Best Bank/Best Commercial Bank
Citigroup is the strongest financial institution in the world and in Asia its reach is unparalleled. Its extensive product range matches its enormous geographic breadth. 2002 has been another dominant year for the group in all its commercial and investment banking activities. Indeed it is the melding together of these two areas of the business under the one name of Citigroup that clients find so attractive.
In core lending, Citibank continues its position at the head of the Asian banking table. The bank has a huge appetite for credit and has been involved in the biggest and most complex loans of the year. In transactional banking services surrounding FX, cash management, short-term finance, derivatives and securities services, the bank is also remarkably strong.
This year has also been a fantastic year for Salomon Smith Barney on the investment banking side of the business. The team has completed some of the highest profile deals of the year and is towards the top of the debt, equity and M&A league tables. Combining this array of talent with the huge loan capacity of the group is a very powerful tool for Citi and its clients. Indeed over the course of the year, Citigroup has raised over $20 billion for its clients in debt, loan, equity, equity linked and M&A deals. It is a prodigious performance.
What perhaps sets Citigroup apart from most of its peers is its ability to serve its clients and its shareholders at the same time. There is a general perception that banking is a zero sum game in Asia, where you do not make profit if you want to win business. In Citigroup's case, this is not true at all. In the first nine months of 2002, the group made just over $1 billion in Asian profits. This is a huge number for a foreign bank to earn in a difficult market. And perhaps most impressive is that its earnings are 11% up on last year.
Despite all the problems that Citigroup's universal banking business model is having in the US, in Asia the success of the team shows that the model works. The full service banking relationship is one that obviously makes sense and as Asian companies grow and develop, they will need the financial strength and acumen of an institution like Citigroup.
Best Investment Bank
For the third time in six years, Goldman Sachs scoops the top prize and is named FinanceAsia's Best Investment Bank in Asia. In a year that has been characterized by weak and choppy markets, Goldman Sachs has been involved in nearly all the landmark deals for which the year will be remembered. It has dominated the markets in equity, equity-linked and M&A and been involved in all the most significant transactions of the year.
These transactions include (among others): the IPOs for Bank of China (Hong Kong) and Maxis; the sale of Taipei Bank to Fubon Financial; Hutchison Whampoa and Singapore Technologies acquisition of Global Crossing; the SK Telekom combined exchangeable and ADR; Nissan's acquisition of 50% of Dong Feng Motors; and the Hana Bank - Seoul Bank merger.
Indeed, not only were these deals groundbreaking transactions, but many were for clients using Goldman for the first time.
It is not just about doing one off deals, however. Goldman has long made a point of nurturing strong and enduring relationships with key clients in the region. This year it has continued its record of doing repeat business for some of the largest companies in Asia as they seek to grow into global champions. These clients include Petrochina, China Mobile, TSMC, Hutchison Whampoa, SK and DBS. Indeed this year Goldman has done deals for 36% of the top 25 companies in the FinanceAsia 100 - our index of Asia's bluest chip companies based on profitability.
The one dark spot in its franchise appears to be in the public bond markets, where it has undoubtedly been weak. However, this is clearly a decision Goldman has made for reasons of profit. It claims its debt business makes a lot of money on the private placement and derivatives side.
Despite this, the truth remains that in these difficult markets, Goldman is the firm that clients turn to for advice. It remains the bank that all others aspire to beat in any bake-off and it has a consistent track record of dedication to Asian investment banking.
One area of note this year has been the growth of its Korean franchise. Korea has been the biggest source of Asian investment banking fees and this year, Goldman has made a successful push to gain market share in equity, M&A and even public debt.
For investment banking head, the sparky Michael Carr, for whom Korea was a priority, it must be an extremely gratifying result as he finishes his second full year in Asia. For Goldman big man, Richard Gnodde, he can take satisfaction that his team has enhanced its position as the leading equity capital markets and M&A franchise in the region.
Borrower of the Year
Federation of Malaysia, $540 million syndicated loan, $600 million Sukuk issue and $750 million bond
Malaysia and its blue chip credits have virtually swept the board across our Deal Awards announced earlier this week and in many ways it is only fitting the government itself should win the category for Borrower of the Year. Malaysia's careful and consistent approach to its international borrowings has never been more evident than this year, which has seen it complete three well-priced, well-timed, landmark transactions. With a flow of positive information emanating from the country, the sovereign has been able to ride on the back of the upgrades, which have followed to launch a series of successful transactions.
