The best deals in Europe over the past year are celebrated.
Bonds: Corporate
LSEG’s nine-tranche multi-currency bond
Global coordinators: Bank of America, Barclays, Citi and HSBC
Joint bookrunners: Bank of America, Bank of China, Barclays, BNP Paribas, China Construction Bank, Goldman Sachs, HSBC, IMI, Lloyds BankingGroup, Morgan Stanley, MUFG, NatWest, RBC, Santander and Sumitomo Mitsui
Following its acquisition of Refinitiv in a mega $27bn deal in 2019, the London Stock Exchange Group (LSEG) became the world’s largest publicly listed financial market infrastructure and data company by revenue.
This transaction marked LSEG’s return to the capital markets after completing its acquisition of Refinitiv. The proceeds of the bonds included refinancing legacy Refinitiv debt. The US-dollar portion of the deal also enabled it to establish a financing profile in the US market, to match the currency profile of combined group’s revenue.
The complex multi-currency, multi-tranche transaction comprised $4.5bn across five US dollar tranches ranging from three- to 20-year maturities, €1.5bn across three euro tranches ranging from four- to 12-year maturities, and a £500m nine-year sterling tranche. It was the largest multi-currency issuance and the second largest Yankee issuance by a European corporate in 2021.
It was also LSEG’s first euro transaction to be structured for eligibility in the European Central Bank’s Corporate Sector Purchase Programme, providing the company with incremental price leverage.
Over a two-day execution period, LSEG achieved heavily subscribed orderbooks, enabling it to substantively compress the pricing across the tranches.
LSEG also made use of two digital initiatives with the execution of this deal. It used its own in-house presentation tool, SparkLive, for the investor marketing and LSEG Floww, the company’s new digital primary debt capital markets platform to automate bond documentation.
Bonds: Sovereign, supranational and agency
Hungary’s $4.25bn and €1bn triple-tranche bond
Joint lead managers: BNP Paribas, Citi, Goldman Sachs, and JPMorgan
Hungary capitalised on a low-rate environment and strong demand for central and eastern European (CEE) assets with an impressive multi-tranche bond transaction in September 2021.
The three-tranche deal comprised a $2.25bn 10-year, a $2bn 30-year and a €1bn seven-year offering, in what was the sovereign’s biggest ever transaction and the biggest deal from the CEE region in the past five years. Hungary also became the first sovereign to issue a dual currency bond in the international capital markets from the CEE region.
The dollar transaction came first with Hungary repricing and extending its dollar credit curve with its first dollar bond since 2014. Demand proved robust with the orders closing at more than $15.5bn, marking the biggest ever combined dollar order book by Hungary. The strong demand allowed Hungary to compress pricing by 30 basis points (bps) from initial price thoughts to land flat to its secondary curve.
Following the successful dollar outing, Hungary opened books on its euro trade on the next day with demand similarly strong. The books were comfortably covered, with the sovereign able to tighten the pricing. For both the dollar and euro bonds, it was able to achieve its lowest-ever coupons.
The timing of the transaction was also impressive as within a month following the deal, the yields on the seven-year euro and 30-year dollar bonds rose by around 15bps, while the yield on the 10-year dollar bond increased by 30bps.
The deal followed a revised financing plan by Hungary, with up to €4.5bn of net foreign currency bond issuance approved largely for pre-financing needs, following a better-than-expected economic performance.
Equities
Allfunds’ €2.2bn IPO
Joint global coordinators: BNP Paribas, Citi, Credit Suisse, and Morgan Stanley
Joint bookrunners: Bank of America, Barclays, CaixaBank, HSBC, ING, Intesa Sanpaolo, and Santander
Adviser to Allfunds: Rothschild & Co
Allfunds is one of the world’s largest wealthtech platforms, targeted at a business-to-business client base. It operates a market-leading open-architecture platform that provides a digital marketplace for asset management products, matching fragmented demand from distributors (retail and private banks, wealth managers, life insurers and funds of funds) with fragmented supply of those products from fund houses (asset managers). It has approximately €1.2tn assets under administration, connecting more than 1900 fund houses to 1500 distributors in 59 countries.
In April 2021, the company listed on Euronext Amsterdam, selling around 163.7 million shares at a value of €1.8bn. This was followed by a €282m, 24.5 million greenshoe additional allocation.
A thorough early look process prior to launch, with investor meetings and deep-dive sessions, led to a de-risked transaction with a €850m cornerstone investor tranche (39% of total offer size) including BlackRock, Jupiter and Lazard, and created substantial anchor demand. There was broad and thorough post-launch engagement, with more than 900 investor meetings. The offering was multiple times oversubscribed with strong demand from institutional investors globally.
The transaction ranks among the three largest initial public offerings (IPOs) on Euronext Amsterdam in the past five years, and is the largest European finance IPO in the same period.
