BEST IPO
WiseTech Global A$168m IPO
Joint bookrunners: Credit Suisse and Morgan Stanley
Australia is perhaps not the first choice that springs to mind for technology leadership. But the country is home to a number of market leading companies in the sector and WiseTech Global proved its mettle when it became the first technology IPO to price in either the Australian or US markets in April 2016. The transaction was also the first IPO in Australia that year, effectively kick starting a market that had failed to get started in the first quarter.
Twelve months ahead of the IPO the company, which supplies logistics software, completed a pre-IPO funding round allowing it to make some acquisitions without diluting its share capital.
One year later the company was ready to list and emphasis was put on investor education given the tech stock sell-off at the start of the year. Selling points include WiseTech’s strong level of R&D investment, less than 1% customer attrition rate and its successful track record of acquiring and integrating other businesses.
The leads managed to price the transaction at the mid-point of the indicative price range and by the start of 2017 the shares had gained 74%. A deserving winner of Best IPO.
BEST FOLLOW ON/ABB
Boral A$2.1bn Paitreo and placement
Joint lead managers: Citi, Macquarie and JP Morgan
Building and construction material specialist Boral long had ambitions to build scale in the US so its decision to buy US-listed Headwaters for an enterprise value of A$3.5bn was a natural next step.
However the all-cash offer meant the company had to raise a huge amount of funds. Wanting to protect its credit rating, the firm decided raise equity. This was no mean feat considering the company was looking to raise around A$2bn when it only had a market capitalisation of around A$4bn.
Adding to the complication was that the Boral wanted complete secrecy about the fundraising as takeover had not been announced. This required the leads to fully underwrite the deal without being able to sound out investors in the nine month lead up.
The company announced news of the acquisition and equity raise on the same day on November 21. As the deal was so large, the leads’ strategy was to both target existing shareholders and introduce new investors to the share registry. New support came from existing large shareholders in Headwaters and a variety of a global and domestic long only accounts.
The transaction ended up multiple times subscribed with an institutional take up of more than 91%. As well as being transformative for the company, the transaction was also the largest equity deal in Australia in 2016. A true standout.
BEST EQUITY-LINKED DEAL
AusNet Service Holdings $375m 60NC5.5 hybrid bond
Joint bookrunners: Citi and UBS
AusNet successfully tapped into Asian liquidity to price the first US dollar Reg S hybrid bond by an Australian corporate. However, the deal did not face the easiest journey.
With a need for funds but not wanting to put any pressure on its credit rating metrics, AusNet began talking to investors in November 2015 following the release of its half year results. But following a roadshow in Asia the bottom fell out of the market and the transaction was pushed into the following year.
The start of 2016 also proved to be to be unsettling but by March the leads felt they were ready to pull the trigger and while spreads had been widening in euros the Asia Reg S market was proving stable and so the dollar transaction was launched on the ninth.
The leads were confident the trade would play well with Asian investors and so it proved with 91% of final allocations going to the region and a 63% take up by asset managers. A $2.7bn order book also allowed the borrower to upsize from the target $300m-$350m to raise $375m.
BEST INTERNATIONAL BOND
Australia and New Zealand Banking Group $1bn Basel III AT1
Joint bookrunners: ANZ, Citi, Deutsche Bank, Goldman Sachs and Morgan Stanley
Australian lenders have been substantial issuers of Basel III compliant bonds but until ANZ made its debut last June, not one had ventured into the US dollar market to sell an additional tier one.
And it was another of the year’s transactions that sought to tap into demand from Asian investors to drive momentum.
One of the main challenges for the leads was making sure the structure was understood by and attractive to international investors. A week before launch, the borrower undertook a global roadshow that visited the US, UK and Asia. Key structural features included a provision of a dividend stopper, a CET 1 capital trigger of 5.125% and issuance at the operating company level.
On opening, books built quickly for the perpetual non-call 10 transaction with Asia driving the order momentum. A peak order book of around $11bn allowed the deal to price at 6.75% having started with initial price thoughts of 7.25%.
A superb outcome for the first offshore hybrid transaction by a major Australia bank since 2009 and the first from ANZ since 2007.
BEST LOCAL CURRENCY BOND
Commonwealth of Australia A$7.6bn 30.5 year bond
Joint bookrunners: ANZ, Citi, Commonwealth Bank of Australia, Deutsche Bank, UBS and Westpac
Bankers love to hang superlatives on their deals in an effort to impress. But while some deals can stretch the claims made of them, the A$7.6bn bond issued by the Australian government is truly impressive.
The bond is the longest to ever be sold in Australia, creating a new benchmark for the sovereign. The deal is also the largest ever sold in the Australian market.
In September, the Australian Office of Financial Management announced that it planned to establish a new 30 year benchmark and formally launched the deal on October 12, 2016.
