Best M&A adviser
Goldman Sachs
“It was a pretty thin year,” says one mergers and acquisitions (M&A) banker in Australia of 2012. The overall volume and size of deals fell a great deal.
Amid the quiet, Goldman Sachs still managed to stand out. According to data provider Dealogic the bank advised on 34 deals that totalled AUD42 billion (US$43.49 billion) in value, giving it a market share of 30.7%; that’s a lot higher than rivals UBS (21.9%) and Macquarie (19.6%). On most of the major and most complex deals, Goldman Sachs was present.
It was particularly strong in infrastructure: it acted as sole financial adviser to broadband network builder NBN in its deal with Telstra, which included Definitive Agreements (DAs) for NBN’s use of Telstra infrastructure, and the migration of customers to NBN’s network. The total post-tax consideration of the deal to Telstra is around AUD11 billion. Goldman was also the sole financial adviser for NBN’s deal with the second major player in the Australian telecoms market, Optus.
Additionally, Goldman was the sole financial adviser to the New South Wales government on the US$2.3 billion sale of the Sydney Desalination Plant to an investor group led by OTPPB (Ontario Teachers’ Pension Plan Board) and Hastings Funds Management; it was the largest completed government asset sale in 2012.
Goldman also had a strong year in mining. It was adviser to Yankuang Group and Yancoal Australia on its US$2.5 billion acquisition of Gloucester Coal, and adviser to Whitehaven Coal on its US$2.7 billion merger with Aston and Boardwalk Resources, which created Australia’s largest independent coal producer.
And it was financial adviser to Austar in Foxtel’s acquisition, Asiamoney’s Best M&A deal for 2012. Goldman helped negotiate a complex set of stakeholders, including powerful shareholders and regulatory concerns. It helped consummate a long-held desire to merge the two pay-TV companies and was a truly industry-transforming deal.
In a quiet year, Goldman played the lead role in the most complex and industry-shaping transactions.
Best equity arranger
UBS
For the second year running 2012 proved to be a tough market for equity arrangers, particularly on the investment banking side. The Australian market went up 18%, but activity was still muted and confidence yet to flow through and trigger more deals. It was a scrappy year of recovery and consolidation, which made it hard for any one bank to truly dominate.
Since the start of 2008 UBS has underwritten more than twice the equity of any of its rivals. That dominance continued in 2012, with the Swiss bank’s market share at 17.3%, according to Dealogic, well above rivals Citi (11.6%) and Macquarie (11.1%).
During the year UBS demonstrated its flexibility and multi-faceted strength. With equity capital markets (ECM) slow, it refocused on hybrids, a booming area with a surge in issuance to ‘mum and dad’ investors seeking strong yields. UBS lead managed more hybrid transactions for Australian issuers than any other bank.
One particularly successful issue was Suncorp’s AUD560 million CPS2 offer, which received strong support despite a string of competing Tier I issuance.
While UBS was dominant overall, it didn’t have all the running to itself. Macquarie had a strong year, with 25 deals, as did Citi, although it only worked on nine deals versus UBS’s 27. Citi has innovated strongly in secondary market trading, including a strong focus on high-frequency trading, which enabled it to take UBS’s number one market share position. UBS still maintains an edge in secondary market commissions.
The deal that showed UBS’s smarts was the AUD1.5 billion sell down of part of the Queensland government’s stake in QR National (Asiamoney’s best equity offering for 2012). Amid ferocious competition from its rivals the bank secured an exclusive mandate and came up with an innovative solution that allowed an issue at a price premium. It was smart advisory work and something no other bank had suggested.
UBS’s strength and its ability to focus and exploit the strength in the hybrids space, as well as its work on the QR National deal, means it still won the year.
Best international bond arranger
J.P. Morgan
When it comes to arranging international bond issuance from Australia, J.P. Morgan sets the pace.
According to Dealogic statistics the US bank was responsible for US$11.3 billion of bond underwriting through 52 deals between December 2011 and November 2012, giving it a 10.9% market share. That was comfortably more than second-ranked Citi, which was responsible for US$9.81 billion via 44 transactions.
It was a good year to do well too, with international bond volumes from Australia rising by around US$30 billion over the previous 12 months.
The US bank was strongly represented throughout the various types of international bond transactions from the country. Australia’s banks are always prolific borrowers and J.P. Morgan was on hand to assist them in 2012. It was a bookrunner for National Australia Bank’s (NAB) €1 billion (US$1.36 billion) 2.625% five-year covered bond issue on January 5; one day after Commonwealth Bank of Australia (CBA) had kicked off euro-denominated covered bonds with our international bond of the year.
J.P. Morgan went on to help NAB raise US$2.5 billion via a dual-tranche vanilla bond issue on March 1, then assisted CBA in a US$2 billion 2.25% five-year covered bond issue and a separate US$2 billion 1.95% three-year transaction on March 5.
The US bank also featured heavily in a relatively vibrant flow of transactions from the country’s businesses. Standout transactions include BHP Billiton Finance (USA)’s US$5.25 billion multi-tranche bond issue in February 2012, a huge transaction that gained strong investor enthusiasm, telecommunications operator Telstra’s €1 billion 3.5% 10 year transaction in March, FMG Resources’ US$2 billion dual-tranche bond issue in the same month, and a US$600 million in 3.9% 10-year bond issue for Sydney Airport Finance in October.
