Best Domestic Investment Bank
CICC is a vital part of any major Chinese privatization. Its participation in these deals has become almost as predictable night follows day. One reason for this is that CICC is uniquely placed to understand the political angle of these incredibly important deals. No foreign investment bank is able to understand (as CICC does) what is politically possible and what is not in these vast restructurings all of which involve the shedding of jobs. Working in conjunction with Goldman Sachs and Morgan Stanley, it has made these deals possible and sits at the top of any China league table, having participated in the successful privatizations of China Unicom and Sinopec, as well as China Mobiles $6.9 billion new capital raising. With less than 200 staff, it is one of the most profitable institutions per capita in Asia.
Best International Investment Bank
This was one of the most competitive awards. Morgan Stanley retains this award thanks to quality of the deals it brought to market in the time period, and also thanks to the mandates it has in reserve. The $5.65 billion privatization of China Unicom was our equity deal of the year in 2000 (as well as our Best IPO and Best Privatization). Simply put, it was a flawlessly executed deal that saw the Morgan Stanley machine at its best. Then there was the $3.46 billion IPO for Sinopec, which again managed to be timed to perfection and exhibit excellent execution. In both cases, Morgan bought the smaller of Chinas two national players (PetroChina being bigger than Sinopec, and China Mobile being larger than China Unicom). However, this disadvantage did not hinder Morgan, which sold their stories with aplomb. It also participated in Chinas highly successful $1 billion bond and has the mandate for China Telecom which promises to be one of the biggest privatization processes of all. The deal may even require Morgan to advise China on how to create its own Baby Bell system and privatize each of them separately. It also has the mandate for China Aluminium.
No firm in Hong Kong has the breadth of HSBC. While many of its rivals are excellent investment banks, they tend to focus on only a few key clients. Moreover, in a period in which debt has been the key theme, the dominance of HSBC in this area stands out. HSBC has launched major benchmark bond deals for Citic Pacific, Hongkong Land and the MTR. It is also the rating advisor to the Hong Kong Mortgage Corporation, which will become one of the SARs biggest and most frequent issuers. Moreover, it has been mandated to lead the forthcoming Hongkong Telecom bond, which is set to be the largest corporate bond in Asian history. Last year, HSBC launched a $1.5 billion convertible for PCCW and took part in the only major equity deal, the privatization of MTR by leveraging its unique ability to place paper with retail investors. HSBC listed Star Cruises in Hong Kong and also launched the Henderson Cyber offer. On the advisory side, it reorganized ICBCs Hong Kong operations (a $360 million deal), and advised Hutchison Whampoa on its $210 million 3G deal with Telecom New Zealand in Australia, as well as advising DoCoMo on raising its stake in Hutchs telecom business.
This was another very closely fought award. Why? Well, India is blessed with excellent investment banks and highly talented people. In the end, we concluded that Kotak Mahindra, the Indian firm that is 25% owned by Goldman Sachs, has truly excelled. It led the largest equity issue by an Indian corporate in our time period for Hughes Tele.com, a $191 million IPO. This success was followed by deals for Indian Overseas Bank and Vijaya Bank. Meanwhile, it originated the Rediff.com ADR deal for Goldman Sachs. The firm really excels in the M&A arena too, the most exciting growth component of India Inc. In a $228 million deal, it helped to reshape the mobile phone industry by advising Hutchison on its acquisition of cellular circles in Calcutta and Gujurat taking it from 250,000 subscribers to 750,000, making it Indias biggest player. It also played its part in the reconfiguration of the cement industry by advising Lafarge on its $170 million acquisition of Raymonds cement division, helping Lafarge to double its capacity and gain a position of strength in Eastern India. It also advised on one of the largest M&A deals in the engineering industry when Hindustan Motors sold its earthmoving division to Caterpillar. Likewise, it helped the UKs Powergen to dispose of its Indian assets. Perhaps most significantly, it pioneered Indias first white knight defence as it advised Gesco Corporation against a hostile bid. In its presentation, Kotak Mahindra included a series of signed testimonials from its many satisfied clients, surely the greatest accolade of all.