For such a landmark transaction, it was important to get a strong book. Pricing was launched at EFP+100bp-107bp and orders reached A$11bn at close of business Australia time. The deal was re-announced during the European open which caused the order book to peak at A$13.8bn prior to final guidance of EFP+101bp.
Global accounts proved particularly keen to get their hands on the transaction and ended up accounting for just over 65% of final allocation while 68% of the transaction went in to the hands of fund managers.
BEST STRUCTURED FINANCE TRANSACTION
Pepper Residential Securities Trust No 17 A$800m non-conforming residential mortgage backed securities
Joint bookrunners: Citi and National Australia Bank. Lead manager: MUFG Securities
As is clear from the number 17 attached to this borrowing entity, Pepper Residential Securities Trust is a familiar name to investors in Australia’s securitization market.
But last year was an exceptional one for the issuer. In March, it sold the largest non-conforming residential mortgage in its history – a A$700m by Pepper Residential Securities Trust No 16.
However it surpassed that with our pick for Best Structured Finance transaction which took advantage of the large rise in non-conforming RMBS in the Australian market last year.
Launched on October 4 at A$600m, the deal saw strong demand across all 11 tranches which allowed the leads to upsize the issue to A$800m. The subscription level was 1.32 times the final size.
One unique feature of the trade saw the class A1-af tranche structured with a fixed rate scheduled amortisation.
Investors lapped up the transaction with 20 accounts placing an order, of which offshore buyers accounted for 68% of the book.
BEST SYNDICATED LOAN
Asciano Finance A$3.95bn four tranche acquisition loan
Mandated lead arrangers and bookrunners: BNP Paribas, Commonwealth Bank of Australia, Credit Suisse and Société Générale
Pay attention as there were a number of twists and turns before our winner of Best Syndicated Loan came to a conclusion.
It started in June 2015 when Brookfield launched a takeover offer for all the business of Asciano. That was followed by a counterbid by a consortium including Global Infrastructure Partners and Canada Pension Plan Investment Board after Brookfield faced scrutiny from the competition regulator. In the end, the bidding groups decided to work together with Asciano’s business split into three.
GIP and CPPIB took ownership of the Pacific National rail business and needed a loan to fund the acquisition.
With three consortiums comprising seven different investors looking for funding, the leads decided to launch the fully underwritten syndication and bridge facilities once the bid had been accepted in order to get out early. The multiple consortiums also meant that many of the banks that would have been obvious sources of liquidity were conflicted.
As a result, the leads also sent invitations to banks that had been active in other deals in Australia as well as Asciano’s existing syndicate. The syndication was launched in February 2016 and closed two months later with a final demand of more than A$4.8bn.
BEST PROJECT FINANCING DEAL
HWF 2 A$199m dual tranche loan
Mandated lead arrangers: Investec, KfW and Société Générale
The A$199m loan for stage two of the Hornsdale Wind Farm project is not the biggest deal in the market but at 19 years is one of the longest and sets a new benchmark for the funding tenor that can be achieved in Australia.
The windfarm is part of the plan by Australian Capital Territory to have 100% renewable energy by 2020. French renewable specialist Neoen won the bidding to develop the second stage and as the project had a 20 year agreement to supply electricity to ACT, it wanted funding to match.
As the typical strategy for infrastructure projects in Australia is to provide five year funding that is rolled over, the leads decided to target European banks for syndication as the market is more comfortable with longer-dated risk. European banks were also more familiar with the sponsor though the leads had to do some education around the Australian regulatory environment.
The result means the sponsor has security of funding for the length of the scheme and the Australian project financing market has a new yardstick for what is achievable.
BEST LEVERAGED FINANCING
GenesisCare A$790m five year stapled financing
Arranger: KKR Capital Markets Asia. Mandated lead arrangers and bookrunners: CTBC Bank, Credit Suisse, HSBC, Natixis, UBS and UOB
When KKR was looking to sell its entire 45% stake in cancer and cardiac treatment firm GenesisCare, certainty of financing was one of the key considerations.
The private equity firm wanted a flexible funding package that could be used for the sale, but which if the sale did not go ahead could act as a backstop to allow existing facilities to be refinanced or be used in the event of an IPO.
The result was a rare example of stapled financing in Asia Pacific with the mandated lead arrangers and bookrunners putting in place a firmly underwritten package that comprised A$140m amortising term loan, a A$550m bullet term loan, a A$50m capex facility and A$50m revolving credit facility, all with five year maturities.
So well structured was the financing package that the winning consortium led by China Resources decided to take up the staple to finance its bid.
The loan, which was the largest Australian bank market leveraged buyout of 2016, was then launched into a limited syndication. Strong demand, especially out of Asia, lead to the loan being 1.5 times subscribed with around 15 banks joining.
BEST EQUITY HOUSE
Credit Suisse
It was a tougher year for equity capital market desks in 2016. After the bumper volumes of 2015, ECM activity more than halved to around $20bn largely due to banks raising less capital. The difficulty also spread to trading and research.
