Best M&A House
Morgan Stanley
Morgan Stanley sits at the top of the completed M&A league table and has enjoyed a good year both in terms of the quality of the transactions it has executed and the fees earned. It is also in command of a strong pipeline of (large) announced deals that are set to close in the coming month - ensuring strong momentum for its M&A franchise.
It is a franchise which also enjoys strong diversity across countries and sectors - and likewise enjoys a healthy balance between buyside and sellside mandates.
Its largest transaction of the year was advising Singapore Power on its $3.7 acquisition of TXU Australia's power and transmission assets. This deal, which saw SingPower turnaround the acquisition in 18 days, creates the largest utility in Australia. SingPower was able to get over regulatory hurdles to put together its Victoria transmission grid with TXU's 80,000 square kilometer of electricity and gas distribution networks. The deal added 1.1 million retail customers, and the 1290MW gas-fired Torrens Island Power Station to the SingPower portfolio. It forms part of the ongoing trend of Singapore Inc buying assets abroad.
Likewise on the power front it advised on International Power and Mitsui's $3.9 billion acquisition of Edison Mission's Asian power assets - some of which were in Australia and some in Indonesia. It is also advising on the $2.5 billion National-North of England Gas transaction - a deal not yet completed, but whose Asian angle derives from Cheung Kong's role as acquiror.
Other transformational deals it has advised on this year include the three-way merger between Thai Military Bank, DBS Thai Danu and IFCT (see our Domestic M&A Deal of the Year); and the $1.6 billion merger between STATS and ChipPAC. The latter created the second largest test house in the world, and a global leader in mixed signal testing. It also created a company with combined revenues of $1 billion in 2004 and one of the broadest portfolios of assembly products. The bottom line is that this $1.6 billion transaction created for Asia a company with global leadership in its industry space.
In China, Morgan Stanley advised on the country's first hostile M&A situation as Anheuser-Busch and SABMiller duked it out for control of Harbin Brewery in a $739 million contested bid. It also advised on the creation of a JV between TCL and Alcatel.
In its announced-but-not-yet-completed pipeline, Morgan Stanley boasts some large and significant deals. The pending acquisition by Doosan Heavy Industries of Daewoo Heavy is a $3.5 billion deal; the acquisition of Excelcomindo by Telekom Malaysia is a $1.6 billion deal; the sale of the KDIC's stakes in DITC and KITC have a combined value of around $1.2 billion. Slightly smaller, the acquisition of Koream confectionery business, Haitai by Crown is near completion and will be valued at around $500 million. And yet smaller in size - but not in significance - is the potential sale of Shenzhen Development Bank to Newbridge.
It has been a good M&A year for Morgan Stanley, but the US firm will not have much scope for complacency - especially as it shuffles personnel on the M&A side, with Gokul Laroia moving to head GCM and Matt Hanning arriving from Australia to take control of Asian M&A. Indeed, CSFB has shown very strong momentum on the M&A side in 2004 under Colin Banfield; and Goldman Sachs has demonstrated its continuing ability to pull-off big, landmark transactions (Koram/ Citi, BoComm/ HSBC, Lenovo/IBM); meanwhile JPMorgan and Citigroup pop up everywhere and offer fierce competition.
Best Equity House, Best Straight Equity House
Goldman Sachs
In a record-breaking year for the Asian equity markets, Goldman Sachs is once again the dominant force by some margin. Its stranglehold over the Asian equity league tables is hard to argue against, although of course there are always some willing to give it a try.
Last year the argument we heard was that TSMC should be stripped out of the league tables because it is a big, repeat issuer that always gives mandates to Goldman, thus skewing the true picture of who is winning new business and clients. This year the argument was that Goldman's big block trades for Petrochina and Hyundai Motor should be discounted because they were both deals originated in Europe for European clients - BP in the case of Petrochina and DaimlerChrysler in the case of Hyundai Motor.
Yet both these divestments were run out of Asia, utilizing Goldman's Asian execution skills and its marketing abilities to sell two of Asia's top corporate names.