These started right at the beginning of the year when it returned to the syndicated loan market with a $570 million seven-year deal that carried one of the longest tenors and most competitive pricing the country has been able to achieve since the financial crisis. Mandated co-ordinating arrangers for the loan, which closed in March, were HSBC, Bank of Tokyo-Mitsubishi, Barclays Capital and Maybank. Headline pricing came in at 56bp over Libor, with the market offered the deal at an average all-in of 62bp over Libor at a time when a comparable sovereign bond was trading around the 100bp level.
With few of Malaysia's top names accessing the loan markets, the deal was well received in general syndication from both Labuan and offshore banks, leading the underwriting commitments of the mandated arrangers to be scaled back approximately 60%.
Then in March, Malaysia was responsible for one of the best days on record for the Asian bond markets, when investors flocked to a re-opening of its July 2011 bond led by Morgan Stanley and UBS Warburg. The huge wash of liquidity propelling the success of every successive Asian bond deal was exemplified by the reception to the then Baa2/BBB rated deal. Pricing at 6.8% represented the lowest borrowing cost the issuer had ever achieved for a benchmark dollar offering. Its deal was underpinned by a huge order book both in terms of overall size and number of investors participating.
Cleverly it was also timed to coincide with the announcement that Standard & Poor's was changing its outlook from stable to positive. With a total deal size of $1.75 billion, the 2011 bond now marks Asia's most liquid sovereign benchmark and as such attracted a high quality order book where 10 accounts alone accounted for over $1 billion in demand.
But perhaps the deal, which stands out above all others and the one, which the government is thought to feel most proud, is its $600 million Global Sukuk deal of June. Led by HSBC, which is fast becoming the strongest player in the Malaysian market, the deal underlined the government's commitment to develop the Islamic finance market and highlighted its innovation and structuring skills. The winner of our Most Innovative Capital Markets Deals, the five-year deal represented the world's first global Islamic bond issue and was able to price flat to the sovereign curve.
Most Improved House
We don't normally give an award in this category and only give it in years where we see evidence of an astounding sea change in a firm's performance.
In this case, we have seen just such a change in ABN AMRO's investment banking operations. It seems that the new strategy - and the reorganizations of 2000 and 2001 - have finally paid dividends.
Broadly speaking, the strategy was a simple one. The firm created industry groups that ran across investment banking and commercial banking. It then sought to use its balance sheet to lend to selected customers, and use this lending relationship to win high margin investment banking mandates.
It's a simple strategy - and by no means unique - but ABN has managed in 2002 to get it to work.
Obviously, the franchise deal in this respect was the highly successful Maxis IPO (see our deals of the year section). Suffice to say that ABN did a series of work for this client; advising it how to buy back a stake from BT; gave the bridge financing; the syndicated loan; and finally became global coordinator on its IPO.
Likewise, it did a syndicated loan for Mobile One, and later the IPO.
Yet again, it has an important relationship with Hutchison Whampoa (thanks to its European 3G loan exposure); and then managed to get the mandate to advise it on buying Europe's leading health and beauty retailer, Kruidvat for $1.3 billion - and organized the acquisition finance.
In Malaysia, it advised IOI on its $213 million acquisition of Unilever's Loders Croklaan and also did the financing. Meanwhile it has continued to work with San Miguel, and advised TransAsia Pipeline on its $188 million acquisition of Transgasindo in Indonesia.
These successes helped it to win key roles on the future privatizations of Bank Mandiri and Nalco.
All in all, a breakthrough year for ABN AMRO, and one which must taste to investment banking supremo, Richard Orders somewhat like a 1945 Mouton Rothschild.
What could set the firm back in 2003? Obviously, the management in Amsterdam would be top of the list. But left to its own devices, the Asian operation definitely has the potential to build on the success it has achieved this year, and do even better in the coming 12 months.
Best Equity House
The firm's dominance of the league tables has made Equity House one of the easiest awards to judge this year. At the time we came to make our decision, Goldman had raised $6.6 billion in straight equity during 2002, more than twice the amount of its nearest competitor. In equity-linked it has also had a strong, if sometimes controversial year, raising $2.6 billion, again the number one bookrunner by volume.
