Hong Kong
The Deal: Sun Hung Kai Properties’s $1.41bn accelerated bookbuild top-up placement
Goldman Sachs was sole bookrunner.This is the largest equity offering in Asia, excluding Japan, this year and the largest ever follow-on offering in the real estate sector in the region. The day the transaction was executed marked the stock’s highest ever price. The placement attracted a well diversified pool of investors, ranging from long investors to high net worth individuals to hedge funds. The book was three times oversubscribed and closed with more than 100 investors, in just three hours, while the demand book was covered after the first hour. The company’s expansion strategy to China was appealing to the Asian, European, North American and Middle Eastern markets. Goldman Sachs can pride itself of having secured the fourth largest ever sole bookrun follow-on offering in the region, after having previously conducted the first three.
Hungary
The Deal:M6 motorway phase III €1bn PPP
HSBC, Bank of Scotland, Fortis, KfW IPEX Bank and CIB were mandated lead arrangers and bookrunners.This landmark European PPP deal is a vital step in the region’s development: it connects Budapest with the Croatian border through one of the country’s least economically developed regions, Baranya. It will also enable the Hungarian government to continue its large road infrastructure programme. By far the largest PPP deal in the region in 2007, the M6 financing was also the longest tenor (29.5 years) ever achieved in CEE. This was a highly complex deal with a large number of shareholders that was nonetheless completed in just eight weeks from final offer stage to financial close.
Indonesia
The Deal:Elnusa’s Rp584bn IPO
Mandiri Sekuritas was sole lead underwriter and sole bookrunner.Bringing an IPO to the market when conditions are uncertain is a challenge. Doing it successfully is a great achievement. Elnusa’s listing on the Indonesia Stock Exchange, which represented a part privatisation for its parent company, Pertamina, attracted good interest from quality investors, three-quarters of which were investment managers. The deal appealed to both local pension funds and fund managers and to foreign fund managers, insurance and retail investors. The book was 11 times oversubscribed and, while the IPO was not the largest of the year, it was liquid and on the first day of trading the share price closed 28% higher than the offering price despite a 2% dip in the market.
Ireland
The Deal:Republic of Ireland’s €6bn 4.5% fixed-rate notes due 2018
Barclays Capital, Davy International, Deutsche Bank and HSBC were joint bookrunners.When it comes to sovereign, supranational and agency deals, less is definitely more. Rare deals have the kind of cachet that set investors’ pulses racing. Ireland’s euro debut – the largest syndicated eurozone sovereign transaction of 2007 – did just that. The transaction quickly generated a book of more than €16bn from more than 150 investors and was priced at the tight end of guidance. Previously, some investors have shied away from Ireland’s bonds because of their lack of liquidity, but this €6bn, 10-year deal has put paid to such reservations.
Israel
The Deal:Israel Corporation’s $722m acquisition of a 46% controlling stake in Oil Refineries
Citigroup was exclusive adviser to Israel Corporation and sole mandated lead arranger of the acquisition finance facility; JPMorgan, Merrill Lynch and Lehman Brothers advised the government on the sale of Oil Refineries.
This deal was the largest privatisation in Israel to date and the largest ever acquisition financing of an Israeli asset provided by a foreign bank. As part of its ongoing privatisation programme, the State of Israel sold 100% in Oil Refineries via an IPO process on the Tel Aviv Stock Exchange, entailing the sale of 54% of ORL to institutional and retail investors and the sale of a 46% strategic controlling stake of ORL to strategic investors in a competitive bidding process. Israel Corporation was part of the winning consortium for the 46% ($722m) stake in ORL which implied a total equity value of $1.57bn.
Italy
The Deal:UniCredit’s €21.8bn acquisition of Capitalia
Merrill Lynch and an in-house team advised UniCredit; Citigroup advised Capitalia and Credit Suisse and Rothschild provided a fairness opinion to Capitalia’s board of directors.Italy has seen lots of changes in the past years, at least in financial terms. Its banking system has been consolidating and UniCredit’s acquisition of central and southern Italy champion Capitalia has been both highly significant for the acquirer and highly contested by the target’s long-standing chairman. The combined group will have a thorough national distribution, with complementary branch networks and highly recognised local brands. It will also have a combined 16% market share based on customer loans and is set to achieve significant cost synergies.
Japan
The Deal:Permira’s ¥250bn leveraged buy-out of Arysta LifeScience
Goldman Sachs and Lehman Brothers advised Arysta and the sellers; Lehman Brothers was the sole provider of stapled financing and JPMorgan advised Permira. The acquisition was financed by a mix of senior debt, senior mezzanine and junior mezzanine facilities which were successfully placed prior to the completion of the transaction by JPMorgan, Lehman Brothers, HVB and Aozora Bank.