When competitors have to resort to such tactics to chip away at Goldman's franchise, it often has the reverse effect - underscoring just how strong that franchise actually is.
In 2004, the firm has completed 29 equity and equity-linked deals raising $9.78 billion as of December 10, a 13.72% market share in a year when more than $70 billion has been raised. It is currently $2.5 billion ahead of its nearest competitor Morgan Stanley, $4 billion ahead of third placed Merrill Lynch and has raised almost double that of fourth placed JPMorgan and fifth placed UBS.
Had the Link Reit from Hong Kong listed on schedule, that margin would also have been a further $1 billion wider.
In 2003, Goldman was very strong in straight equity but backed away from the equity-linked markets where banks with bigger balance sheets became far more aggressive about pitching trades that didn't always work by the time they got to the market. This year it has adopted a more balanced approach and ranks second in the equity-linked league tables as of December 10, raising $2.06 billion from 7 deals.
To do this, it has become very selective about targeting clients with big benchmark deals likely to be mandated on the basis of execution abilities rather than low fees or the most aggressive terms. The two stand-out deals in this respect are the $1 billion, sole-led, four-headed monster deal for the Formosa group in late June and in October, the $200 million sole-led transaction for Shanda that had been IPO'd just a few months earlier.
At the head of this consistently successful team is Mark Machin, the patriarch of Asian ECM, who has now been in the region for so long that some wonder if he has become physically welded to his desk in the Cheung Kong Centre. Over the past two years, the team has seen a number of high profile departures including former co-head John Daly who re-found his calling in New York and Matthew Koder who went on to become head of ECM at UBS.
In their place, new talent has started to surface including the understated but highly regarded Richard Cormack as well as Jason Cox. So too, there is Kevin Zhang, one of the busiest and most successful ECM bankers with a large number of China tech deals under his belt this year including IPO's for Tencent, Shanda and the innovative dual Hong Kong flotation of A-share listed ZTE.
Best Equity-Linked House
JPMorgan
It has been a phenomenal couple of years for JPMorgan. The bank that was nowhere in any of the equity league tables only a few years ago is now remorselessly and successfully pushing its way to the very top. Its achievements are particularly evident in equity-linked where it now bestrides the leagues tables, having raised $2.263 billion via 15 deals during 2004.
It has done so by cleverly marrying its equity, derivatives and fixed income franchises with its own balance sheet. Its risk appetite and structuring skills have increasingly proved a lethal combination for all of its competitors who find that it is always there, pitching against them for practically every single piece of business.
JPMorgan bankers would argue that the firm's breadth and depth of expertise make it a very fine judge of when a deal becomes unprofitable and when to walk away. However, such is the sheer aggression of the equity-linked business that not all deals are executed smoothly and not all are profitable. Indeed, it is becoming all too commonplace for banks to buy deals at par and then on-sell them at 99 to make sure they can clear the market.
JPM, like many of its competitors, has had its mishaps this year, most recently with CMC Magnetics and Sino Land. But in giving the bank this award, we felt that these slips ups should not dent its overall achievements.
The bank has been literally everywhere. It has done some of the biggest deals of the year and some of the smallest. It has also been very broadly based across the region with transactions in China (CNOOC), Hong Kong (Clear Media, Noble, Shangri-La, Sino Land), Taiwan (Wistron, CMC Magnetics), Singapore (Temasek/Keppel, Singapore Power), Malaysia (Commerce Asset) and India (Tata Motor, Wockhardt and Sun Pharma).
Two of its most recent deals also demonstrate just how good it has become. A $100 million CB for Wockhardt, for example, re-opened the Indian CB market in mid-September after elections and aggressive pricing had shut the market since spring. It was priced sensibly and has traded up ever since.
Then in mid-November, JPMorgan was back with a second Indian company Sun Pharma. Five banks had already tried and failed to bring the drugs company to market over the course of the year. JPMorgan succeeded with terms that were deemed aggressive, but achievable.
And today as you read about this award, you'll find that while the rest of the market was enjoying Christmas drinks, JPMorgan has been back again with a $375 million exchangeable by Malaysian investment holding company Khazanah into toll road operator PLUS.