Financial institutions group financing
DenizBank’s $410m syndicated term loan facility with renminbi tranche
Joint coordinators and bookrunners: Abu Dhabi Commercial Bank, Emirates NBD
Capital and ICBC Turkey Facility agent: Emirates NBD Bank
In June 2021, DenizBank launched a $410m equivalent multi-currency one-year syndicated term loan across US dollar, euro and, significantly, renminbi. The transaction represents the first-ever syndicated loan from a Turkish bank to include a renminbi-denominated tranche.
The renminbi is still a relatively new currency in the international syndication market, but its usage in this context is expected to continue growing. It has now joined the ranks of the top five global payment currencies and its usage as a trade currency between China and Turkey has been growing.
DenizBank, a significant player within local trade finance, already had substantive experience in using renminbi and decided to add the tranche to further support its engagement in international trade activities, as well as bring new international investors into its financing sources.
The proceeds will be used to finance international trade transactions of DenizBank customers, primarily relating to tourism, shipping, export-oriented industries and agriculture.
Despite market volatility, the facility achieved a strong global response with the participation of 16 international banks across the US, Europe, Asia and the Middle East.
Infrastructure and project finance
Dogger Bank C £3bn project funding
Mandated lead arrangers: ABN Amro, Barclays, BBVA, BNP Paribas, Bank of China, Crédit Agricole, CaixaBank, CIBC, CIC, Danske Bank, Deutsche Bank, DNB Bank, DZ Bank, ICBC, ING Bank, Korea Development Bank, Lloyds Bank, Mizuho, MUFG, NatWest, Norinchukin Bank, Rabobank, Santander, SEB, Shinsei Bank, Société Générale, Standard Chartered, and Sumitomo Mitsui
Dogger Bank is an offshore wind farm being developed in three phases – Dogger Bank A, B and C – located between 130km and 190km from the north-east coast of England. Collectively they will become the world’s largest offshore wind farm, powering up to six million homes with an installed capacity of 3.6 gigawatts.
Financial close on Dogger Bank C was reached in December 2021, through the financing support of a group of lenders comprising 28 banks and three export credit agencies. Total senior debt facilities for Dogger Bank C are £2.bn, with ancillary facilities of £435m. With strong interest from lenders, Dogger Bank C was able to secure competitive terms, despite continued impact from the Covid-19 pandemic on the macroeconomic environment.
Dogger Bank C is a 50/50 joint venture between SSE Renewables and Equinor. In November 2021, SSE and Equinor announced the sell down of a combined 20% share in Dogger Bank C to Eni (10% each), with the transaction completing in February 2022. The new overall shareholding in Dogger Bank C stands at SSE Renewables (40%), Equinor (40%) and Eni (20%).
Dogger Bank A, B and C have all been successful in securing contract for difference (CFD) at highly competitive prices. Under the CFD, Dogger Bank B will benefit from inflation-linked fixed price revenues for 15 years based on a strike price of £41.61/megawatt hour. This will be the primary source of repayment for the financing.
The construction of Dogger Bank C will start in the first quarter of 2022, while full power is expected in the first quarter of 2026.
Islamic Finance
UK’s £500m sovereign sukuk
Joint lead managers and joint bookrunners: CIMB Investment Bank, Dubai Islamic Bank, Emirates NBD Capital, HSBC and Standard Chartered Bank
Building on the success of its first sukuk issuance in 2014, the UK government returned to the sukuk market in March 2021 with a £500m five-year offering, using the commonly used al-ijara sukuk structure in line with its debut issuance.
An al-ijara structure uses assets to generate a regular income stream that is used to pay investors an agreed rate of return, in lieu of interest payments. The sukuk was underpinned by rental income from several government-owned properties.
Following a three-day marketing period, which included a global investor call and several virtual group investor meetings, the issuance received strong demand, with the book well covered and oversubscribed. Final orders totalled in excess of £625m.
Allocations were given to a wide range of high-quality investors across diverse geographies. For instance, more than 55% of the sukuk was sold to major hubs of Islamic finance in the Middle East and Asia. UK Islamic accounts also played a strong role, taking a 44% share.
The high-quality orders received from investors enabled the government to issue its second sukuk at more than double the issue size of its first offering, making it the largest sterling-denominated sukuk issuance to date.
The offering increased the supply of high-quality sharia-compliant liquid assets to the market and further supports the development of Islamic finance products in the UK. It also further cements the UK’s position as a leading global hub for Islamic finance outside the Islamic world.
