Romania
The Deal:Transgaz’s €65m IPO
RZB was the sole lead manager and bookrunner.The sale of the monopoly gas transportation and distribution company by the government in one of Europe’s fastest-growing economies was always likely to attract investor interest. Even so, this deal, completed in December 2007, set high standards not just for size, but also for innovation and for its compressed timescale – Raiffeissen was only selected to begin the process in April 2007. The use of allotment certificates for the first time in Romania helped cut the time-lag between closing the subscription period and the first day of trading to just a few days. This was all the more impressive, given that Transgaz was the largest listing on the Bucharest bourse up to that time. Moreover, Raiffeissen had received 12,000 orders – another local record – totalling €1.8bn (almost 30 times oversubscribed), with foreign investors accounting for about 40% of demand.
Russia
The Deal:Lion Capital’s $500m acquisition of OAO Nidan Soki
Goldman Sachs was sole advisor to Lion Capital; Troika Dialog was sole advisor to Nidan Soki. As well as advising on the deal, Goldman Sachs was lead arranger for the leveraged loan, alongside UniCredit and VTB.
It was a year of mega-deals in Russia in 2007, including VTB’s blockbuster $8bn dual London and Moscow IPO and massive consolidation in the mining sector. But The Banker’s winner broke new ground, potentially helping to introduce a wider variety of western techniques to Russian financial markets. UK private equity firm Lion Capital’s acquisition of juice manufacturer Nidan Soki for $500m is the largest Russian leveraged buy-out to date, and the first driven by a foreign sponsor, which provided equity to finance between 30% to 35% of the total price. The deal was also the first to employ a range of senior and subordinated loan tranches to finance the transaction, increasing the possibilities for buy-outs of privately held Russian companies.
Saudi Arabia
The Deal:Dar Al-Arkan Real Estate Development’s SR3.33bn IPO
Samba was the sole financial adviser, lead underwriter, bookrunner and lead manager; Arab National Bank, Riyad Bank and Saudi British Bank were co-underwriters.
The Dar Al-Arkan IPO, with an offer size of SR3.3bn ($900m), marked the largest bookbuilding exercise in the Saudi capital market to date and also the first major real estate development company to go public on the Saudi market. With overwhelming demand for the offering, with a hit ratio of 74% for the institutional tranche and about two million retail subscribers bidding for more than SR14bn in total volume, the deal was 4.23 times oversubscribed. The offer structure was 70% to Saudi institutional investors and 30% to retail investors.
Serbia
The Deal:Restructuring and €220m privatisation of DDOR Novi Sad
BNP Paribas was sole financial adviser to the Serbian government and some minority shareholders.The privatisation of DDOR Novi Sad had already been postponed in late 2006 due to parliamentary elections. The political environment remained volatile even after elections in January 2007, as parties took several months to form a coalition government. This was not the only complication that BNP Paribas faced in preparing Serbia’s second largest insurer for sale to a strategic investor. The state’s 83.3% holding was subdivided between the national Deposit Insurance Agency, other financial institutions, and ‘social shareholders’, including pensioners and employees. This necessitated a complex tender process to navigate the vestiges of the old Yugoslav legal system. Despite these complications, the winning bidder, Italian insurer Fondiaria, paid 1.9 times written premiums to obtain a market share of about 30% in the Serbian insurance sector.
Singapore
The Deal:Sealane (Trade Finance)’s $3bn synthetic securitisation
Lehman Brothers and Standard Chartered Bank were co-arrangers, joint lead managers and bookrunners.Creating a product or opening a market for the first time always deserves an award. This was the first ever public synthetic securitisation of trade finance loans globally and the largest securitisation in Asia, excluding Japan and Australia, in 2007. The banks involved successfully attracted strong demand across the capital structure. The deal saw its size increased twice from the initial $2bn to $2.5bn and then to $3bn, despite challenging market conditions. A good number of investors participated in the transaction, which was distributed globally and gave international participants exposure to Asia, in a market filled with US and European securitisation deals.
