Best House at Small Cap IPOs
BNP Paribas Peregrine
Few houses or investors have covered themselves in glory when it came to the tech sector this year, and BNP Paribas Peregrine (BNPPP) is no less different from most. Though this may seem a strange opener to the presentation of an award, it is necessary to put the bank's achievements into the context of a bubble, which burst spectacularly when the NASDAQ suffered its first major precipitous crash on April 14.
What BNPPP should be applauded for is having the foresight to spot a market opportunity and go for it. The bank has built up a 46% market share for GEM (Growth Enterprise Market) listings in Hong Kong, having brought eight companies to market between March and July this year. Four were also launched and closed within the space of just six weeks over the course of March and April.
BNPPP rode the wave of the tech frenzy more adeptly than most and was responsible for the listing of GEM's two largest companies by market capitalization, AcrossAsia Multimedia and tom.com. The latter also still ranks as one of the year's best performing IPO's relative to issue price. Having listed at HK$1.78 ($0.23) in late February, the counter was still trading up 57% by mid-December around the HK$2.80 mark. For many observers, this achievement is also somewhat ironic given that at the time the listing was seen as a blatant cashing-in on a mania by the Li Ka-shing empire. AcrossAsia Multimedia also stands out as one of only two international offerings from Indonesia this year. BNPPP raised $75.89 million for the only broadband internet access play in Indonesia, securing a valuation of over $2 billion for a Lippo Group company with little track record.
BNPPP itself likes to view itself as an investment bank that grows with the companies it raises capital for. Francis Leung's greater China team has certainly risen successfully from the ashes of what was once Peregrine. Within two years, the bank has grown from approximately 100 predominantly Hong Kong-based staff to 700. In terms of fee generating business, it has also trounced larger rivals this year, sitting at number five in the equity league tables for the year to November, with 26 issues and $3.097 billion under its belt.
Best Brokerage House
Merrill Lynch has made this award its own. In the past four years, Merrill has steadily and consistently built its regional brokerage operation into a centre of excellence.
At the core of this is the firm's dedication to top quality equity research. In various polls it has won accolades. Most importantly, it is number one ranked in the Institutional Investor magazine poll, winning 28 individual awards and 10 first team awards.
Research brings in the orders, and Merrill's massive execution ability does the rest. In markets across Asia from Korea to Hong Kong to the Philippines, Merrill is a true flow machine.
Best M&A House
At the time these awards were being decided, Goldman Sachs was topping the M&A league table. This is an outstanding achievement considering it was the only major bank not to be involved in the gargantuan M&A deal of the year, PCCW/HKT.
However, it is an ironic mark of Goldman's M&A abilities that it was thanks to the firm that the transaction even happened at all. PCCW would never have had the opportunity to launch its LBO for HKT if Goldman had not brought SingTel to the table in the first place. Aside from PCCW/HKT, Goldman has advised on seven of the top 25 deals announced this year and eight of those completed. It has worked on seven deals over $1 billion, and completed 16 deals for a total of $51.6 billion. What is truly amazing is its geographical breadth. It has executed deals in 10 Asian countries this year and has done tremendous repeat business the true mark of quality. For example, it advised TSMC on its $6.4 billion acquisition of Worldwide Semiconductor and on the $2.7 billion deal between TSMC and TSMC-Acer.
Its telecoms expertise obviously helps, and it is the pre-eminent advisor to one of Asia's top clients, China Mobile, whom it helped with the $34 billion acquisition of seven Mainland mobile networks and with the $2.5 billion investment from Vodafone.
And with Hutchison Whampoa, another of Asia's best clients, it has had nine advisory roles since 1997, including two this year.
Its commitment to the regional M&A business was also underlined when it brought in Michael Carr. Carr, who was co-head of M&A in the US, is now running investment banking, and his relocation to the region is a significant investment of human capital. The addition of rainmaker Tim Freshwater, as chairman of the investment banking division, further underlines this point.
Best Private Bank
Historically, it has always been tough to figure out which private bank is best, so this year we set up a role-play situation.
We short-listed six banks and gave them the profile of a dotcommer who had sold his business and had $4 million of investable assets. His domicile was in the UK, he lived in Hong Kong, and he planned to have two children. His concerns were with capital preservation, tax planning and not having too much exposure to the US stock market but he wanted a return of around 10% per annum. All in all, about 20 hours of meetings went into this process, and it was enlightening.
The personality of the private banker was an important consideration, but given this was an award for an institution and not an individual, we tried to look beyond the individual. In most cases, teams of experts were rolled out to give investment advice and tax advice. All the short-listed banks were good, and coming to a final decision was not at all easy.
Why CS Private Bank (CSPB)? Of all the banks, we felt this was the best overall. It managed to combine very high service, with common sense advice and an investment proposal that was excellently tailored to the peccadilloes of this particular client.
The wealth planning and tax advice was very good, especially the way CS Private Bank explained the issues facing a UK domiciled person and related them to the age of the client in question (30 years old).
CSPB explained what needed to be done and attempted to keep things simple. Unlike other banks, it did not try to foist an expensive (and from inheritance tax purposes, bad) discretionary investment trust on the client. It felt the client could avoid costs using an offshore Singapore account and writing an appropriate will. Given there were no children yet, a trust was not advised for the moment.
However, CSPB explained what may need to be done with a timetable over the next 10 years, and how potential domicile changes (Cyprus, for example) and insurance bonds could be used. CSPB also stood out on a second front with its investment advice and the clarity with which it was explained. It did the best job of listening to what the client wanted. That is to say, it registered the client's strong concern about the US and abided by it in as constructive a way as possible. It also avoided putting the client into mainly its own funds, and gave very good explanations for choosing particular fund managers. Its emphasis on capital preservation, while taking on the equity risk required to hit a 10% return was well explained.
Best Project Finance House
Asian project finance has had something of a rebirth in 2000 as economic growth has returned to the region creating the need for new infrastructure. But memories are long in the world of project finance and the shut down of the market in 1997-1998 left many banks wary of stepping into the arena again.
Not so Citibank. In 2000, the group showed leadership in Asian project finance, closing a string of deals in a variety of countries using a variety of complex structures to mitigate the risks inherent in Asian project finance. The bank claims to have closed 19 project finance deals in Asia this year, although some of those are more strictly defined as corporate deals. But even so, the commitment to financing the region's new infrastructure is seen in the way the bank has raised nearly $6.5 billion in debt for projects with a combined value of $13.45 billion.
The group has thrived this year through its focus on financial innovation and industry knowledge. It has embraced the trend of local currency funding with debt arranged in Australian Dollars, Malaysian Ringitt, Singapore Dollars and Thai Baht. The bank has arranged project loans and project bonds this year and maintains a leading presence in the financial advisory arena, using a wide variety of risk mitigating structures in the many deals it has closed.
Noteable deals that Citibank has worked on this year include the Ratchaburi Power and the Bowin Power projects in Thailand both of which broke new ground in the size and local flavour of the financings. Citibank has also been busy in the Philippines with the closure of the Ilijan Power project for sponsor Kepco the first time the Korean power company has done an offshore IPP. It was project advisor and one of the arrangers of the financing for Asia Container Terminals in Hong Kong the first major infrastructure project in Hong Kong since the crisis. It has also financed Malaysian satellite systems and water projects as well as telecom deals in Hong Kong and power transactions in Singapore.
The bank is aggressive in its pursuit of mandates but has a strong focus on risk mitigation and financial rectitude when it comes to structuring the deals. It is well placed to take advantage of the region's renewed growth prospects and looks to have a number of ground breaking deals in its pipeline for 2001.