Best International Bond House
Citigroup
Choosing the best G3 debt house has become as difficult as differentiating the taste of different brands of mineral water. So many deals have multiple bookrunners these days that it is hard to judge from the outside which bank has brought what to the table. A very high proportion of the league tables also comprise flow business - deals banks are prepared to accept marginal fees on just to keep their league table position high. It has become a standing joke in the Asian DCM world that banks have to double the amount of business they execute each year just to stand still on wallet share.
This year, our decision came down to Deutsche Bank or Citigroup and it was a close run thing. Deutsche Bank has zoomed into focus in 2004 like never before and it is the bank most of the competition appears to fear most.
However, in the end we felt that it was very much Citi's year. Citi has had the kind of consistency over the years that practically all of the competition lack. It is always at the top of the league tables and it rarely suffers the kind of execution or personnel mishaps to which others are prone. It is also very profitable, marrying its league table ranking with an equivalent position in wallet share.
Under DCM head Aamir Rahim, it also has one if not the best originators in Asia. Indeed if we were to give a gold medal for pitching, it would have to go to Mr Rahim whose sense of humour never seems to desert him and his passion for winning awards and mandates remains undimmed.
And Citi has had a very good year. It has finally amalgamated its international and local currency bond business creating an integrated pan-Asian platform that only HSBC can match.
As this award went to press Citi had raised just over $5 billion in 2004 and had the most balanced portfolio of business in Asia spanning investment grade and non-investment grade sovereigns, quasi-sovereigns and corporates. It is undoubtedly strong in Korea where it has a seven strong team that was set up just over three years ago in anticipation of an uptick in business. This team has come into its own this year when roughly 40% of issuance has come from the Republic and Citi has a 48% market share incorporating the sovereign, proxy sovereign issuers such as Kexim and pure corporates such as LG Caltex.
This broad spread of business is also evident elsewhere in Asia. In Malaysia, for example, it has done deals for a quasi-sovereign issuer such as MISC and a corporate issuer like Genting. In Hong Kong, it also spans each end of the spectrum with deals for the sovereign and high yield issuers such as ASAT, which provided a rare credit from the tech sector at the very beginning of the year.
Citi rarely appears to be the second string on the deal. It is often the bank of choice, leveraging a loan relationship into a ratings advisory mandate and finally a bond deal. A clear example of this is the recent $400 million bond deal for the State Bank of India, which Citi transformed from a syndicated loan (albeit on extremely aggressive terms) into a bond. The deal has been one of the most successful transactions of 2004 and part of the reason can be attributed to the rating it was assigned - one notch above the Indian sovereign in a highly unexpected move by Moody's. Citi was ratings advisor and the first bank to be mandated on what turned out to be a three-handed deal.
Best High Yield Bond House
UBS
Like G3 debt, this was a very hard award to judge with a lot of banks encroaching on UBS's territory this year. The league tables are also not stacked in its favour as it has done less for the Republic of the Philippines than other banks. However, while the Philippines may have dominated the non-investment grade league tables, the government has not had a good year. The sovereign's rating has been on a downward slide all year and its funding strategy has been widely panned.
A successful high yield bond house is one that can provide tailored solutions for its clients. Deals tend to be smaller, take longer to come to market, are sole led and heavily tilted towards corporates. UBS is one of only a handful of banks that have led more than one non-investment grade corporate issue in a year in which Asian high yield has proved difficult to execute.
Its particular strength lies in Indonesia, which has proved increasingly fertile ground for high yield mandates. In January it was one of three banks to bring PT Excelcomindo to market with a $350 million deal that marked the largest high yield deal from Indonesia since the financial crisis. Later in the year, it returned to the Indonesian telecommunications sector with a $270 million three tranche issue for MGTI that was highly structured and re-opened the high yield market after a difficult few months. The deal was striking because it was so unusual. PT Mitra is less a company than simply the rights to revenues over one of Indonesia's KSO's that will revert back to PT Telkom in 2010.