Friends and 'friendly competitors' alike ascribe its success to two main factors. Firstly the firm has always had something of a stranglehold over the region's top clients like TSMC and Standard Chartered, plus an unerring ability to pick winners like Maxis and Kookmin Bank. Secondly in ECM, it has a strong and experienced team under the leadership of John Daly and Mark Machin. Both men are well known for their passionate approach to work. Machin is a man often described as intensely focused even by Goldman standards, while everyone's favourite Irishman, Daly, has pumped out one deal after another from Taiwan and Korea this year, where the firm again ranks number one by volume and number of deals.
Contrary to popular belief, Goldman does not have one of the largest Asian ECM teams, but just four senior bankers and two associates, with support from a small pool of analysts. Alongside Daly and Machin, both PMD's (partner managing director), there is Jeffrey Kolitch, who runs many of the tech deals and was recently promoted to managing director. Underneath him is vice president Matthew Koder, regarded internally as a rising star and who executed Standard Chartered Bank's $377 million dual primary listing in late October. Finally, associates Jason Cox and Richard Cormack respectively cover Southeast Asia and CMT (communications, media and telecoms).
Testament to the firm's success this year, are the awards it has picked up in our individual deal categories. The immense restructuring work and virtually flawless execution underpinning Bank of China Hong Kong's IPO propelled it to our Deal of the Year, while Maxis has been awarded Best Equity Deal and the SK Corp/SK Telecom exchangeable and ADR, our Most Innovative Equity Deal.
Goldman executed four of the five largest equity deals of 2002 and is generally geographically widely spread across the region, though dominant in the most profitable markets of Hong Kong, Taiwan and Korea. In our Best Investment Bank write-up, we particularly highlighted Goldman's emergence as a dominant player in Korea and this has also been reflected in ECM where deals have been completed for SK Corp, Korea Tobacco & Ginseng, Koram Bank, Kookmin Bank and INI Steel.
But while Goldman is regarded as a lead manager of choice for the region's benchmark transactions, it is also active in mid cap and small cap stocks, when it finds companies that bring strategic value. Its range, therefore, spans Bank of China Hong Kong, the region's largest equity deal of 2002 to Ambit Microsystems, whose $56 million GDR ranks as one of the smallest.
Best M&A House
It has not been a great year for M&A volumes in Asia, but there have been some interesting transactions, and Goldman Sachs has advised on nearly all of them.
This would include both of our M&A deals of the year - advising the Korean government on its sale of Seoul Bank to Hana (best domestic M&A), and advising Hutchison Whampoa on its joint-acquisition of Global Crossing (best cross-border M&A).
Additionally, it advised on two other deals that were on our shortlist for both the above awards. The first was its advisory work on the $2.3 billion sale of Taipei Bank to Fubon Financial - a deal that some see as triggering the start of the long overdue consolidation in Taiwan's banking sector. The second was its advice on Nissan's $1 billion acquisition of a 50% stake in the Dong Feng Motor - a deal that is not only the largest ever foreign direct investment in China, but says much about how Japan Inc intends to interact with China in the coming years.
Likewise, the firm advised on HSBC's $600 million acquisition of a 10% stake in China's Ping An Insurance; and advised San Miguel on Kirin's buying a stake.
What is also impressive about the Goldman M&A franchise this year is its geographical diversity. It has done work in nine countries - missing out only on Thailand, where there has been remarkably little M&A this year.
In a difficult year for M&A activity (with the industry fee pool probably lagging its costs), Goldman has notched up some franchise-enhancing transactions.
Best International Bond House
Undoubtedly one of the most difficult categories to judge of all, Bond House has been a four horse race between Morgan Stanley, Salomon Smith Barney, Credit Suisse First Boston and UBS Warburg. All four firms have had good years and been geographically well spread. In the case of CSFB and UBSW, both banks have been pioneers in some of the region's more challenging markets like Indonesia where superior execution skills have been bought to bear. Salomon Smith Barney has also been dominant across a broad sweep of markets and been the most diversified of all in terms of product (high yield to high grade) and currency.