The bank also helped arrange a US$400 million asset-backed securities (ABS) issue for Macquarie Bank’s SMART Series 2012-1 US Trust in March and a US$400 million follow-on of the ABS series in June.
Overall it was a robust series of deals that no other bank could match. For that, J.P. Morgan is deservedly Australia’s top international bond arranger of 2012.
Best domestic currency bond arranger
ANZ
Australia’s banks earn a lot of league table volume from arranging their own debt funding. However even after stripping this away ANZ was the top bookrunner for Australian dollar bonds between December 2011 and November 2012.
The bank enjoys a marginal lead on key rival Westpac across all locally-arranged bonds, having been responsible for US$15.96 billion of league table volume across 59 transactions versus its rival’s figures of US$15.49 billion via 55 deals, according to Dealogic. It enjoys a similarly small advantage once self-led deals are excluded.
ANZ doesn’t just lead for volume, but for diversity of business. The bank participated in several semi-sovereign benchmarks, such as a AUD1 billion, five-year bond issue sold at 4% for New South Wales Treasury or a AUD1 billion 3%, three-and-a-half year issue for Western Australian Treasury on November 1.
It was busy in the corporate space too, arranging deals for stalwart blue chips such as Woolworths (a AUD500 million 6% seven-year deal on March 14), Wesfarmers (a AUD500 million 6.25% seven-year transaction a week afterwards), and Telstra (a AUD750 million 4% five-year deal on November 8).
The bank’s most impressive local deal was BHP Billiton Finance’s AUD1 billion 3.75% five-year issue on October 9, which is Asiamoney’s local currency bond of the year and should stand as a major corporate benchmark for a long time to come.
ANZ even helped its bank rivals get deals away, including a AUD1.68 billion 10-year floating rate note by Westpac Banking on July 20.
Plus the Australian bank helped conduct securitisations for a variety of institutions such as Members Equity Bank, Bank of Queensland and Investec of South Africa.
ANZ’s participation in a diverse array of bond transactions helped to further develop Australia’s domestic bond market and encourage more than the usual array of local bank borrowers.
Best loan arranger
ANZ
Syndicated lending had a year to forget between December 1, 2011 and November 30, 2012. Total syndicated lending volumes during this 12 month period was US$102.48 billion, 24.4% lower than the US$135.59 billion registered during the previous year.
Banks fought to get deals as appetite for borrowing sagged amid caution with regard to capital regulation changes, and would-be issuers instead opted to issue bonds.
While overall lending volumes dropped off, the period did possess a clear winner in terms of market activity and diversity. ANZ registered US$9.32 billion of lending volume as a consequence of being a bookrunner on 31 deals, according to Dealogic. That is nearly US$2.7 billion more than nearest rival NAB. It was the second year running it had beaten its rival in volumes.
Standout transactions for ANZ include Seven West Media’s AUD2.08 billion four-tranche loan on January 16, 2012, a AUD2.4 billion loan for Origin Energy on October 4 and Leighton Holdings’ AUD1.4 billion loan on November 5, a deal that helped restructure the its debt profile and was named Asiamoney’s syndicated loan of the year.
ANZ was one of the many bookrunners to participate in Australia Pacific LNG’s project financing too, our project finance deal of the year, so it was well represented on some of the most notable transactions to take place.
As the most Asia-minded of Australia’s big four banks, ANZ looks well-set to continue benefiting from its home country’s rising trade and resources links with other nations in the region.
Its three rivals will need to work hard to catch up. Hopefully 2013 will offer more loan volumes with which they can try.
Best investment bank
UBS
The consistency of UBS in Australia is something to behold. Year after year the Swiss bank’s Australian operation stands tallest for equity capital markets, impresses with its robust M&A advisory work, and make itself felt in the debt capital markets (DCM).
2012 was no exception. As we note, the Swiss bank was the topmost arranger in Australia’s admittedly lacklustre equity market, while its level of completed M&A volume was second only to Goldman Sachs, our winner for M&A advisory according to data provider Dealogic.
Goldman deservedly took the top spot for M&A work overall, but UBS could still point to the fact it enjoyed the second-largest volume of completed deal work overall. This included several notable transactions such as co-advising Foxtel Management on its acquisition of Austar, our M&A deal of the year. UBS was strong in the resources space too, acting as one of the advisers to Aston and Boardwalk Resources over its US$2.2 billion sale to Whitehaven Coal in April 2012 and as an adviser to Yankuang Group’s US$2.46 billion purchase of Gloucester Coal.
Meanwhile in the ECM space UBS’s work on the AUD1.5 billion sell down of part of the Queensland Government’s stake in QR National was of particular note, as Asiamoney notes in its deal awards.
Even in DCM, an area in which the bank does not specialise, UBS registered a credible fourth for non-Australian dollar DCM activity and was fifth-most prolific domestic currency bond bookrunner, making it the most active bank overall in this space.
Yet 2012 revealed that other banks are catching up on UBS’s Australian investment banking pre-eminence. Goldman’s stood tall in M&A, while UBS lay only fourth in the announced M&A rankings between December 2011 and November 2012. Citi is also becoming an increasingly active player in all areas.
But for now at least UBS continues to set the standard for Australian investment banking.