Telecoms has been a big component of UBS's high yield franchise in 2004 and one of the main reasons why the bank has also been awarded Best Telecoms House. In addition to Indonesia, it has also executed deals in the Philippines and Sri Lanka. In the former, it completed a consent solicitation for Globe Telecommunications and went on to re-open its 2012 bond.
In the latter, it bought a debut issue to market for B+ rated Sri Lanka Telecom. A five-year deal launched in late November was extremely successful generating an order book of over $1 billion for a $100 million deal that was priced through Excelcomindo.
Aside from telecoms, UBS is also very strong in FIG. It has always had a complete monopoly in the Philippines and underscored this further in 2004 with a $125 million deal for Union Bank of the Philippines in September. It has also been active in Korea where it raised $300 million of hybrid tier 1 capital for Korea First Bank in February and $400 million subordinated debt for Cho Hung Bank in October.
As this award goes to press it is also back in the market with one of the most interesting high yield deals of the year, a $750 million offering for Magnachip of Korea.
Best Local Currency Bond House
HSBC
HSBC has once again had a strong year in the local currency bond markets. With a market share of 20.4% it has led 158 deals in total (year-to-date) with a volume of close to $6.5 billion. Even if you strip out Hong Kong - where the bank dominates the local currency bond market - HSBC has volume of $2.65 billion from 59 deals. Indeed, with the exception of Korea, HSBC has played a role in virtually all the local currency bond markets, and has this year strengthened its position in Singapore and built out its platform in Taiwan - a market where it was formerly absent.
Among the landmark deals it has worked on this year are the retail and institutional Hong Kong dollar tranches of the SAR government's HK$20 billion inaugural sovereign bond; the HK$6 billion Hong Kong Link tunnel securitization; the ADB's Rs5 billion bond (the first by a supranational borrower in the Indian local market); the IFC's M$500 million Islamic debt securities (the first ever Islamic debt issue by a supranational); the M$1.27 billion Optimal financing (a uniquely structured financing executed in both US dollars and ringgit, using both bonds and loans, and being the largest Islamic debt financing by a petrochemicals company in Malaysia); the Rp1 trillion five year bond for HM Sampoerna (the first Indonesian bond priced using a spread to the government bond yield curve); and San Miguel's Ps4 billion fixed rate corporate notes (the only Philippine corporate issue to be priced below the Treasury benchmark rate).
Overall it has been a year of innovation and achievement for HSBC in the local bond markets, and one of which HSBC's debt supremo, Steve Williams can feel justly proud.
Best Securitization House
HSBC
If this award were judged on dollar volumes it would be a close-run contest between HSBC and Citigroup, both of which gained a nice boost from the Hong Kong toll road deal, and Standard Chartered. Figures supplied by Citi and HSBC both make the same claim: they are the top securitization house in 2004, in terms of cash raised.
Both sets of figures use some deft tricks to make the point. HSBC created a bar chart with Citi, StanChart and UBS as tiny lumps while its own red bar stretched right across the page. The tactical use of shading saw them discount self-led deals by Citi and StanChart, and include mandated transactions for HSBC and even the Link Reit, an IPO led by the equity group. On the other hand, Citi included $300 million of Indian put trades to vault over HSBC into the number one spot.
If it was an award judged on number of deals, Citi and StanChart would top the field easily. But with an Asian securitization market still in its infancy it is perhaps too early to read much into league tables. For example, 18 of Citi's 20 deals were in India. Eight of those 18 were self-led and two were the questionable put trades. The remaining deals add up to about $120 million.
Instead this award is, by necessity, about outstanding deal-making and development of the Asian asset-backed market. In this respect UBS is unlucky. Its deal for Cosmos, which was Taiwan's first cross-border securitization, missed out on inclusion for both 2003 and 2004 by falling into our awards black hole: the last couple of weeks of December. That deal, added to its Korea First Bank deal this year, would have given UBS a strong hand.