Slovenia
The Deal:Republic of Slovenia €1bn 4% benchmark bond due 2018
Dresdner Kleinwort, UniCredit and Société Générale were joint bookrunners.Slovenia’s bond issue in March 2007 had remarkable significance not just for the country, but for the whole CEE region. It was the sovereign’s first benchmark-sized issue denominated in euros, and equally important, the first time Slovenia could borrow in euros as a local rather than a foreign currency. Slovenia was the first of the 10 countries that joined the EU in 2004 to qualify for eurozone entry, adopting the single European currency in January 2007, and the other nine are queuing up to follow it. A healthy investor reception was assured, given sovereign’s AA credit quality and the scarcity value of its paper – this was its first international issue for more than five years. Even so, the deal was notable for winning real money allocations of about 65%, and a diversified geographic base of investors, with no single country accounting for more than 30% of distribution.
South Korea
The Deal: Kexim’s $1.5bn global bond offering
ABN AMRO, BNP Paribas, Merrill Lynch and Morgan Stanley were joint lead managers.The first high-grade deal out of Asia since the subprime crisis, this deal re-opened the G3 currency-denominated markets in Asia after three months of market turbulence and set a benchmark for other Korean and Asian issuers to follow. The transaction also represents the largest non-governmental transaction from the country. Sounding the market before launch helped reduce any potential risk. Once launched, the deal attracted strong interest from a broad base of investors, which pushed the deal size to the final $1.5bn and resulted in a three times oversubscribed orderbook and a price that reached the tight end of the range.
Spain
The Deal:Enel and Acciona’s €42.52m joint acquisition of Endesa
Credit Suisse, Goldman Sachs, Dresdner Kleinwort, UBS, Morgan Stanley, Mediobanca, Lazard, Credit Suisse and Santander Investment advised Enel; JPMorgan, Deutsche Bank, Citigroup, Lehman Brothers, BNP Paribas, Credit Suisse and Merrill Lynch advised Endesa.
Long fought takeover battles always grab headlines. This, the largest ever utility deal, lasted 19 months and started with a bid from rival Gas Natural. The subsequent successful offer by Italy’s Enel and Spain’s Acciona includes an agreement with E.On – another potential bidder – for the disposal of some of Endesa’s assets in Spain, Italy, France, Poland and Turkey to the German energy group. The deal created an international energy group with a large customer base and a healthy energy generation mix. The combined company is well positioned in high growth markets, such as Latin America, and brings together complementary skills and assets.
Sri Lanka
The Deal:Republic of Sri Lanka’s $500m 8.25% fixed-rate notes due 2012
Barclays Capital, HSBC and JPMorgan were joint lead managers and joint bookrunners.
This inaugural sovereign bond issue enabled Sri Lanka to establish its first benchmark in the international capital markets, diversifying its investor base and raising the country’s profile. The banks involved deserve praise for having successfully distributed a new name with an imperfect credit backdrop in turbulent market conditions and despite political opposition to the deal and civil turmoil in the country. The deal was 3.2 times oversubscribed and a total of 136 investors recognised the appeal of this rare Asian high-yielding sovereign debt. The transaction helped re-open the sovereign and high-yield markets in Asia, excluding Japan and Australia.
Sweden
The Deal:Borse Dubai/NASDAQ’s $4.9bn acquisition of OMX
ABG Sundal Collier and HSBC advised Borse Dubai; JPMorgan and SEB Enskilda advised Nasdaq; Credit Suisse, Lenner & Partners Corporate Finance, Morgan Stanley and Lazard advised OMX.
Stock exchanges are increasingly becoming an international game. The latest deal towards consolidation was struck with the acquisition of OMX by Borse Dubai and its sale onto Nasdaq in exchange for a 20% stake in Nasdaq and a 28% stake, owned by Nasdaq, in the London Stock Exchange. As part of the deal, the US exchange has also become a strategic shareholder in the Dubai International Financial Exchange with a 33.33% stake. The new Nasdaq OMX group is the world’s largest exchange company, with operations in both developed and emerging markets.