But Morgan Stanley wins by a nose and much of the reason why can be attributed to one client - Petroliam Nasional Berhad (Petronas). Likewise much of the credit for winning such a high profile borrower can be laid at the door of relationship banker Shamus Hassan, who has an incredibly close relationship with company and of whom not even the competition has a bad word to say. In addition, the ever-energetic Kate Richdale, who moved to Singapore earlier this year to cover Southeast Asia, was crucial in successfully executing the company's two landmark bond deals.
In May, Petronas launched and closed a $2.7 billion multi-tranche multi-currency bond issue that re-filled the company's yield curve in seven, 10- and 20-years and saw it branch into euros for the first time, as well as consolidate its standing in dollars. Then in mid-November it was back again with a $700 million re-opening of the 10-year tranche and $250 million re-opening of the 20-year tranche. Morgan Stanley structured the original deal, although a group of other banks later came in to join it.
At the time, one Morgan Stanley banker described Petronas as a client, which, "never fails to get it right." And indeed with both deals, the company and lead managers took a sensible strategic decision to build size expectations from a low base and were subsequently able to time the market to perfection.
For Max Blandon who oversees DCM within Morgan Stanley's newly formed GCM group, it has also been a good year. Following the departure of his predecessor, Bob Voreyer, back to New York, Blandon has ensured a smooth transition. He also bought his structuring skills to bear after teaming up with CSFB to complete PLDT's difficult but ultimately successful liability management exercise, which saw the company execute a cash tender and bond offering that allowed it to term out its maturity profile.
Morgan Stanley has also led two of the most successful sovereign bonds this year for the Republic of the Philippines and Federation of Malaysia (see Best Borrower write-up). Other stand out transactions include a $300 million bond issue for CLP Power and a $200 million bond offering for Hysan, virtually the only high grade transactions for Hong Kong this year.
Best Local Currency Bond House
While Citigroup's overall volume in local currency bond issues ranks second to HSBC's, it gets this award for being spread across more Asian markets in 2002.
HSBC has always dominated the Hong Kong dollar bond market, and won this award last year. However, it has been much less diversified across Asian markets in 2002 than in 2001, especially when compared to Citi.
Citi has arranged bond issues in all 10 Asian markets this year, and has the lowest dependence among the major players on a single market. According to the league tables, it ranks in the top three in six markets, and is the top house in four markets (Taiwan, India, Singapore and the Philippines). The only market where its showing is weak relative to its foreign competitors is Thailand.
Key deals that it has led this year include the Rp400 billion three year bond for Astra Sedaya Finance, a W100 billion three year bond for Cheil Jedang, the EIB's NT$7 billion bond and issuing 10 year Singapore dollar paper for GE Capital Australia funding.
Citi itself may look back at its groundbreaking deal for Celcom in Malaysia as its premier local currency deal of 2002. This was the first financing by a mobile operator in the domestic markets and was a critical part of an overall restructuring of the company's parent.
In sum, Citigroup raised about $5 billion in the local currency bond markets in 2002, which is about 50% more than it raised in 2001.
Best Loan House
Citi has had an iron grip on this award for several years. And while competition has intensified from the likes of HSBC, Standard Chartered, and ABN AMRO, it still remains the bank that combines league table dominance with innovation and a broad geographical spread around the region.
To be fair, this has not been a banner year for the loan markets. A few innovative deals have had problems getting done; and some execution has been poor, leaving the arranger holding more paper than it would like.
Citi has come through this tough year and can lay claim to the deal of the year, the complex acquisition financing of Hyundai Merchant Marine's car carrier division (see deals of the year).
Its strength in Korea is also underlined by its sole underwriting of a $154 loan for Hyundai Oilbank, various local bank financings, as well as two deals for Korea Zinc.
In Singapore it arranged the largest corporate syndication in the Lion City to date - a $600 million amortizing term loan for UMCi to finance a new 12" wafer fabrication plant in Singapore. Indeed, with loans also arranged for Silicon Manufacturing and Tech Semiconductor, Citi has led all the semiconductor deals in Singapore in 2002.
In Taiwan it has been among the most active arrangers, raising $1.2 billion by October in 10 deals. Meanwhile in Malaysia it brought Bumiputra-Commerce Bank to market, after a gap of nearly two years since its last foray into the international markets. Plus in the Philippines, Citi helped PLDT to term out its debt profile via a $145 million term loan facility.
However, with competition intensifying among the major players, Citi no longer takes its position at the top for granted, and knows it will have to work even harder in 2003 to retain this award which it has held since 1999.