But one house defied the downturn to gain market share while providing innovative solutions to its clients. Under the leadership of Simon Cox and Adam Lennen, the bank’s deal volume jumped by a mammoth 173% to $1.8bn last year, according to Dealogic. This caused it to leapfrog from 10th to third place in the league table behind perennial leaders UBS and Macquarie Group.
The bank’s focus on the entrepreneur underpinned many of the transactions it worked on including our pick for Best IPO. Twelve months before WiseTech Global launched its A$168m listing, Credit Suisse completed a pre-IPO funding round for the company allowing it make some acquisitions without diluting its share capital.
Meanwhile a A$888m block for Mayne Pharma sold to buy a portfolio of pharmaceutical products which was forced to launch two days after Brexit do to the acquisition timetable still managed to price. The deal came in at a 6% premium to TERP with a 99.9% take up by institutional shareholders and a 36% price bump the next day.
A new structure that sees the Apac unit operate as the standalone division has also allowed the bank to become more nimble now that reporting lines and risk decisions begin and end in the region. Credit Suisse is a well-deserved winner of Best Equity House.
BEST BONDS HOUSE
ANZ
ANZ has always had a leading presence in Australian debt capital markets but 2016 saw the bank return to dominance as its captured business across asset classes and sectors.
The lender worked on a raft of the year’s high profile deals including our picks for Best Local Currency Bond, Commonwealth of Australia’s groundbreaking A$7.6bn 30.5 year trade and the first US dollar additional tier one from an Australian bank for its own treasury — our choice of Best International Bond.
The bank’s international network has become an even stronger part of the bank’s offering helping it command a leading presence in Kangaroo issuance. Highlights include Apple Inc’s A$1.425bn transaction and debuts for The Coca-Cola Company and Toyota Motor Credit Corp.
And with bringing Asian liquidity to the Australian market one of the year’s biggest overriding themes, ANZ’s presence in the region allowed it to harness this liquidity for Australian corporates. The bank further supported this effort with a two-day event in November for Australian corporates in Hong Kong and Singapore where they met over 70 investors.
The performance propelled ANZ back to the top of the all Australia DCM league table for last year with proceeds of $25.8bn and a 12.7% market share. This a marked growth in business from its fourth position and 9.7% market share in 2015.
BEST LOANS HOUSE
HSBC
In just six years, HSBC has grown to become one of the most impressive loans outfits in the Australian market. The project started in 2011 when the bank hired Todd Langsford from Barclays Capital to build a loan platform in the region. From that beginning, the team now have six people and HSBC has grown to become the top ranked international bank in the Australian loan market sitting just behind the big four. In 2016, it ranked fifth in the bookrunner league table for all Australian loans, up from seventh the previous year, according to Dealogic.
The bank’s loan activity has played to its strengths as a global bank with cross-border deals, broad distribution and sophisticated structuring which has dovetailed nicely with the shifting dynamics in the Australian market. It was a mandated lead arranger on our pick for Best Leveraged Financing, a A$790m stapled financing for the acquisition of GenesisCare by China Resources Group and Macquarie Capital.
In was also bookrunner for Blackstone’s investment in a portfolio of industrial real estate in Australia. HSBC was able to combine the expertise of its global real estate team with its Asian distribution strength to structure and syndicate the A$432m four year senior secured facility.
For building a leading loan franchise in a crowded market by harnessing its cross-border capabilities, HSBC is a natural pick for Best Loans House in Australia.
BEST INVESTMENT BANK
Citi
The ability to capture cross-borders flows is increasingly becoming the key differentiator in Australian investment banking. Across assets classes, the ability to bring liquidity into Australia from abroad or find opportunities for Australian companies outside their home market is the key driver of revenues and growth.
In this context, Citi has demonstrated its ability to harness its international network and structuring expertise to deliver complex transactions in the Australian market. Led by head of investment banking, Aiden Allen, Citi’s strength comes from the breadth of its business, holding top ten positions in M&A, debt and equity capital markets, according to Dealogic.
In M&A, its transactions include advising Qube Holdings on its $8.6bn buyout of Asciano. The deal was a tricky transaction that saw multiple consortiums bid for the target before coming together for a joint bid that saw Asciano’s business split into different components.
Citi was also a lead bank on five of the six transactions we have awarded in ECM and DCM. Highlights include Boral’s A$1.6bn placement, the country’s largest equity raising in 2016 and our pick for Best Follow On/ABB.
While in DCM it served as a joint bookrunner on our choice for Best Local Currency Bond, Commonwealth of Australia’s benchmark busting A$7.6bn 30.5 year deal.
For capturing cross-border activity while delivering market-defining transactions, Citi is our choice for Best Investment Bank.
For commercial opportunities please contact Deputy Publisher, Danny Cheung: danny.cheung@asiamoney.com or +852 2912 8080.