Switzerland
The Deal:Swiss Re’s £500m 6.30% perpetual hybrid Tier 1 notes
Barclays Capital, Deutsche Bank and UBS were joint bookrunners.During turbulent times, any temporary stable market condition must be taken advantage of. Thanks to meticulous organisation, Swiss Re successfully launched its inaugural benchmark sterling hybrid Tier 1 notes at short notice, when windows of stability were identified. The choice of sterling as the issue currency provided investor and market diversification and arguably a better execution than euros or dollars would have allowed, as Swiss Re had previously issued subordinated debt in both currencies. The notes’ structure, a perpetual, non-callable 12-year fixed-to-floating rate step up, was designed to bolster the company’s capital ratio.
Taiwan
The Deal:Oaktree Capital’s T$8.08bn Fu Sheng buy-out financing and $3.46bn bridge financing for Fu Sheng’s shareholders
Chinatrust Commercial Bank, Taishin International Bank and Mega Commercial Bank were joint bookrunners.
This deal’s loan financing was arranged in a very limited period of time for the first buy-out of a Taiwanese-listed company by an international private equity firm. The term loan pricing and structure were adjusted to reflect the target’s relatively low debt-to-Ebitda ratio but still remained palatable to the syndication market. In addition, the arrangers set up a bridge loan for Fu Sheng’s major shareholders to swap their shares to the acquirer. The bridge loan used a trust vehicle to mitigate the performance risk and streamline the settlement procedure.
Tanzania
The Deal:Tanzania Electricity Supply Company’s (Tanesco) TZS3bn six-year syndicated loan
Stanbic Bank Tanzania was mandated lead arranger. CRDB Bank and National Microfinance Bank were co-arrangers.
Stanbic Bank Tanzania had to overcome a series of hurdles to complete this deal. The borrower was a loss-making state-owned electricity supplier, which had just taken on a new management team and was in need of capital to fund an urgent recovery plan. Although Tanesco’s initial target of TZS3bn ($240m) was not achieved, Stanbic managed to raise $183m in local currency making it the single largest commercial loan arranged in east and central Africa. All the money raised came from local banks and institutions and the deal marked the first time the Tanzanian government has used the private sector to raise money for critical infrastructure.
Thailand
The Deal:PTT Exploration and Production’s Bt12.5bn triple tranche bonds
Bangkok Bank, Barclays Capital, Siam Commercial Bank and Kasikornbank were joint lead underwriters.Despite volatile bond market conditions, in response to the Bank of Thailiand’s neutral outlook in May, the deal attracted strong investor interest and generated an almost twice oversubscribed orderbook. Demand came from a good mix of investors. If the 31 institutional investor accounts are a good result, even more significant is the high number of retail investors: more than 2000. This is the first public offering for the company and the strong retail investor base that it helped create will pave the way for future fund raisings. This includes a Bt5bn ($159m) 3.6% tranche due 2010, a Bt3.5bn 3.91% tranche due 2012 and a Bt3bn 5.13% tranche callable in 2012 and due in 2022.
Turkey
The Deal: Halkbank’s $1.85bn IPO
Goldman Sachs acted as sole global co-ordinator and sole global bookrunner. Is Investment acted as domestic co-ordinator and bookrunner and UniCredit acted as a lead manager.
This $1.85bn IPO represents the largest on the Istanbul Stock Exchange to date and the largest in continental Europe in the first half of 2007. Strong demand was generated from both domestic and international investors with the base institutional deal ten times oversubcribed at the offering price and 51,655 retail investors placing demand, representing the largest retail demand for any Turkish IPO. The global offer was made of three tranches, 69.5% to international institutional investors (led by the UK with 37%, the US with 30%, Kuwait with 16% and continental Europe with 15%), 0.5% to Turkish institutional investors and 30% to Turkish retail investors.