At a time when acquisitions in the US and Europe had slowed, this deal stands out for its size and success, and the fact that it represented one of the most hotly contested auctions in the Asian market. It was also one of the largest ever private equity-led buyout transactions in Japan and has the potential to reinvigorate interest in the country’s sluggish private equity market.
Jordan
The Deal:Royal Jordanian Airlines’ $261m IPO
Citigroup acted as sole global co-ordinator and sole bookrunner.This was the first privatisation of a national flag carrier in the Middle East and proved a successful offering in a volatile market environment with both a record retail response in Jordan, with more than 30,000 individuals subscribing for shares and a warm institutional reception internationally with the majority of stock being placed with regional specialists. Following the December 2007 issue, the fully privatised airline has 55% of its shares owned by Jordanians with a 10% placement with Social Security Corporation, 7.7% with Employee Fund and 19% with M1 Group. All proceeds went to the government with none received by the company.
Kenya
The Deal:Yara East Africa’s $36.4m commodity letters of credit
Citibank Kenya was the sole arranger.Among the four letters of credit that Citibank Kenya issued for bulk fertiliser importer Yara East Africa was the biggest ever letter of credit opened by the bank in Kenya, worth $19.5m. The deal took place against a background of civil and political unrest in Kenya as president Mwai Kibaki refused to accept defeat in the December elections to rival Raila Odinga. The deal allowed Yara East Africa to increase its trade terms with suppliers and eased the firm’s cashflow pressure during an uncertain time in Kenya’s history. Country risk was mitigated by a guarantee from Citi in London. Yara East Africa, which is a subsidiary of Yara International [Formerly Norsk Hydro], requested the money to deal with shortening supply terms and to hedge its foreign exchange exposure due to paying for imports in dollars and making sales in Kenyan shillings. The company’s suppliers had initially offered only 90-day terms on open account, but accepted 270 days on the back of the letters of credit.
Kazakhstan
The Deal:Eurasian Natural Resources Corporation’s £1.5bn IPO
Deutsche Bank was sole global co-ordinator, and joint bookrunner alongside Credit Suisse, Morgan Stanley and ABN AMRO.For Kazakhstan, 2007 was the year things turned sour in the capital markets. The central bank intervened to stave off a liquidity crisis among local banks that had borrowed heavily overseas, and a sell-off in equities prompted government plans to prop up share prices with public money. These adverse conditions also forced the cancellation of several IPOs, but thanks to ENRC – the world’s largest ferro-chrome producer – the year ended on a much brighter note. Its listing on the London Stock Exchange was the largest ever Kazakh IPO, as well as the largest IPO in the UK that year. Despite the tumultuous events earlier in the year, the offering was four times oversubscribed, with real money accounting for half the demand. And while global markets have continued their decline, ENRC’s shares were up about 60% from the issue price at the time of writing.
Kuwait
The Deal:Qatar Telecom’s $3.7bn acquisition of Wataniya Telecom
Morgan Stanley acted as sole financial advisor to KIPCO, the vendor, while ABN AMRO advised Wataniya Telecom.This was a significant transaction, the largest in the GCC telecommunication sector, the first regional consolidation in the sector across the GCC and the largest ever on the Kuwait Stock Exchange. In March 2007, KIPCO announced the sale of a 51% stake in Wataniya Telecom to Qatar Telecom for a total of $3.7bn, implying a total aggregate value of $7.8bn. The deal provides QTel with the first cross-regional Middle East telecoms footprint with 10 million subscribers in Kuwait, Iraq, Algeria, Tunisia, the Maldives and Saudi Arabia and 1.5 million wireless subscribers in Qatar and Oman.
Lebanon
The Deal:Fransabank’s $153m acquisition of Banque Libanese pour le Commerce
An in-house team advised Fransabank; financial advisers were not disclosed for BLC Bank.After the bidding process was shortlisted to two banks, Fransabank won a two-round competition to buy BLC Bank from the Qatari Supreme Council for Economic Affairs and Investment. The acquisition of BLC increases Fransabank’s share of the Lebanese banking market, with its ranking in respect of total deposits rising from fifth to fourth. The BLC move brings in one of the oldest banks in the country with a wide client base of 50,000 customers, a network of 35 branches and deep roots within the business community. The BLC Bank will operate as a separate entity and while there will be a reduction in operating expenses there will not be a reduction in staff. BLC is Fransabank’s fifth acquisition in recent years and was financed by the bank’s resources.
