Best Telecom House
When we did the analysis of who had done what in telecom this year, we came up with an interesting league table. Goldman Sachs topped the chart by a massive margin. We equally apportioned credit for equity, debt and M&A deals, and using this methodology, Goldman's 14 deals represented $22 billion. Its strongest bulge bracket competitor was Merrill Lynch, which accrued $10.15 billion in seven deals. This underlines Goldman's dominance in the telecom field in Asia.
With 24 experienced telecom bankers across four Asian cities, and Institutional Investor's top-ranked telecom research team, this should come as no surprise.
It acted as the advisor on the China Mobile/Vodafone deal and the simultaneous purchase of seven mobile networks in China û worth $34 billion. It did the follow-on $6.8 billion equity offering (with Merrill Lynch and CICC) for China Mobile, and the $690 million convertible bond.
It also advised Hutchison Whampoa on its joint venture with Global Crossing and raised $476 million for the JV in an IPO in October. It was also advisor to Hutchison in its acquisition of a stake in Sterling, the Indian mobile phone company. It also did the $5 billion block trade of Vodafone stock on behalf of Hutchison in March (with Deutsche). The message is clear: key telecom clients use Goldman Sachs again and again for their financing needs.
It missed out on PCCW/HKT, but that was only the result of its bringing SingTel to the table in the first place. Without Goldman having done that, Richard Li might be sitting on bubble stock today, rather than a premier telecom asset.
Perhaps most significant is the transaction still to come, the last great telecom privatization in Asia, Chunghwa Telecom. In one of the great mandate battles of the year, it emerged victorious. The Taiwanese Government, which is well aware of how political this deal is, chose Goldman for this difficult task. In Asian telecom financing, you will not go wrong in giving your mandate to Goldman.
Best Technology House
This year Steve Foland deserves credit for building an outstanding Asian extension to CSFB's global tech franchise. He has methodically hired a team of outstanding tech bankers and is well placed now that the froth has gone out of the market. Let's face it, there have been some outstandingly bad Asian tech IPOs this year, and to their credit, CSFB managed to avoid allowing short-term considerations to sully its dominant global franchise with any of them. It may seem odd to give credit in these awards for turning down deals, but given what we saw this year, it is a very considered decision.
The fact that CSFB is the tech banker of choice is amply illustrated by its close relationship with PCCW, for which it first raised $296 million at the end of last year and was later brought onto the HKT acquisition for its tech expertise by Richard Li himself.
What does this tech expertise consist of? Bhavin Shah was ranked the number one Semi-conductor team leader, while Jay Chang is well-known on the street as a star of the internet industry, and was ranked first by Reuters. Chang used to work at Microsoft Network during MSN.com's launch, while Shah leads the 14-person research team and is a former microprocessor design engineer for Digital Equipment Corporation. He jointly designed the architecture of the world's fastest Alpha microprocessor, and in the process received three US patents.
CSFB's overall team was voted not only first by Institutional Investor but also by Reuters. It is this bottom-up approach to building its tech effort that has seen investors look to CSFB as the broker of choice. This year CSFB was joint bookrunner on the IPO for ASAT, and was a key advisor on the year's landmark transaction, advising PCCW on its $28 billion acquisition of HKT. In total, it was involved in 15 capital market transactions and private placements. It has many of the premier mandates going forward, and has built tremendous relationships in the semiconductor field, which is likely to be the strongest area of growth in the next 12 months.
One source of confidence û apart from the team itself û is the fact that Frank Quattrone is in charge. Quattrone is the world's top tech banker and when he set out to replicate his US and European franchises in Asia he didn't take the task lightly. CSFB has a global tech team that is 600 strong.
Quattrone called personally from the US to emphasize his support for what Foland has achieved this year. "We have been growing our business in Asia over the last year significantly faster than we have in the US and in Europe, and we're big believers in the area," Quattrone said. "We think Asia is going to contribute disproportionately more of our revenues going forward than other geographies."
Best Financial Institutions House
As Asia restructures itself out crisis, banking consolidation has increasingly come to the fore and Financial Institutions Groups correspondingly become a more important and prominent component within investment banking. JP Morgan was one of the first of the major banks to spot the opportunity and still has one of the largest teams in the region, with 14 bankers, of whom 13 are based in Hong Kong and one in Singapore.