Best Securitization house
Credit Suisse First Boston
Given how deals - particularly the prestigious cross-border transactions - have been spread evenly between the banks in the past 12 months, this was an extremely difficult award to give because no one house has dominated the securitization market.
So in choosing a best securitization house, it was necessary to not only look back over the past year or so to see which bank has shown the capacity to do a broad range of transactions. It was also necessary to determine who has the best strategy in place to seize opportunities across the region, as the markets open up even more in future.
There are a few worthy candidates to win this award based on these criteria, but CSFB just has the edge over its closest competitors. The bank's ex-Japan Asian securitization group, headed by Greg Park, has in the last 15 months been involved on four of the six public cross border ABS deals in the region, two of which it acted as sole lead manager.
CSFB has been involved on credit card deals (LG Card joint-led with UBS Warburg, and KEB Card), a collateralized bond obligation (Kotec) and a transaction backed by equipment leases from bankrupted merchant banks (for KDIC, with SG as joint lead).
This highlights the ability of CSFB to work on a wide variety of deals, a quality that should be in evidence in the early part of 2003. In the second half of 2002, the bank focused a lot of effort securing business throughout Asia - and has tied up or is close to finalizing mandates in Korea, Taiwan and the Philippines. In what has been a tough year for securitization bankers, the capacity to think ahead has assumed greater importance than ever for this award. No bank has done better in this regard than CSFB.
Best Project Finance House
Citibank continues its reign as the pre-eminent project finance bank in Asia turning in another very active year. At the time of going to press it had closed 20 deals in Asia (which includes Australia for Citibank) raising debt of $8 billion. The total value of these projects is some $11.5 billion. Moreover Citibank has worked on six project advisories with a value of $8.2 billion during the year. These figures are far ahead of any other bank in the project finance world.
Key to Citibank's success is the broad array of financial products at its disposal, which are all needed in the diverse world of project finance these days. The bank offers advice and structuring services; it lends international and local currencies; and it arranges international and local project bonds. Over the course of the year Citibank has acted in a variety of roles in its deals including modelling bank, technical bank, ECA facility agent, underwriter, bookrunner, documentation bank, equity placement agent and security trustee.
It has also been involved in many of the most important of the project finance deals of the year including the BASF/Sinopec integrated petrochemical project in Nanjing, China, the Star Refinery restructuring in Thailand and the Celcom refinancing in Malaysia. It has been a banner year for Citibank's project finance team of which they should feel justifiably proud.
Best Ratings Advisory House
This is a new award created to recognize an area that investment banks increasingly regard as key to winning and cementing business relationships. For UBS Warburg, it has been a standout year, in which it has completed 18 rating assignments across seven countries.
Success is partly a reflection of a strong DCM and equity-linked franchise, where the firm has executed transactions for a number of first time borrowers needing to be rated. Partly it can also be put down to the hard work of the team's self effacing head Stella Shao and her boss, DCM head Paddy O'Brien.
The results of their success can be measured by the ratings achieved by their clients. Of particular note, is the advisory work completed for Bank of China Hong Kong - a mandate, which was awarded on a sole basis and represented a huge coup for the firm. But, the bank more than lived up to the task, with Bank of China Hong Kong awarded a Baa1/BBB+ rating, three notches above its parent, Bank of China, which has a BB+ non-investment grade rating. Having convinced the agencies of the bank's forward looking financial projections, UBS Warburg was also able to successfully position Bank of China Hong above more established local players such as Bank of East Asia.
Likewise its expertise was particularly successful in the FIG arena. For example, where a subordinated debt issue for Bank Mandiri was concerned, it was key to ensure that the Indonesian bank secured at least one single B rating. Having failed to do so at the first attempt, the bank was able to successfully appeal to Moody's and get the rating changed from Caa1 to B3, allowing Mandiri to complete a lower tier 2.
UBS Warburg has also been extremely successful in the Philippines and many were surprised when it was able to persuade the agencies to rate the subordinated debt of Metrobank and then Equitable PCI at the sovereign ceiling rather than one notch below as is often customary. Again the rating was key to optimising pricing for the borrower.
Best Equity-Linked House
Credit Suisse First Boston
This is the second year running that CSFB has won Best Equity-Linked House and for the firm's good natured team head, Julian Hall, it has been one, which has seen the "billion dollar man" strike back. CSFB continues to be one of the most active houses in the sector in Asia, but where it really makes its mark lies in being able to capture the highest quality deals.