Libya
The Deal:BNP Paribas’s €145m acquisition of a 19% stake in Sahara Bank
Rothschild acted as the sole financial adviser to the Central Bank of Libya; an in-house team advised BNP Paribas.The deal was a landmark for Libya in that it was the first ever bank privatisation. BNP Paribas’s acquisition gave it management control over the Libyan bank and the right to increase its stake to 51% in three to five years. The sale followed a competitive bidding process involving six separate offers. The deal, which took six months to complete, posed a number of obstacles for Rothschild. The bank succeeded in executing what was a highly political deal in a transparent way, despite legal constraints. It kept the tender process competitive and managed to keep bidders informed of a sound knowledge of the asset, the Libyan economy and the Libyan banking sector as a whole.
Lithuania
The Deal:Bité €300m two-tranche floating rate note issue
Deutsche Bank was sole bookrunner.Well before Denmark-based TDC decided in late 2006 to dispose of mobile operator Bité, which is headquartered in Lithuania and has a growing presence in Latvia, CEE regional private equity firm Mid Europa Partners had already identified it as a possible target. To fund the €443m leveraged buy-out, for which Mid Europa Partners were advised by UniCredit, Bité issued the first conventional high-yield bond from any of the three Baltic states. Despite the lack of comparisons for investors and a sell-off in Lithuanian equities during the roadshow, the book was oversubscribed, allowing an upsized deal at the tight end of price guidance. The bond consists of a B rated €190m senior secured 2014 tranche and a CCC+ rated €110m senior subordinated 2017 tranche. As elsewhere in Europe, however, future deals in Lithuania may well need lower leverage to attract investors – Bité’s credit ratings were put on negative outlook early in 2008.
Madagascar
The Deal:Ambatovy Nickel Project Madagascar’s $2.1bn, 17-year loan facilities
ING acted as mandated lead arranger with SMBC, Bank of Tokyo Mitsubishi UFJ, Mizuho, Calyon, Société Générale, BNP Paribas, Shinhan Bank and Woori Bank.
This was one of the largest ever mining project financings, at a record tenor. The $2.1bn debt, which will go towards a total financing cost of $3bn, was broken down into five separate loans each at a 17-year tenor. Japan Bank for International Co-operation took $700m, Export Import Bank of Korea took $650m, Export Import Bank took $300m, Canada’s state export credit agency, the EDC, took $300m and The African Development Bank took $150m. ING’s share of the debt amounted to $52m. The project, which is owned by Canadian mining giant Sherritt (45%), Japanese conglomerate Sumitomo Corporation (27.5%) and the Korean Resources Corporation (27.5%), plans to construct an open-cast nickel mine along with the related infrastructure.
Malaysia
The Deal:Binariang GSM’s RM39.6bn acquisition of Maxis Communications and leveraged financing package and Malaysian ringgit Islamic bonds
ABN AMRO and CIMB were joint advisers to Binariang and joint mandated lead arrangers and bookrunners for the RM bond take-out; ABN AMRO was also sole underwriter for the acquisition financing and mandated lead arranger and bookrunner for the US dollar take-out. JPMorgan and RHB Investment Bank acted as financial advisers to Maxis Communications.
The privatisation of Maxis Communications is the largest ever corporate transaction in Malaysia and one of the largest buy-outs in the Asia-Pacific region. The transaction was executed in a short period of time. The $7.1bn bridge financing was also noteworthy as it represented the largest ever financing package in the country. Additional financing was provided by a RM20bn ($6.3bn) take-out via Malaysian ringgit Islamic bonds and long-term US dollar loans. The long-term take-out, part of the bond issues, was the largest ever single Malaysian bond issue and one of the largest Asian corporate issues outside Japan.
Mauritania
The Deal:Kuwait Foreign Petroleum Exploration’s $128m acquisition of BG Group’s Mauritanian assets
BG Group was advised on the sale by Jefferies while no external banking advice was given to Kuwait Foreign Petroleum Exploration.
UK-listed energy company BG Group sold its Mauritanian subsidiary, Mauritania Holdings, to Kuwait Foreign Petroleum Exploration Company (KUFPEC) for $128m. Despite making a $4m loss on what BG Group paid for Mauritania Holdings’ assets in 2004, the $128m price tag was above market expectations. The assets, which were performing badly at the time of sale, included a 10.2% stake in the troubled Woodside-operated Chinguetta oil field. In early November 2007, Woodside admitted that it had to cut the field’s estimated reserves by 60%. A planned sale by Premier Oil of its own 8.12% stake in Chinguetta failed last year, making BG Groups’ successful deal all the more praiseworthy.