UK
The Deal:Tata Steel’s £6.2bn acquisition of Corus Group
Deutsche Bank, ABN AMRO and Rothschild advised Tata; Credit Suisse, JPMorgan and HSBC advised Corus.Deals where the target company is bigger than the acquirer are not common. Indian steel producer Tata Steel managed to do just that when it acquired Corus Group, the largest steel producer in the UK and the Netherlands. The deal created an international powerhouse with great scope for future growth. The transaction was the largest ever overseas investment by an Indian company and the process became hotly contested when Brazil’s Companhia Siderúrgica Nacional launched a counter offer. Effectively navigating the intricacies of the UK Takeover Panel secured a successful auction process which helped to resolve the bidding battle. The acquisition was also accompanied by a large and complex non-recourse finance debt facility that ensured the success of the bid and demonstrated Tata’s ability to tap the debt markets.
Ukraine
The Deal:Galnaftogaz’s $50m senior mandatory convertible 5% convertible notes due 2012
Citigroup was the sole bookrunner.In a difficult period of post-election investor uncertainty, Citi set a remarkable precedent to allow Ukraine’s third largest petrol retailer to raise low-cost equity capital before a planned IPO had taken place. The deal was the first pre-IPO convertible bond in the CIS region, issued successfully to equity, fixed income and hedge funds in choppy market conditions in November 2007. The choice of instrument was vital, as Galnaftogaz needed to raise financing to expand its retail distribution network, while leaving room to incur further debt from its bank creditors. If no qualified public offering occurs, investors will benefit from the added protection of a step-up coupon from year two and a put option at par from year three. In practice, Galnaftogaz announced plans in February 2008 for the IPO itself, to take place on the London Stock Exchange in 2009.
Uruguay
The Deal:Republic of Uruguay’s UYU12.1bn 4.25% inflation-linked global peso bonds due 2027
Deutsche Bank and Merrill Lynch were lead managers.The Republic of Uruguay’s landmark offering of 20-year global inflation-linked peso bonds was the largest ever bond linked to the Uruguayan inflation index, Unidad Indexada, and was a key milestone for the government in diversifying away from dollar debt and increasing its proportion of peso funding. So attractive was it to investors – more than 60 accounts participated in the offering – that the structure received $900m-equivalent orders within fewer than two hours. By the time the books closed, the order was four times oversubscribed, at $1.35bn equivalent, allowing Uruguay to upsize its offering from $300m equivalent to $500m while achieving pricing at 4.25%, the tight end of guidance.
US
The Deal:Sabic’s $11.6bn acquisition of GE Plastics
Citigroup was the sole advisor to Sabic; Goldman Sachs and Lehman Brothers advised GE Plastics.Though some would suggest that Sabic overpaid for its GE acquisition at the top of the market, The Banker believes that the deal will be well worth it for the Saudi corporation. GE Plastics will be critical in building its global franchise. Reaching the elusive US market for polymers could be one of the greatest obstacles in the expansion of Saudi Basic Industries Corporation, and GE Plastics should help Sabic get its foot in the door. Many see this deal – the largest acquisition by an Arab company of a foreign rival – as strategically important for Sabic and another example of the continued reversal of global capital flows. Just the integration of the largest US engineering plastics firm into the organisation represents an organisational achievement virtually unprecedented for a Saudi Arabian business.
Zambia
The Deal:Zambia Sugar’s ZMK608bn term debt facility
Citigroup and Standard Bank were joint mandated lead arrangers.The deal was the largest Kwacha-denominated facility raised for a Zambian corporate borrower. It was equivalent to $160m. The deal was completed in two tranches comprising an onshore-placed syndicated portion and an offshore placement. Zambia Sugar’s key requirement was to raise as much as possible in the form of local currency debt. This was achieved by beefing up offshore interest in the deal. The money will part fund an ambitious expansion programme by Zambia Sugar, which hopes to double its sugar production by 2012.