CSFB has built an astounding franchise in Indonesia since the Asian crisis. The government sees it as a valued advisor, as is indicated by the mandate it holds to launch the IPO of Bank Mandiri, Indonesias largest bank. Moreover, CSFB was brought into help the government understand how it could reorganize its telecoms sector in a more sensible way. CSFBs advisory team then went on to execute the asset swap between Indosat and PT Telkom. That, in many respects, has been one of the best M&A transactions of the year so far, creating a truly win-win situation in which both companies are fundamentally more attractive to investors and less politically-influenced than in the Suharto era. As well as this, it advised on PT Bimantara Citras sale of 15.53% in PT Nestle Indonesia to Nestle, and on the $400 million sale of 61% of PT Indocement Tunggal Prakarsa to Heidelberger Zement. That followed CSFBs advice to the Indonesian cement company on how to restructure its $1.1 billion of debt. With this track record, it was natural that APP would turn to CSFB to lead its $12 billion debt restructuring, the largest in any emerging market.
Nikko Salomon Smith Barney
A hybrid US Japanese investment bank appears to have come of age -- and its name is Nikko Salomon Smith Barney. Few would have predicted that the tie up between one of Japans biggest brokerage houses and one of the worlds premier investment banks would have gone so well. Cynicism abounded, but nowadays even competitors grudgingly admit that the new entity is a powerhouse. It has stormed the Japanese equity capital market, gaining a market leading position in underwriting equity offerings. One internal calculation that the firm uses to measure its success, is the fact that it has engaged in underwriting equity for three-and-a-half times more clients than all the other foreign firms combined. Landmarks are obviously the $11.4 billion sixth privatization tranche for NTT, and an $8.9 billion offering for DoCoMo, as well as key deals for Mitsubushi Estates and Konami. It also led the first global dollar bond for a Japanese issuer for three years the $675 million Takefuji issue. On the M&A front, it is growing its franchise, although its strength in this area is not yet (relatively speaking) as formidable as in ECM. It did advise ATT Wireless on the sale of a 16% stake to DoCoMo for $9.8 billion and on the sale of Verio to NTT Communications, as well as on the interesting acquisition of a 60% interest in People Co by Konami one of the first M&A transactions to be driven by Japans move to newer, more transparent accounting standards. Overall, Nikko Salomon Smith Barney has shown the power that can be created when you put the best global standards in a Japanese context.
CSFB has 18 investment banking professionals wholly dedicated to Korea. And given the quality of the business it is winning, it shows. Since June, it has led five bond issues from Korea worth $841 million, including the Y50 billion of Euroyen for Chohung Bank and Hanvit Bank, a $250 million Eurobond for SK Corp (the first fixed-rate US dollar deal from a Korean issuer in 2001) and an upper tier-two bond offering for KEB. Its $467 million exchangeable for Hyundai Motors into Kia, was followed by a mandate to launch a $200 Eurobond for Kia. Likewise, it was mandated to launch a bond for LG Caltex just after the June 11 close for this years submissions. Last year it launched the first ever triple A exchangeable notes from Asia with the $352 million IBK exchangeable into Korea Tobacco and Ginseng, and on the M&A front, a great year was capped by the advisory work it did on the sale of 10% of Hyundai Motor (for which CSFB is the house investment bank) to Daimler Chrysler. What made CSFBs pitch all the more compelling this year was the 10 testimonials the firm obtained from some of the most significant figures in Korea, all of whom praised the firms excellence.
Malaysia is an interesting investment banking market, which unlike many others in Asia is less of a focus for many international investment banks. Fortunately Malaysia has CIMB, which is at the heart of every major transaction, and is able to leverage its unique political connections to the full. Little wonder that in 2000, it earned record profits of M$210 million (pre-tax). Moreover, in the first quarter, profits were M$71.8 million, an increase of 33% compared to the year before. Between June 2000 and June 2001, it sponsored 12 out of 40 new listings on the Kuala Lumpur Stock Exchange, and advised on two out of three new listings on the MESDAQ. It raised over M$3 billion in funds for its clients via 12 IPOs, 7 rights issues and 8 special issues. Its corporate finance team has 70 professionals, far more than any foreign firm can boast and so one should not be surprised that it advised in four out of 10 banking mergers (including the merger of Public Bank with Hock Hua Bank). It also advised on the restructuring of Time Engineering, on Phileo Allieds move into the postal industry (via its acquisition of POS) and on the restructuring of the Berjaya group. Most significantly, it was the only Malaysian house involved on Tenagas $600 million 10-year global bond, working alongside HSBC and Lehman Brothers. This has truly been a year of achievement for CIMB.