Morocco
The Deal:Maroc Telecom’s €415m accelerated bookbuild offering
Morgan Stanley was the sole bookrunner.This deal represented 4% of the total shares outstanding of Morocco’s biggest listed company and was structured as a two-day bookbuilding. The bookbuild took place at a volatile time for north African and European share markets and was further affected by the fact that two other sizeable European telecom companies were raising money at the same time.
The French government sold €2.7bn worth of France telecom shares in the same week and the Greek government sold €1.1bn of Hellenic Communication. Despite this competition, the deal was priced at €11.63 per share, a 0% discount to the price as at the last close, and was 1.5 times covered by domestic Moroccan and French investors. The transaction was the largest ever accelerated bookbuild offer on the Casablanca Stock Exchange and the second largest equity offering of a Moroccan listed company. The largest was Maroc Telecom’s 2004 initial public offering.
New Zealand
The Deal:CCMP Capital Asia and Teachers’ Private Capital’s NZ$2.24bn acquisition of Yellow Pages
ABN Amro was sole financial adviser to CCMP; ABN AMRO was also mandated lead arranger, underwriter and bookrunner on the acquisition financing along with Barclays Capital, Calyon and Deutsche Bank. Goldman Sachs JBWere advised Yellow Pages.
A complex transaction, the acquisition of Yellow Pages represents several ‘firsts’ in the New Zealand market. It is the largest ever private equity deal, the largest M&A transaction last year and the largest ever private equity leveraged financing in the country.
The deal was initiated when the share price of Telecom Corporation, the vendor, was under pressure due to several factors, including regulatory investigation into the mobile market’s competition and continued troubles with the Australian business. Technically complex legal agreements were required and their successful negotiation was also key to the transaction.
Nigeria
The Deal:Guaranty Trust Bank’s $750m global depository receipt offer to domestic and international investors
JPMorgan Securities and Morgan Stanley co-ordinated and underwrote the international offer while Afrinvest was the local co-ordinator.Guaranty Trust Bank became the first Nigerian and African bank to be listed on the main market of the London Stock Exchange through the issue of a $750m global depository receipt. The deal, which was open to international and domestic investors, meant GTB had to comply with international equity issuance market practices and requirements – something never before done by a Nigerian bank. The challenges facing GTB included converting from Nigeria’s generally accepted accounting principles to international financial reporting standards. GTB offered $250 million to Nigerian investors with the $500m balance going to foreign institutional and individual investors.
Norway
The Deal:Sparebank 1 Boligkreditt’s €1.5bn 4.5% covered bond due 2010
Danske Bank, Dresdner Kleinwort, HSBC and Merrill Lynch were joint bookrunners.
In a market suffering from an unprecedented crisis, Sparebank 1 managed to re-open the covered bond market with this debut issue. The issue was launched in a distorted covered bond market with widened bid-offer spreads and following deferrals of new issues by established issuers. The transaction also tackled the challenges surrounding a sensitive secondary market. The book was particularly strong, with 67 accounts, and there was very little price sensitivity, with 96% of the price moved from a 5bps spread to a final 4bps. The transaction was well received in the secondary market with follow-on demand seeing the bond tighten by 0.5bps to 1bps.
Oman
The Deal:Privatisation of Rusail Power and Barka2 independent power and water projects
HSBC acted as joint arranger, financial adviser, mandated lead arranger and bookrunner; SMBC was also mandated lead arranger and bookrunner.
This is the first privatisation of a power generation asset in Oman, the largest non-recourse power financing in Oman to date and the longest tenor for a power financing to date at 17.5 years plus a two-year term-out option. The project also achieved a record financial close process of 70 days from signing the project documents to signing of the financing agreements. Given its innovative funding structure combining equity cashflow pooling, traditional limited recourse finance and acquisition finance, the project has set a new benchmark for structuring independent power and water projects in Oman and the GCC at large.
Pakistan
The Deal:Maple Leaf Cement Factory’s Rs13bn balance sheet restructuring and debt re-profiling
Allied Bank was sole financial advisor and lead arranger.This is the largest financing for a cement company in Pakistan, and it was carried out at a time when the cement business cycle was at its low and by only one lead arranger. A well-engineered structure and a timely execution made the transaction a success. The deal was oversubscribed despite the size of the multiple facilities arranged, Rs13bn ($213m), and the scarce appetite of the banking industry for the sector. The pricing was competitive and principal repayments were spread over multiple tenors in alignment with the company’s debt repayment ability.
