôWhy Waitö programme makes CIMB Islamic the first financial institution in Malaysia to offer an Islamic fixed deposit that allows depositors to get profit immediately after opening an account. Last year the bank also launched two Islamic structured investment funds for retail investors.
These innovations have improved the bankÆs capabilities in creating SharÆiah-compliant investments that suit investors in different market conditions. The bank says the enhanced sophistication has helped it penetrate the conventional markets as well.
BEST CASH MANAGEMENT BANK
Citi
Citi once again stands out as the best provider of cash management solutions in the region. The bankÆs cash management franchise in Asia-Pacific, which boasts an on-the-ground presence, expertise and full range of banking services in 16 countries (in addition to Australia and Japan), continues to grow from strength-to-strength. It has a client base of more than 44,000 (and that excludes SME clients managed by the corporate bank and the consumer bank) and as of October 31, its deposits on balance sheet exceeded $75 billion.
CitiÆs third quarter in 2008 marked the 20th consecutive quarter of double-digit growth for the cash business in Asia and the bank continued to invest in product developments, such as the provision of mobile and e-commerce solutions. For example, in Thailand Citi instituted a partnership with mobile carrier AIS to initiate payments through SMS via mobile phones. In India, it launched solutions for BillDesk, enabling corporations to present invoices, statements and bills to consumers or businesses and receive payments against them. In February, Citi acquired PayQuik, a leading provider of remittance software, and integrated its platform with CitiÆs global remittance service to create QuikRemit. In September, it began white labeling QuikRemit to IndiaÆs Andhara Bank.
Citi dominates handling complex request for proposal (RFP) bids and a record number of non-RFP regional mandates. Indeed, a small sampling of the marquee regional deals won include working for China National Petroleum Corp, Johnson Controls, Lenovo, Neptune Orient Lines and Verizon Communications. Plus it serves as the lead international bank for many of AsiaÆs largest local corporations, banks and government entities. For example, it handles cash management for Bank Islam Malaysia, China Merchants Bank, Dr ReddyÆs, Foxconn and ICBC, to name just a few clients. It also supports its market-leading position through a close relationship with local regulators, particularly in emerging markets such as China, India, Malaysia, Thailand and Vietnam.
BEST TRADE FINANCE BANK
HSBC
Amid unprecedented market turmoil, HSBCÆs trade finance team continued to expand in key markets, reinforcing the bankÆs local footprint and enhancing its service delivery. It increased the number of dedicated trade and supply-chain specialists by 10% (200 associates) across the region.
The bank opened 23 new locations in key commercial cities across China, giving it the largest network among foreign banks. And it honed in on key markets. For customers in Guangdong, it launched a courier service to clients based in less centrally-located areas with the ability to submit trade documents from their own premises, extending HSBCÆs delivery channels to reach virtually every customer in the Guangdong province, which is more than 180,000 sq km.
In Indonesia it acquired Bank of Ekonomi, one of the countryÆs largest commercial banks. The integration will double HSBCÆs local network to 190 outlets, expanding market reach and support to IndonesiaÆs growing commodities market. In Malaysia, HSBC is the countryÆs first foreign bank to trade through an Islamic subsidiary. In Taiwan, HSBCÆs presence expanded to approximately 50 outlets, including all key commercial cities, strongly positioning the bank to capture increased trade and investment in the territory as ties between China and Taiwan continue to strengthen. And in Vietnam, the bank not only strengthened its position through an increased stake in Techcombank, but also opened a new representative office in Can Tho with approval for local incorporation.
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