Leveraged Finance
iliad’s €8.8bn acquisition financing
Bridge financing
Underwriters, bookrunners and mandated lead arrangers: BNP Paribas, Crédit Agricole, JPMorgan, and Société Générale
Mandated lead arrangers: Crédit Industriel et Commercial, Credit Suisse, Helaba (Landesbank Hessen-Thüringen), Natixis, and UniCredit
Lead arrangers: Bank of America, Raiffeisen Bank International and Sumitomo Mitsui
High yield bonds
Left lead joint bookrunners: BNP Paribas (euro), JPMorgan (US dollar)
Global coordinators and joint bookrunners: Crédit Agricole and Société Générale
Joint bookrunners: Bank of America, BayernLB, Crédit Industriel et Commercial, Credit Suisse, Helaba, Natixis, Raiffeisen Bank International, Sumitomo Mitsui, and UniCredit
Founded in 1999 by French billionaire Xavier Niel, iliad is an innovative telecoms company and the inventor of the triple-play box, which provides integrated voice, video and data services. It mainly operates in France under the brand name ‘Free’, but has been seeking to expand in recent years. Since 2018, it has been establishing a mobile phone business in Italy and it made a major entry into the Polish market in 2020 with the acquisition of the mobile operator, Play.
The brand has further growth ambitions, and founder and controlling shareholder Mr Niel judged that the brand would be in a better position to efficiently and effectively execute on these plans as a private company. On July 30, 2021, he launched a simplified public tender offer for all outstanding iliad shares.
The offer was supported by a €5.1bn underwritten financing package comprising a €3.6bn bridge to bond facility, a €1.2bn bridge to disposal facility (linked to proceeds expected from disposals of the group’s remaining stakes in joint venture tower companies in France and Poland), and a €300m revolving credit facility. Given the take-private nature of the transaction, the debt was structured entirely at holding company level.
In October 2021, a four-tranche €3.7bn and US dollar-equivalent bond offering was raised by the holding company to finance share purchases, debt refinancing and other related costs. All four tranches were heavily oversubscribed.
Loans
Vonovia’s €22.4bn and €20.15bn bridge facilities
Underwriters, bookrunners and mandated lead arrangers: Bank of America, Morgan Stanley, and Société Générale
Mandated lead arrangers: BNP Paribas, Citi, Commerzbank, Deutsche Bank, Goldman Sachs, ING, Intesa Sanpaolo, JPMorgan, LBBW, UBS, and UniCredit
Vonovia is Europe’s leading private residential real estate company, with a significant presence across Germany, Sweden and Austria.
In May 2021, Vonovia entered into an agreement to acquire Deutsche Wohnen, a leading German residential property company. The completed merger in October 2021 created the largest listed real estate company in Europe, with a portfolio of more than 500,000 apartments.
Vonovia’s acquisition was supported by a €22.4bn bridge facility in May 2021; however, its first offer did not gain the support of a great enough percentage of shareholders (achieving just less than the required 50%) to progress. On August 1 it made a revised offer, supported by a €20.15bn bridge facility, launched in late July.
Before that, in June 2021, the company had successfully priced a €4bn bond offering, whose proceeds had enabled the total size of the facilities to be reduced to €20.15bn.
The final €20.15bn bridge facility was quickly refinanced by €9bn of bond issuances and a €8.1bn rights issue.
The initial €22.4bn bridge was the largest European syndicated loan financing in the past five years.
M&A
Electronic Arts’ £945m acquisition of Codemasters
Financial adviser to Codemasters: Jefferies
Financial adviser to Electronic Arts: UBS
Over the three and a half decades since its founding, UK video games company Codemasters developed a highly successful range of computer games, in particular gaining a niche in racing games such as Micro Machines, the Colin McRae Rally franchise and the F1 franchise.
In December 2020, one of the world’s largest video game publishers Electronic Arts (EA) made a £6.04-per-share all-cash offer to acquire Codemasters, at a total value of £945m. This offer came just over a month after rival publisher, Take-Two Interactive, had made an offer of £4.85 per share, valuing Codemasters at £759m.
Codemasters’ board had previously recommended shareholders accept the Take-Two offer; however, they assessed the EA offer to represent a superior deal and unanimously recommended that instead.
The deal involved complex cross-border negotiations, all during a period when international travel and in-person meetings were not possible. Both parties deployed significant internal resources to due diligence which, alongside the eight-hour time difference, was a significant undertaking for both teams.
The transaction has added Codemasters’ range of racing games to EA’s already impressive roster of sports games, including the Fifa and Need for Speed franchises, positioning it well for continued strength in the this part of the market.
The acquisition is part of EA’s growth strategy focused on delivering more “exceptional experiences and top live services”, as well as reaching more players via different platforms, globally. It is also expected to grow net bookings and EA’s underlying profitability.