As it is, HSBC's two memorable retail offers in Hong Kong stand out as exceptional deals in both size and profile. The team still needs to land more deals outside Hong Kong, particularly major cross-border offers, to confirm its competitiveness with more established rivals. But, in 2004 at least, few of HSBC's competitors can lay claim to a more exciting track record.
As well as the two Hong Kong deals the team also closed a $200 million commercial mortgage deal for CapitaMall Trust in Singapore, a deal that achieved the tightest ever pricing for a CapitaLand-group securitization, as well as a $400 million private placement for Samsung Card in Korea.
Best Loan House
Citigroup
Another year and another award for Citigroup. Having been in the midst of an intense battle to retain what has become their title last year, the US house made strides this year in a bid to put a significant gap between itself and its rivals.
HSBC actually pipped Citigroup for top spot in the bookrunner rankings last year, finishing on $5.8 billion from 47 deals as opposed to Citigroup's $5.6 billion from 46 transactions. Despite market share being over 11%, there was a feeling that other banks had managed to encroach on Citi's dominance and had established themselves within striking distance in 2004.
This year Citi sits in the lead on $7.3 billion from 60 trades, $600 million clear of second place HSBC. It has maintained its market share at 11% while all of its other competitors have seen theirs slide down.
One of the banks outstanding achievements is its ability to constantly win sole mandates in a market where the trend has been towards more and more top-heavy syndicates. The percentage of deals with just one bookrunner has fallen to a meagre 52% in 2004, down from 75% in 2002, yet Citibank has still managed to gain 28 sole mandates, almost 50% of all the deals it participated in.
Its closest competitor was Chinatrust Commercial Bank, which achieved 21, although all of these were picked up in its domestic market. (Despite this it has been a banner year for the Taiwanese bank as it moved up from 16th to fourth in the bookrunner table with $4.6 billion from 45 deals, almost five times the volume it completed in 2003).
As for Citi's regional rivals, Standard Chartered ran 18 sole deals for a total of $1.6 billion with HSBC on 17 for $1.3 billion. Last year's party crasher, DBS, jumped one further place up the table to seventh this year on the back of 15 sole bookrun deals for $1.3 billion.
Citi implemented an aggressive bidding strategy in 2004 as it looked to re-affirm its dominance in the region. This resulted in some high profile struggles in the market with the State Bank of India deal topping the list as it floundered in syndication and eventually led Citi to take an unprecedented final take of 32% of the deal.
This was seen as one major failure, but they were able to bag a number of prestigious mandates including the $500 million Chexim loan - the first sole led onshore loan syndication for a financial institution or policy bank in China. Its success in China was second to none as it finished top of the pile in this potentially lucrative market with $1.7 billion from nine deals, over three times ahead of DBS in second.
Additionally it was able to win some structured business as well, an area in which it hasn't been as active as some of its competitors in recent times. In this capacity it launched the $435 million LBO financing for C&M Communications at the beginning of November, which has attracted seven banks in underwriting and is due for completion by year end.
Citi's geographical reach across Asia continues to include almost every country in the region, including Indonesia where it was joint books on the highly successful PT Astra loan. Standard Chartered provide some stiff competition on this basis as it has a presence in 12 countries, two more than Citi, with the UK house appearing mostly in Southeast Asia where as Citi is dominant in North Asia.
When 2003 drew to a close there was murmurings in the market that someone may be able to overhaul Citigroup as the pre-eminent loan syndication house in Asia. As with any leader, it has responded in the best possible fashion in 2004 to leave its rivals returning to the drawing board to plot for 2005.
Best Project Finance House
SG
SG is one of the few banks that still takes the noble art of project finance seriously and it has had a great year in securing some of the most innovative deals in Asia. It has acted in a wide spread of roles from pure financial advisory to arranging and restructuring.
It has been active across a wide range of countries and sectors even bringing the first project finance deal to Macau. That deal, for Wynn Resorts (Macau) saw $397 million go into the construction of a new casino, which, for the first time in Asia, was being built on a project finance basis.
SG negotiated a key clause that allows the concession to be transferred to the banks and then onto a third party in the event of a bankruptcy. In the over ripe world of Macanese finance, this deal stands out as being a well thought out template for future transactions.