There is one investment bank that is truly committed to the Philippines through good times and bad and that is ING Barings. With its 17 corporate finance staff on the ground and its immense track record with corporates in the Philippines, it is a permanent fixture in the local scene. In a year in which new equity issuance has been scarce thanks to the recent turmoil putting investors off this has been a period more dominated by M&A advisory. Thus, in September, ING Barings advised First Pacific on its acquisition of a 7.8% stake in PLDT from Metro Pacific for $275 million; on the sale of a majority stake in Lucky Star Gaming to iVantage; on the sale of Metro Pacifics 81% stake in Steniel Corp; and on the sale of a 34% stake in Chinatrust Philippines to Chinatrust. Moreover, it also advised the government on the sale of its stake in the Philippine National Bank. And when the board of Equitable PCI sought interest from potential acquirers, it mandated ING Barings to do the job. What we particularly respect about ING Barings in the Philippines is the sheer amount of repeat business it does for top clients such as PLDT, Smart, Petron, SM Prime, Meralco and JG Summit.
The manner in which UBS Warburg has committed resources to Singapore and methodically built its franchise with intelligence and skill is worthy of note. For the purposes of these awards, some may carp that many of the privatizations it has been mandated for have not been executed in the timeframe we allocate to these awards. However, we did specify that we would give credit for key mandates that have yet to be executed. In UBS Warburgs case, it has truly earned the trust of the government so much so that it has become the first bank to win three consecutive privatization mandates. It successfully led the deal for SMRT, (the first ever IPO by a mass transit urban railway), and subsequently this deal became one of the best performing of the year. It was then mandated to privatize Singapore Power and PSA, which owns and operates the Port of Singapore. As the awards were closing, it won advisory and capital raising mandates for the bank which is leading the consolidation process in Singapore, OCBC. In what has become one of the most competitive investment banking markets in Asia, UBS Warburg has not only secured a place at the top table, but is a force to be reckoned with.
Goldman Sachs is a truly dominant force in Taiwan, where it commands a leading position in investment banking league tables, with a diverse spread of M&A, equity and convertible bond business. The fact that the senior figure in Taipei, Hsueh Sung, is also vice-chairman of Goldman Sachs Asia says a lot about how much emphasis the bank places on Taiwan. In the past year, it has launched a $1.7 billion ADR for TSMC, an ADR for Advanced Semiconductor Engineering, two convertibles for Compal Electronics and one for Hon Hai Precisions worth $345 million. Meanwhile it also has the mandate for Chunghwa Telecom, a privatization that has so far proven challenging, but is one which the government knows Goldman is one of the few firms capable of carrying off. On the M&A front, it advised on DoCoMos acquisition of a 20% stake in KG Telecom and on StarTVs 20% investment in Koos Cable Systems. In May, it advised on Taiwan Cellulars acquisition of TransAsia Telecommunications, bringing together the leading nationwide mobile operator with a strong regional operator in Southern Taiwan.
Lehman Brothers is one of the few investment banks to remain committed to Thailand, at a time when many have refocused their operations on North Asia. Indeed, Lehmans CEO and chairman Richard Fuld visited Thailand in May and committed to increase its investment in its Thai banking business by 20%. Lehman's role in the privatization of the Ratchaburi Electricity Generating Company, one of the most significant South East Asian deals of last year, and the largest project financing transactions in Thailand, was critical. The privatization saw the company IPO raise Bt60 billion of debt financing, with the firms help. The firm also advised Starwood Hotels on its bid to become the largest shareholder (with 44%) in the Royal Orchid Hotel. It also advised Thai Olefins on the restructuring of its $349 million of debt. Significantly, it advised PTT Exploration and Production on the acquisition of the 26% of outstanding shares in Thai Oil. Indeed, it is a mark of the firms quality that Lehman has executed nine transactions for PTT and six for EGAT since 1995. Quite simply, the best Thai clients trust Lehman to get things done.
This award was open to all investment banks working in a particular country, and was seeking to discover the best firm at leading equity capital markets transactions (foreign and domestic), international debt issuance (in dollars and euros) and in advisory and M&A. We stated that banks should inform us of any key mandates it has been awarded that show its forward momentum beyond our rather arbitrary time period of June 1 2000 to June 11 2001. We asked banks for details of significance deals, league tables and where necessary, client testimonials to attest to their quality. In China, we made the exception that we would split the award into Best Domestic Investment Bank and Best International Investment Bank to reflect its somewhat unique circumstances.