Restructuring
Intralot’s €750m notes restructuring
Financial adviser to the noteholders: Houlihan Lokey
Headquartered in Greece, Intralot is a company that supplies interactive gambling services, transaction processing systems and sports betting management services to state-licenced gaming organisations worldwide. Publicly listed on the Athens Stock Exchange, Intralot was active in 41 jurisdictions in 2020, with its US business seen as its main driver for growth.
Pre-restructuring, the company’s capital structure mainly consisted of two series of notes: €250m senior unsecured notes due in September 2021 and €500m senior unsecured notes due in September 2024.
An industry-wide slump triggered by the widespread Covid-19 lockdowns, coupled with a reversal of business fortunes in several of the company’s key markets, caused revenue to dip by more than 16% at the end of 2020.
Amid the looming maturity of Intralot’s €250m notes, Houlihan Lokey was mandated as financial adviser to the noteholders. A deal was then sought with the noteholders to extend the maturity of the 2021 notes and avoid a hard restructuring, which was deemed as value destructive due to the complex nature of Intralot’s multi-jurisdictional corporate structure.
Under the terms of the restructuring plan, holders of the 2021 notes could exchange them at a discount for Ä215m of new secured debt issued, due in 2024, and secured by the firm’s US entity, while the Ä118m of the 2024 noteholders could exchange their notes for a 34.3% equity stake in the entity.
Following extensive discussions and diligence sessions with Intralot, the noteholders signed a lock-up agreement in January 2021, and the transaction was implemented on a consensual, out-of-court basis, without the need to obtain consent of the 2024 noteholders in August 2021.
Intralot was able to refinance the notes due in 2021 and effectively reduce its total debt liabilities by Ä153m, while deleveraging and accelerating the growth of its US business.
Securitisation
Europcar’s €1.7bn pan European rental fleet securitisation programme
Sole arranger and transaction agent ESG adviser: Crédit Agricole
In October 2021, Europcar Mobility Group, one of Europe’s leading vehicle rental companies, completed the transformation of its securitisation financing into a sustainability-linked structure.
The €1.7bn transaction is a refinancing of its securitisation programme linked to its core continental European rental fleet across France, Germany, Italy, and Spain. It represents the largest-ever sustainability-linked securitisation programme linked by assets.
The refinancing was performed in two steps, beginning in July 2021 — first, a restructuring including a maturity extension, followed by the inclusion of sustainability-linked conditions.
The refinancing of the senior notes was successfully placed with nine investors, including one newcomer in July 2021. The programme structure also includes €500m high-yield secured notes, sharing security with the senior notes, but ranking behind in repayment. Once completed, the programme was then amended to include sustainability features.
Under the terms of the securitisation, an interest step-up or step-down mechanism will be applied depending on the achievement of a sustainability key performance indicator (KPI), covering the percentage of green vehicles (emitting less than 50g carbon dioxide/km) within its car and van fleet. The performance of the KPI will be reported annually from 2022 and independently verified. The transaction allows Europcar to demonstrate its ambition in the deployment of its carbon reduction plan.
Europcar first outlined its ‘One Sustainable Fleet Programme’ in 2019 and, to further demonstrate its commitment in these issues, in September 2021 it published a sustainability-linked financing framework including selected KPIs to be measured and reported annually.
Sustainable finance
EU’s inaugural €12bn NextGenerationEU green bond
Lead managers and joint bookrunners: Bank of America, Crédit Agricole, Deutsche Bank, Nomura, and TD Securities
Co-managers: Intesa Sanpaolo and Santander
The NextGenerationEU (NGEU) stimulus package is a more than €800bn temporary recovery instrument to help repair the immediate economic and social damage brought about by the coronavirus pandemic.
Some 30% of NGEU funding is set to be raised in green format, which will turn the EU into the world’s preeminent green bond issuer. This makes its inaugural green transaction under this programme a highly awaited deal by the global audience, and much scrutinised given its potential to fundamentally develop environmental, social and governance (ESG) capital markets.
The process to establish the NGEU green bond framework was extremely complex, given the challenges of coordinating sustainable projects criteria between all the member states, as well as a logistical control framework given proceeds will not be directly controlled by the issuer, but by individual member states. After months of carefully developing the NGEU Green Bond Framework — and after successfully establishing the NGEU curve with several conventional transactions — the execution of the inaugural green bond was a significant success, setting a new record as the largest green bond ever issued.
Despite the size of the deal, the books were still substantially oversubscribed, with more than 500 orders at 11-times book size. In order to facilitate smooth execution, the syndicate pre-defined a group of designated ESG investors who were due to be given preferential allocation treatment, as well as preparing a shadow orderbook in order to facilitate speedy allocations on the day.
A very broad allocation was achieved and a strong pricing result of a 2.5 basis points (bps) ‘greenium’ compared to conventional issuances. The bond has continued to perform strongly in secondary markets, maintaining a spread of 2–3bps through the conventional curve.