Its reputation for innovation is also second to none and in 2002 it bought these skills to bear with the launch of Asia's first public convertible bond denominated in Hong Kong dollars. Launched in March, a HK$2 billion ($257 million) issue for Hang Lung Properties was all the more remarkable for the fact that it was executed within the space of only 40 hours. In a market dominated by Taiwanese tech related deals it also added welcome diversification.
Because of the unusual currency element however, the deal structure was kept as simple as possible and had a clean par in par out structure. Capitalizing on the deal's success, the Hong Kong property company went on to re-open the transaction in late May with a further HK$1 billion ($128 million) line of paper. Again, this marked a landmark, as the deal was the first ever to be executed as a tap with the same terms and documentation. It was also the first to re-offer to the market above par, at 101%.
CSFB's grip on the Asian convertible market is further demonstrated by the fact that its two largest deals of the year have also won two of our best deal categories. A $430 million convertible for Fubon Financial Holdings, for example, has won the award for Best Equity Linked Offering and a $1.25 billion exchangeable for SK Corp/SK Telecom (SKT), Most Innovative Equity Deal.
Fubon was a particularly interesting, because it was the first deal from a number of Taiwanese banks and it was to the issuer's and lead managers' credit that it was positioned in a way that enabled it to enjoy first mover advantage.
The combined exchangeable and ADR for SK Corp/SKT was a different animal altogether. Six months and 2000 emails later than expected, lead managers CSFB and Goldman Sachs successfully executed an enormously complicated deal amid some of the most volatile trading conditions of the year. Representing the first ever concurrent ADR and exchangeable, the deal had a number of innovative structural tweaks including full dividend pass through and full voting rights.
CSFB has undoubtedly had an extremely strong year and looking forward into 2003, it is likely to be feeling even more confident with the recent addition of ECM head and convertibles expert, Marshall Nicholson.
Best Small Cap IPO House
Core Pacific-Yamaichi epitomizes a true Greater China approach to investment banking. Core Pacific is one of the leading integrated securities houses in Taiwan, and acquired the Yamaichi operation in Hong Kong in 1998 - later merging its Yuanta Securities Hong Kong subsidiary in 2000.
What emerged was an investment bank that straddled Taiwan and China, and has sought to bring to the Hong Kong market a host of new Chinese companies.
A classic example of this nexus at work, was its IPO this year for Natural Beauty. This company was set up by a Taiwanese entrepreneur in Shanghai as a cosmetics company with strong branding and later went on to obtain 1660 franchisees throughout mainland China. Core Pacific-Yamaichi launched its HK$270 million IPO at HK$0.55, and three weeks after listing the stock was up to HK$1.20.
Indeed, this year Core Pacific-Yamaichi can claim to have dominated the small cap arena in Hong Kong. Other deals it brought to market as global coordinator and sponsor included Wanyou Fire Safety Technology (HK$200 million), Tungda Lighting (HK$64 million), ZDLD (HK$81 million), Golding Soft (HK$70 million), Launch Tech Company (HK$80 million) and Vital Bio Tech Holdings ($135 million).
Apart from its presence in Hong Kong and Taiwan, the group operates offices in Beijing, Shanghai and Shenzhen.
Best Financial Institutions Group House
The FIG team from UBS Warburg have had a stellar year in Asia, acting on most of the key deals to have come out of the region. These include the IPO of Bank of China (Hong Kong), the sub debt deal for Bank Mandiri, the convertible issue from Bank Sinopac, Shinhan's purchase of Good Morning Securities, the securitization and bond deal for Woori Card, the upper tier two deal for Citic Ka Wah Bank, and the sub debt deal for Metrobank. It has been a spectacular run of form.
What really makes these deals stand out is the fact that so many are innovative and market opening. Bank of China is the first Chinese bank to subject itself to the scrutiny of the markets. Bank Mandiri's sub debt deal is the lowest rated sub debt deal anywhere in the world, Citic Ka Wah's issue marks the first upper tier 2 transaction by a Hong Kong bank and Metrobank's is the first public sub debt deal from the Philippines.