SG has also continued to work on its key Tangguh mandate in Indonesia, which will be the largest upstream LNG project in Asia when it closes, hopefully next year. SG has also closed restructurings for the Meizhou Wan power plant in China, the Rayong Refinery in Thailand, Eastern Multimedia in Taiwan and ABS-CBN in the Philippines.
It has also arranged a new financing for the BLCP Power plant in Thailand. It has been another strong year for the French house, whose dedication to project finance is being rewarded with some great transactions.
Best Mid-cap Equity House
BNPParibas Peregrine
In 2004, BNP Paribas Peregrine raised $680 million for mid-cap companies via 15 transactions. The firm has built its mid-cap business with certain key 'big picture' themes in mind, such as China's manufacturing and export story and China's domestic consumption story. This has been a wise and successful formula, helping the firm to source the right types of companies to bring to market.
Take its blowout IPO for Mengniu Dairy. This company proved a perfect proxy for anyone who wanted direct exposure to the growing China consumption story, and achieved high oversubscription levels even in choppy market conditions. Indeed. this $203 million transaction was our Mid-cap IPO of the Year, with the share price having risen over 56% since listing.
Other key mid-cap deals launched by BNPPP included the $220 million IPO for Lifestyle, and the IPOs for Luen Thai and ECM Libra.
Of course, one of the challenges for us of looking at this mid-cap sector is that inevitably some deals fall into the borderline of large-cap such as BNPPP's equity placements for Bumi Resources, and Yhanzhou Coal Mining Company.
What is clear is that BNPPP has a well formulated strategy to give mid-cap companies the attention that many of the bigger global investment banks are unable to offer. It is a viable niche and if BNPPP continues as it has done for the past two years, its approach will continue to make fund managers a lot of money.
Best Small-cap Equity House
CLSA
CLSA has acted as bookrunner on 10 deals this year in the size range of $15-100 million - the typical small-cap universe. These deals include offerings for Berlian Laju Tanker, Scomi, Wing Hang Bank, South Peninsular Industries and Midas Holdings.
CLSA's showing as a small-cap house becomes even more impressive if you add in data from its China JV, China Euro Securities, where it has been sponsor of five A share IPOs and one rights offering - all in the same small-cap range of $15-100million.
It obvious to most fund managers that where small-cap is concerned, CLSA is one of the few houses to call. In 2004 it produced 24 major small-cap sector research reports as well as increasing its coverage to 278 small-cap companies throughout Asia.
This is clearly a sector where CLSA knows it can add value both for its corporate and fund management clients, and its strategy will continue to be one of picking the best quality small-caps. Indeed, the real skill in this area of investment banking is to be able to source and identify the smaller Asian companies that will blossom in the future decades after their IPO into much bigger industry players - following the same route as Asian success stories such as Li & Fung and Techtronic.
Best Brokerage House
UBS
UBS remains the flow machine in secondary equity trading in Asia - a fact that also becomes clear in its distribution of new equity issues. UBS has the widest stock coverage in the region, covering almost 600 stocks, and has the region's biggest sales and research headcount. Aside from the usual channels that are used to communicate with investors, its ideas are also brilliantly distributed through the best broking website that exists. In independent surveys, UBS continues to dominate sales and trading rankings among those investors looking at Asian equities. Indeed it commands a leading broking market share of 14.88%. Building on its success in regional broking, it has also started to devote resources to covering A share stocks.
UBS has been the top regional broker now for close to half a decade, and it will be well aware that previous holders of this mantle (Jardine Fleming, Merrill Lynch) tended to hold the top position for just three years before being supplanted. This suggests it cannot take the top spot for granted, and there is little evidence it does.
Best Equity Research
CLSA
While there is little doubt that UBS has very comprehensive research, and has retained a research platform of high quality, we feel it is only right and fair to reward CLSA this year.
Through the bad years following the financial crisis it has stuck to its knitting as an independent, 'old style' Asian broker - and done so in spite of having been written-off on many occasions. Post-Enron its approach to research has not only been vindicated but become highly prized and favoured by the investor community.