The bank operates a slightly different structure to many of its competitors, however, splitting FIG's M&A functionality and its capital markets functionality between different departments. The teams of James von Moltke and Marc Jones respectively offer JP Morgan's on the ground relationship banks credible M&A and DCM products. Both teams have had an active year.
On the M&A side, the firm has completed Asia's second largest financial institutions merger on record; it has led the banking consolidation process in Malaysia and it has restructured one of Singapore's key domestic banks.
The transactions in the Philippines and Malaysia stand out. Acting as financial advisor to the Bank of Philippines Islands (BPI) in its $1.22 billion merger with Far East Bank and Trust Company, JP Morgan helped create a bank with an approximate asset base of $8.7 billion, making it the largest bank in the Philippines and one of the top 10 lending institutions in Asia. The transaction straddles both 1999 and 2000, having been announced in October 1999 and completed in April 2000.
The bank played a critical role for a number of reasons, not least because it identified Far East as a key target in the Philippines' evolving banking sector and approached BPI with an acquisition strategy. The merger was complicated by two factors: a fragmented shareholding structure and a hostile threat from Metrobank. Yet, what BPI ended up with was the merger it had intended from the very beginning and the added bonus of a strategic partnership with Singapore's DBS, which had the foresight to recognize that a lot of Far East Bank shareholders were being shaken loose by the transaction and came in to mop them up.
Where Malaysia is concerned, JP Morgan also stands out for its role advising Malayan Banking Berhad, the 'poster child' of the government's aggressive bank consolidation policy. But Maybank's acquisition of Phileo Allied Berhad proved to be particularly tricky since it ran up against the objections of major shareholder Avenue Assets, which also happened to be controlled by a son of Mahathir Mohammed. To have not completed a deal because the Prime Minister's son said no would have sent a wave of negative signals to the rest of the financial sector and it is to both banks' credit that a restructured deal could be put forward and approved by the August 31 deadline.
On the debt side it has been at the forefront of the emergence of subordinated debt as an asset class in Asia, particularly for the non-investment grade sector, following the launch of Hanvit Bank's groundbreaking $850 million transaction in February - FinanceAsia's Best Overall Debt Deal.
Best Natural Resources House
Morgan Stanley Dean Witter
For the purposes of this award we have included such sectors as oil and gas, power, pulp and paper, and steel. It is essentially an old economy award. It is awarded to Morgan Stanley Dean Witter because, while all other banks were throwing everything at technology and the new economy, Morgan Stanley kept a strong and clear focus on some of the old economy sectors. As a result of this, it thrived in Asia where some of the largest and most groundbreaking deals of the year were in the old economy sectors. The deals it has done have stood their own ground. And the companies the firm has worked for have benefited from the strategic advice they have received from Morgan Stanley.
The IPO of Sinopec was a huge deal for Morgan Stanley and for China. It represented the wholesale adoption of modern corporate principles by a former state monopoly in China. And Morgan Stanley was leading the process. The two stages of restructuring the company and then doing its IPO were hugely complex and yet very smoothly done. The combination of Morgan Stanley's deep sectoral insight entwined with its great financing skills was key to the success of the transaction.
In many ways, this deal for an old Chinese SOE embodied the future of investment banking in Asia: an embedded relationship based on a deep understanding of the business and the sector, which leads to strategic financial transactions.
This approach to client relationship was also seen in the work that Morgan Stanley did for Singapore Power International (SPI) this year. SPI's purchase of GPU PowerNet in Australia was an expertly handled deal, which combined strong cross-border understanding of the global power market, with adroit financing skills. The purchase was done through the issue of a credit-wrapped subordinated unsecured note, which financed the asset purchase and gave SPI the lowest possible cost of funds.
Morgan Stanley also issued the widely praised debt issue for APP China û the China subsidiary of the region's leading pulp and paper producer. Many thought this deal could not get done, but Morgan Stanley's understanding of the company and its credit allowed the bonds to be sold within the indicative price range and at a 50% over subscription level.
While not the most glamorous of awards, the sectors that are covered are key sectors for Asia. Financing and restructuring companies in the Asian natural resources sector is a crucial task, and Morgan Stanley this year has shown that it is the bank to do the job.