As Asia's banking market continues to evolve, institutions will need to maximize the strength of their balance sheets and consolidate. Groundbreaking transactions will to some extent determine the winners and losers in the shake out. That's where the strength of relationships comes in. UBS Warburg's FIG team, under Steve Sun, has done a good job building relationships and has been ably supported by Paddy O'Brien's dedication and experience on the DCM side.
The firm is banking the banks that look likely to emerge as the winners after Asia's banking consolidation game is wound up. Names such as Shinhan, Bank of China, Bank Mandiri, Sinopac and Metrobank are all leading institutions in their respective countries. The fact that UBS Warburg is chosen to lead such transformational deals as they have done this year is testament to the strength of its franchise.
Best General Industries House
Being the best general industries investment bank requires many attributes. Firstly, you need a commitment to covering industries, which in recent years had become unsexy - power, natural resources, metals, mining, forest products, oil and gas, transport. You need to have a deep and consistent understanding of the dynamics of how these industries work. You need a clear vision of how these industries are going to develop in the future. You need key relationships with the top management of the leading companies in these sectors. And you need to maintain the commitment of head office to keep serving these clients in the face of competition for resources from other, more glamorous areas of the business.
Morgan Stanley is a clear leader in this regard, having some of the best relationships in the region, maintaining the most consistent coverage of the companies involved and doing the most important deals of the year.
Under the tireless but modest leadership of the quiet, self-effacing Sheldon Trainor, Morgan Stanley has completed and is involved in some of the most transformational deals of the year. These include: the ongoing re-organization of the New World Group; the $10 billion creation of Reliance Petroleum for the Reliance Group; the sale of a stake in Tsingtao Brewery to Anheuser-Busch; and the huge $2.68 billion bond deal for Petronas.
The investment banking team is backed up by a very strong equity research capability with analysts such as Christopher Huang, Nam Ki Hong, Stuart Baker and Rob Hart all consistently being top ranked in their relevant sectors.
As Asia further deregulates and modernizes its economies and infrastructure, so coverage of these sectors will continue to be crucial for any regional investment banking franchise. With a pipeline of transformational deals coming up for execution next year, Morgan Stanley looks hard to beat.
Best Telecom House
Credit Suisse First Boston
This has been a very difficult year for telecom investment bankers. Globally the telecom market has continued to be in a tailspin with massive debts and massive losses the order of the day. Asia has escaped much of the worse excesses of the telecom bubble and so deals across a broad spectrum of companies and markets have been possible. CSFB stands out this year for taking part in a broad array of telecom deals, acting on 10 different transaction in equity, debt and M&A in six different Asian countries.
In the equity markets the firm acted on the two deals for SK Telecom in Korea as well as the secondary placement for Indosat in Indonesia. In the bond markets, the team led the very successful $350 million tender and bond deal for PLDT. And in M&A CSFB has worked on the Starhub/SCV merger, the TRI restructuring, the Timedotcom mobile sale to Maxis and the VSNL strategic sale to Tata. Although it had not closed, CSFB also had involvement on the Dacom/ Powercomm deal in Korea - which if completed will be transformational for the Korean telecoms sector.
Talking to the telecom bankers at CSFB, one is left with a feeling that they have a deep understanding, not only how the telecom business is shaping up in Asia, but also what forces will help take Asian telecom companies into a new era of growth. In this way, they add value more than just by raising money - they seek deals that transform companies.
Possibly the only disappointment will be the time and effort expended on advising First Pacific on its attempted sale of its stake in PLDT to the Gokongwei group; a transaction that eventually proved abortive, although it unquestionably produced the most entertaining M&A transaction that a dispassionate observer could ever hope for.
Best Technology House
This year Salomon Smith Barney has left the competition behind when it comes to technology banking. The bank has maintained a strong flow of business across all product areas in a broad range of countries. The firm is the top ranked bookrunner of equity and equity linked deals, the top ranked M&A advisor and the largest trader of technology stocks.
In addition the team completed the largest primary technology ADR of the year for AU Optronics. The deal timed the wildly volatile TFT-LCD sector to perfection and at year- end, AU still remains the only company in its space that has been able to raise straight equity where many others have tried and failed. Salomon also completed the largest GDR of the year for Realtek and the largest convertible of the year for Compal Electronics, a deal which re-opened the equity-linked sector for Taiwanese tech names in early autumn.