Its annual investor conference attracted more international fund managers than ever before this year. And its approach to marketing its research ideas is also innovative. For example, when it wanted to launch its Boomtown idea in July - its megabullish (and mostly vindicated) call on the Hang Seng Index - it hired the UA cinema in Pacific Place and merged the research idea with a tribute to Hong Kong cinema.
Colourful research ideas, strong thematic views and an innovative approach to presentation all make CLSA a formidable research house, and the platform now looks well positioned to thrive in a resurgent region.
Best Fixed Income Research House
Citigroup
This award is always given to the winner of our annual fixed income research poll. This year the poll received responses from 449 individual voters, representing over 300 institutions.
Around 82% of the voters were based in Asia, with 11% coming from North America and the remainder being from Europe. We sent the poll out five times over a six week period, and asked the fixed income investors polled to share with us their preferred research houses.
Citigroup retained top honours in this year's poll, with a total aggregate score of 1056 votes from the six individual categories (Best Investment Grade Research, Best High Yield Research, Best Banks & Financials Research, Best Sovereign Research, Best Asian Fixed Income Strategy and Best Macroeconomic Research).
Citigroup actually increased the number of votes it received in this year's poll versus 2003. Credit for this strong performance goes to the longstanding team of Ivan Lee (head of credit research), Johanna Chua (sovereign research) and So-Yon Sohn (banks & financials credit research).
Best FIG House
Morgan Stanley
Morgan Stanley had another stellar year in FIG and retains this award from last year. It completed deals in the financial institutions space in eight countries in Asia and executed FIG transaction of note in both the debt and equity markets as well as showing strongly in M&A.
On the equity side it was a lead manager on Ping An's $1.8 billion IPO, and sole bookrunner on Shinhan's $535 million domestic block trade (see our Most Innovative Deal of the Year). Likewise, it worked on equity transactions for ICICI Bank, E.Sun Financial Holdings, Shinkong Financial Holdings and Commerce-Asset.
On the debt side it executed an upper tier 2 offering for DBS Bank, as well as bonds for China Development Bank and Korea Development Bank.
Its M&A transactions included the three way merger between Thai Military Bank, IFCT, and DBS Thai Danu (see our Domestic M&A Deal of the Year), the $1.67 billion acquisition of a stake in Great Eastern by OCBC, the sale of Hyundai Investment Trust to Prudential, the pending sale of KITC and DITC in Korea, and work for E.Sun Financial Holdings on a bancassurance alliance with the UK's Prudential and on E.Sun's $400 million acquisition of Kaohsiung Business Bank.
It is also an adviser on the possible sale of Shenzhen Development Bank to Newbridge (although this deal has been ongoing for two years).
The FIG space is always competitive, and Morgan Stanley's FIG boss, Matthew Ginsburg will be aware that strong competitors such as Goldman Sachs and JPMorgan will not make it any easier for it to retain this award for a third year in a row next year.
Best General Industries House
Morgan Stanley
Morgan Stanley has had an incredibly strong year in the GIG space this year (GIG standing for General Industries Group). Under the soft-spoken leadership of Sheldon Trainor, the Morgan Stanley GIG franchise has enjoyed strength across debt, equity and M&A and in a broad range of countries.
Its largest transaction of the year was advising Singapore Power on its $3.7 acquisition of TXU Australia's power and transmission assets. Likewise on the power front it advised on International Power and Mitsui's $3.9 billion acquisition of Edison Mission's Asian power assets - some of which were in Australia and some in Indonesia. It is advising on the $2.5 billion National-North of England Gas transaction - a deal not yet completed, but whose Asian angle derives from Cheung Kong's role as acquiror.
It likewise advised Petronas on its $500 million sale of Energy Africa to Tullow Oil. In the consumer sector it advised on the Anheuser-Busch acquisition of Harbin Brewery and the sale of Haitai to Crown, creating the number two confectionary player in Korea.
