East foot forward
Some banks chase high profile deals; others dig up new borrowers. In eastern Europe, ABN Amro is doing both. Nick Briggs reports.
ABN Amro's record in eastern Europe means that, as one banker puts it, nobody in a company's treasury department gets fired for choosing ABN to arrange a loan. The bank topped the syndicated loan bookrunner table for eastern Europe in 2004, when it arranged 28 deals worth $5.4bn, and repeated the feat last year, arranging 26 deals worth just under $13.5bn.
But ABN offers borrowers more than just a safe pair of hands. By increasing its underwriting capacity and offering clients — large or small — a range of financing options it has been able to win mandates from companies ranging from state-owned energy firms to small discount retailers.
Russia — a market worth $14.5bn in 2004 but almost $40bn in 2005 — best demonstrates ABN's wide-ranging approach to the loan market.
"ABN has been advising and lending to borrowers in Russia since before the crisis in 1998 — we maintained and cultivated those relationships through the difficult times and that effort has translated into a larger share of business when the market did turn around. We are committed to being a long term relationship bank," says Hasan Mustafa, executive director and head of CEEMEA loan syndications and distribution at ABN Amro in London.
"The bank traditionally has been very strong in structured finance and has successfully leveraged its emerging market franchise by making structured lending a core part of its business," he continues. "And because of our strong syndication and distribution capabilities we are now in a position to offer larger underwritings than we were two years ago, although the focus will always be on quality."
ABN Amro was last year one of four bookrunners that arranged Gazprom's $13.1bn loan for its purchase of Sibneft, and was part of the group that supplied a $7.5bn bridge loan for Rosneft when the oil company decided to buy a stake in Gazprom.
"But our success is not simply a function of ABN's balance sheet," adds Mike Elliff, managing director and head of CEEMEA debt origination. "It's about getting the right mix of products on the table for our clients and demonstrating market insight and leadership."
This year the bank has completed a $90m debut deal for Russian discount retailer Lenta, as well as a $350m facility for car distributor Rolf.
Deals like this justify Elliff's claim that: "We have consistently brought groundbreaking deals in terms of sector, size and structure," and lend credibility to his intention "to continue bringing new names to the market and leading the large, event-driven transactions."
Turkey tells a similar story. Having introduced Vestel Elektronik to the market in 2003 and Dogus Otomotiv in 2004, last year ABN Amro began to focus on the country's privitisation process.
With Citigroup it signed in November a $1.4bn guarantee facility for Ojer Telekomunikasyon's purchase of a stake in Türk Telekom.
And this year ABN has played a leading role in full and limited recourse loans backing industrial conglomerate Oyak Group's acquisition of steelmaker Erdemir.
Elsewhere in the region, ABN plans to increase its focus on Kazakhstan and Ukraine, and Elliff says private equity firms are already looking for opportunities in countries like Bulgaria, Romania and Russia.
That suggests ABN's decision earlier this year to form a tripartite loan sales desk by combining emerging market loans with its corporate lending and leveraged finance sales is well timed.
"A lot of work has been done to bring different product areas together and encourage lateral thinking," says Mark Vincent, executive director and the bank's head of loan syndicate, sales and trading.
|Key staff: Mark Vincent (head of loan syndicate, sales and trading), Hasan Mustafa (head of CEEMEA loan syndications and distribution), Mike Elliff (head of CEEMEA debt origination), Donald Hultman (head of structured loans and advisory, Europe and Africa)
Key clients: Gazprom, Rosneft
Key deal (2006): $800m loan pending for Pyaterochka-Perekriostok
League table position (2001-05): 3, 2, 6, 1, 1