It has been the dominant tech M&A house with a reported 80% market share. It has also acted on the largest technology M&A deal of the year with the four-way merger of Lite-On Technology, Lite-On Electronics, GVC and Silitek.
In the debt arena, Citigroup has continued to lend and arrange debt finance for a number of the leading Asian technology companies including Wistron, AU Optronics, LG Electronics, UMC, CMC Magnetics, Quanta Computer and GVC.
It has been active across a wide range of the technology business, doing deals in the EMS, ODM, hardware, software, semiconductor and display sectors. It even did the first major Asian biotech IPO with the CK Life Sciences deal early in the year. It has been a standout year for Salomon's technology team in the face of difficult markets and sceptical investors. Special credit goes to the team's charismatic head, Simon Parker, one of the few bankers able to make tech sound interesting. In ECM managing directors Willy Liu and the lilting Kirsty Mactaggart also deserve praise for their consistent execution of deals in difficult markets.
Best Equity Research House
Whichever survey you care to look at in Asia these days will have UBS Warburg as the investors' favourite equity research house. First of all the breadth of the firm's Asian research coverage is second to none. The firm employs 80 analysts and 20 associates in 10 countries in the region covering a grand total of 459 Asian companies.
Moreover the delivery of that research is consistently praised, and especially its delivery through its website. The features on this site include webcasts, e-mail alerts and cross indexing, making it extremely user friendly.
Finally the researchers actively help investors make money - which in these post-Spitzer days is very different from pumping IPO stocks. Below are some great calls that the team have made:
January 2002, China Mobile downgraded from a buy to a hold. The stock falls 28% during the year.
November 2001, Korean Air upgraded from hold to buy. The stock price rises 162% during the year.
January 2002, UBS Warburg researchers make recommendations on a pair trade in the Singapore conglomerate sector, recommending investors buy Keppel and sell Sembcorp Industries. In response, Keppel goes up 25% and Sembcorp goes down 27%.
By covering as many stocks as possible, in as consistent a way as possible and as deeply as possible, UBS Warburg truly adds value through its research operations to its investing clients.
Best Fixed Income research House
This award was decided very convincingly by FinanceAsia's annual fixed income research poll, published in the November edition of our magazine. UBS Warburg - to put it bluntly - cleaned up. The firm was voted as having the best analyst in Stephen Cheng, the best investment grade credit research, the best bank and financial sector credit research, the best credit strategy and the second best high yield research.
What seems to differentiate UBS Warburg from its peers is the deep integration of the research function into the overall fixed income business of the bank. This makes it a very client focused product, which meets the needs of the fixed income investment community. By anticipating the needs of clients and by assimilating information from all aspects of the fixed income division, UBS Warburg's fixed income research team appears to have an intensity of coverage and relationship unmatched by any other house.
Fixed income research is growing to be a crucially important part of the Asian investment banking business as the region continues to disintermediate from banking and new credits come into the market. Other houses, such as HSBC, Citigroup and ING are making a concerted effort in this area but they will have to work hard to beat UBS Warburg.
Best Brokerage House
UBS Warburg has the largest global equity distribution platform. As equity brokerage these days is very much a flow business, such claims do matter. In Asia, more equity flows through the desks of UBS Warburg than any other firm. A leading market survey has UBS Warburg handling 19.2% of all the equity trades that happen in Asia. This is a remarkable figure given the fragmented nature of the markets.
UBS Warburg makes a virtue of being both global and local when it comes to brokerage. It is on the ground in eight Asian countries with stock exchange licenses in Hong Kong, Taiwan, Korea, Singapore, Indonesia, Malaysia, Philippines and Thailand. With 200 dedicated salespeople serving global institutional investors as well as local asset managers and fund managers, it is the most comprehensive equity brokerage operation in the region. This year as well the firm has considerably boosted its hedge funds sales teams with the addition of high flying salesmen relocating to Asia to serve this ever more important sector of the market.
This secondary market strength is well recognized as being one of the key strengths of the firm's overall equity franchise. The equity capital markets team work closely with the brokerage side to secure mandates based on this excellent distribution and execution. It is a formidable platform that UBS Warburg has built in Asia, which looks to have few challengers. Rumours persist that some firms are going to take a tilt at UBS Warburg's top position this coming year, but they will have to work extremely hard to achieve it.