Panama
The Deal:Newland International Properties’ $220m 9.5% senior secured notes due 2014
Bear Stearns was the sole bookrunner.This landmark deal – the first single-building project financing from Latin America to be executed in the international bond markets – was priced in some of the worst market conditions in recent history. At the same time, seven other emerging market corporate issuances worth more than $3bn were sidelined. Newland was unable to find other sorts of funding, so the ‘Trump Ocean Club’ deal was structured to utilise its strong pre-construction receivables to finance the construction of the building. Despite the extreme market volatility, the deal attracted more than 35 investors from a diverse geographical pool and the bond has performed well in the secondary markets.
Peru
The Deal:Republic of Peru's $1.2bn debt exchange
Deutsche Bank and Citigroup were dealer managers.
Last year’s debt management exercise by the Republic of Peru achieved all of its objectives and effectively reinforced its improving credit story by retiring legacy Brady Bonds. Investors were invited to exchange 9.125% global bonds due 2012 for a reopening of its 8.375% bonds due 2016 or 8.75% global bonds due 2033 and/or tender 2012 bonds for cash.
The Republic also invited owners of outstanding Brady Bonds to exchange for new US dollar bonds due 2037 or tender them for cash. The transactions attracted an unprecedented participation rate in excess of 60%. In one fell swoop, Peru established a new, liquid 30-year benchmark, increased the average life and duration of its external bond portfolio, reduced its stock of debt by about $55m and freed up about $38m in collateral.
Philippines
The Deal:Re-privatisation of Maynilad Water Services and $504m sale to DM Consunji Holdings and Metro Pacific Investment Corporation
ABN Amro was sole financial adviser to the vendor, Metropolitan Waterworks and Sewerage System.
A landmark privatisation transaction in the country, the deal brings Maynilad Water Services back to the private sector, after the government-owned agency MWSS purchased an 83.97% stake in the company following financial troubles in 2005. The same stake has been bought this year by a private sector consortium, reviving investors’ interest in future infrastructure investment opportunities. The transaction was complex and was carried out through a transparent auction process, which should set the standard for future privatisations in the Philippines.
Poland
The Deal: PKO Bank Polski PLN1.6bn subordinated debt issue
PKO self-led the deal, with HSBC Bank Polska and Deutsche Bank Polska acting as joint bookrunners.
When international financial market turmoil struck in mid-2007, other issuers fled the scene. By contrast, Poland’s largest bank, PKO, was not deterred and instead switched its planned subordinated debt issue to the domestic market in October. This was no simple administrative decision, however. The private placement to local institutional funds was the first ever issuance of Lower Tier 2 capital in the Polish domestic debt market, and the bank had to overcome legal hurdles as well as undertaking investor education. Despite the lack of any track record for this kind of instrument in Poland, demand was very strong, allowing the deal to grow from an original PLN1.2bn ($556m). This still left the issue 30% oversubscribed, and tight pricing of 100 basis points over the Warsaw Interbank rate.
Portugal
The Deal:EDP’s reprivatisation and €1.02bn 3.25% exchangeable bonds due 2014
CaixaBI was exclusive financial adviser for Parpública and was joint bookrunner with Morgan Stanley.
The Portuguese government has entered in the seventh phase of energy company EDP’s reprivatisation thanks to the issue of exchangeable bonds by state agency Parpública into EDP’s shares. This structure is highly innovative and complex, and presents several significant advantages to the government, ranging from protection against dilutive events to capital distribution protection. There was a high level of uncertainty in Portuguese financial markets, but this phase of the reprivatisation was carefully chosen to take advantage of EDP’s high share performance, in line with the whole utilities sector. With key accounts seeking high quality issuers, highly rated Parpública turned the financial crisis into an opportunity.
Qatar
The Deal:Alaqaria’s $300m five-year sukuk
HSBC acted as the lead manager and sole bookrunner for the sukuk.The offering represents the first rated sukuk for a Qatari corporate where HSBC acted as the ratings advisor in the exercise as well as advising on structuring the sukuk to receive the same ratings as the company. The sukuk is rated A2/BBB+ by Moody’s and Fitch and is listed on the London Stock Exchange. HSBC, as the sole bookrunner, assisted Alaqaria in achieving its key objective of a diversified investor base. With broad participation by both conventional and Islamic investors the Middle East accounted for 70% of the issue, Europe accounted for 27% and Asia 3%. Banks accounted for 82% of the transaction, fund managers 12% and corporates 6%.