On the equity side it has led major deals for Thai Oil ($788 million), ONGC ($$2.36 billion) Tata Motors ($400 million), Sinopec ($741 million), China Shipping ($985 million) and Mengniu Dairy ($203 million).
One the debt side it has worked on high yield transactions for Sino Forest and Panva Gas.
Best Tech House
Morgan Stanley
Banks that tend to win this award normally have a very strong roster of business in Taiwan and this has traditionally counted against Morgan Stanley. However, the Taiwanese tech sector has been very quiet during 2004, mainly thanks to a cyclical downturn, which hit stock prices from April onwards.
Yet activity throughout the rest of Asia has been strong and Morgan Stanley has been at the forefront of a high proportion of the year's most significant transactions. It has, for example, been lead manager of two of the three big tech IPO's of the year - SMIC, LG Philips LCD and Tata Consultancy.
A $1 billion IPO LG Philips LCD was an enormously complex offering encompassing the first dual listing on the Korean and New York stock exchanges. It should have been one of the blow out deals of the year given the company's standing at the head of the global TFT-LCD sector. It was not the success the leads hoped for, but considering market conditions at the time execution left little to criticize. In fact many thought the leads did well to build an order book of long-term investors that were prepared to sit the cycle out and help smooth what has been a very stable aftermarket performance in the face of continuing declines elsewhere in the sector.
Its second big IPO for Tata Consultancy was a huge success although it too came at a relatively difficult time. The $1.169 billion deal was the dream IPO many had been waiting for over a considerable period of time. But the leads needed to position the company carefully relative to its peers, particularly Infosys. In the end, the leads were able to achieve a slim discount that was subsequently erased during secondary market trading.
Other stand-out IPOs include 51job, which fits one of the main themes of the year - China tech. The deal's passage to market also perfectly encapsulates the huge difficulties of marketing these deals when sentiment can swing from one extreme to the other in the space of days rather than weeks. When the lead first tried to market the deal in August, it came up against a listless investor base. When it bought it back in September, it ended up being able to price above the marketed range. Even more astonishingly, the deal went on to trade 51% above pricing the day it began trading.
Morgan Stanley's other strong suit is its M&A franchise. In 2004 it advised on the big tech M&A transaction of the year - the $1.126 billion merger of STATS and ChipPAC, which created the world's third largest semiconductor testing and assembly services company.
Other M&A deals include Thomson/TCL; eBay/Internet Auction and Rakuten/Ctrip.
Best Telecoms House
UBS
The telecoms category was one of the most competitive of all the awards this year, with both UBS and CSFB putting in very strong and impassioned pitches. It is certainly true that both have had excellent years in the telecoms space, and we received glowing verbal testimonials from key telco clients on the relative abilities of both banks.
What swung it in the end was the fact that UBS's deal list ended up being just that bit longer and deeper. Indeed, UBS's pitch book for telecoms was 55 pages long, making it probably the biggest pitchbook we received for any of the sector awards. UBS's commitment to the telecom's space has grown exponentially in the last two years, probably thanks to the fact that its co-head of investment banking, Robert Rankin is a telecoms banker by background.
UBS's telecoms transactions for 2004 go into the double digits. Some involve Asian clients selling assets outside Asia - such as SingTel selling its 26.9% stake in Belgacom in its IPO, and Telekom Malaysia's 6% selldown of its stake in Telkom SA of South Africa. Pure Asian equity deals it led include the StarHub IPO and Peoples Phone IPO, as well, obviously, as the $1.7 billion placement for China Telecom. It also helped SingTel acquire $120 million of Globe's stock, as well as led the equity offering for Yellow Pages (which while not a telco, is a derivative of the sector). On the advisory side, it worked with REACH on its debt restructuring.
Indeed, on the debt side, UBS also led five telco bonds worth $1.32 billion. These included deals for Telekom Malaysia ($500 million), Excelcom ($350 million), MGTI ($270 million), Globe ($100 million) and Sri Lanka Telecom ($100 million).
Overall UBS's head of TMT, James Roth can look back on 2004 as a year of strong achievement.
