Sixteen banks put forward 48 different deals after we asked the leading ECM houses to nominate their best work of the last year. We only considered deals that were completed between August 1, 2012 and July 31, 2013.
We’ve narrowed those nominations down to a shortlist — all names that we would be proud to name as winners of EuroWeek’s awards of the year — and are now asking you, the banks, to vote.
Each bank has one vote in each category (so, co-heads, now’s the chance to show off your skills in co-ordination and communication). We will send details of how to vote to ECM heads.
The voting will work on a one bank-one vote basis. Each ECM house is being asked to rank the nominations in order, with three points for the best, then two points, then one point. Most points win. Any bank that has been active in each relevant category is eligible to vote. You can vote for your own deal or bank but we do ask that you also rank the other contenders in any category in which you do so.
We reserve the right to reject votes where we believe there are inconsistencies in the process. EuroWeek’s awards are independently audited.
The poll will close on Monday September 9 and we will announce the winners — as well as the Editors’ Choice Award for the EMEA ECM Bank of the Year — shortly afterwards.
IPO of the year
Nominations: Countrywide, Megafon
The European IPO market was firmly re-opened in 2012-13 and for the first time since the crisis delivered a stream of deals for a diverse range of issuers. There were far fewer pulled and postponed deals than in recent years, and better performance, too, against a thriving secondary market. But that’s not to say there weren’t challenges — few deals sold themselves. Markets were often choppy, while getting pricing right was as difficult as ever.
We looked at the importance of the deal for the market, the difficulty of the challenges it faced, the depth of its marketing and quality of execution, and its pricing and performance.
All the deals pitched to us were good. Two were exceptional. One stood out for its landmark appeal and its success against what can only be described as a hostile reception. The other firmly put the boot to a gaggle of canards with execution that we felt simply went further and delivered more than any other.
The November listing of Russian telecoms firm MegaFon. Coming with the IPO market re-opening still in its infancy, the big, $1.8bn offer ran straight into a barrage from the naysayers: unspecified corporate governance concerns, a Russian listing in London (supposedly no longer a happy combination), a setback in getting its prospectus published and an unexplained change in its top-line syndicate between pilot-fishing and launch.
It turned what should have been an easy sell — a highly cash-generative business in a growth market, with impressive management — into one of the toughest of the year.
But the banks leading the deal — Morgan Stanley and Sberbank were joint global co-ordinators and joint bookrunners with Citi, Credit Suisse and VTB Capital — continued to tell the story, and the deal got done. The pricing was impressive, too. Although bottom of the range and with a soft aftermarket, the subsequent performance — up 6.5% in a week and 17.5% in a month — showed that investors willing to put the work in on an IPO could benefit.
Our other nomination also faced challenges. The UK mid-cap space has, since a handful of deals-gone-bad in pre-crisis days, supposedly been a place where you can’t sell a private equity backed deal, certainly not when the use of funds is to pay down debt taken on under (what always seem to be described as) reckless sponsors. Buyers want liquidity, and the UK fund-management club won’t play without a big discount, or accept top-of-the-range pricing.
On the £224m March IPO of estate agency Countrywide Holdings, joint global co-ordinators Credit Suisse, Goldman Sachs and Jefferies put those notions to bed. Key to the success was the work put in across the US — not just pilot-fishing, earlier efforts to take the company on a non-deal roadshow, and not just visiting New York and Boston, but getting out to San Francisco and Los Angeles, too. It meant it could boast true US-to-US sales, with 18% of the deal ending up with those accounts.
Other UK deals, such as those for Crest Nicholson and Partnership Assurance worked hard in a similar vein, but none seemed to take the story as far. For Countrywide it paid off. The UK investor base had no choice but to fall into line with the US as the bookrunners walked them from the bottom of what started off as a price range for everybody. First day performance was 13.4% —perhaps towards the higher end of efficient but indicative of a book 12 times covered — and, boosted by a recovering housing market, the shares put on 70% and allowed the first sponsor sell down of the remaining stake to come early, in August.
Best capital raise
Nominations: Thomas Cook, VTB, ArcelorMittal
We had three criteria for our best capital raise nominations. Deals had preserve or create value, definitively solve a strategic problem, and score highly for structuring. The three big western Europe bank capital raisings of the period didn’t make our list. Deutsche Bank almost couldn’t have been an easier accelerated bookbuild, while feeling too opportunistic for such an important issue.
That attention quickly switched to leverage ratios also seemed to show the bank behind, not ahead, of the regulatory curve. Banco Popular was a controversial deal with many of the bankers working on it telling EuroWeek at the time that they had serious concerns about the way that the underwriting was put together. And Commerzbank has simply been back in the primary equity market too often.
The two biggest corporate rights issues are also overlooked. Konniklike KPN and FirstGroup share prices suffered too much in their deals.
But three capital raises did meet the criteria. Investors had known, and worried, for a long while that steel firm ArcelorMittal needed to raise capital. But when the deal finally came, its structure did much to alleviate concerns about the size. The deal put to bed any questions that investors and analysts had over ArcelorMittal’s balance sheet health, driving a big reduction in net debt as part of a broader deleveraging plan.
Sole global co-ordinator Goldman Sachs and joint bookrunners Bank of America Merrill Lynch, Crédit Agricole and Deutsche Bank, took heart from the welcome given to Volkswagen’s late 2012 revival of the European mandatory convertible market, and brought a dual tranche offering that minimised the upfront dilution and tapped an array of diverse investor bases to limit the impact.
Arcelor raised $4bn through a $1.75bn placing of ordinary shares and $2.25bn of mandatory convertible notes.
The deal was fully SEC-registered rather than the 144A route taken by Volkswagen, making it even more attractive to US investors. It helped with a key motivation for the structure — finding as many long-only, fundamental buyers as possible to minimise the share price impact. A deal that was effectively around 15% dilutive led to a share price reaction of less than 3% from launch to pricing.
UK travel agent Thomas Cook Group supplied the turnaround story of the year. Obituaries were being read for the 170-year old firm in Summer 2011 amid profit warnings, debt renegotiations and a share price that collapsed from 235p to 13p. But with a new management team and bank lenders prepared to persevere, it found a new lease of life — but it still clearly needed to tackle its capital structure.
In May — with its share price back at 145p — it launched a deal that had to put investors’ capital and funding concerns to bed so management could focus on delivering the turnaround.
That meant an integrated deal — a £120m placing, a £305m rights issue, a €525m bond and a £691m loan — together added up to a total restructuring of the balance sheet.
For the banks involved — Credit Suisse and Jefferies Hoare Govett — it took not just equity underwriting commitment but a joined up effort with a loan and distribution of the debt piece.
It wasn’t just an ECM deal, but the ECM was crucial and elegantly executed. The upfront placing, at close to the market price, helped reduce the burden of recycled rights likely from retail shareholders, while providing an opportunity to bring in new money.
Shareholders gave the deal a warm welcome. The placing was well oversubscribed, sending the shares up 14%, while the rights issue — a two-for-five deal — was 97% subscribed.
VTB Group raised Rb102.5bn ($3.2bn) in May 2013, in a deal that had been long-awaited by investors. But it didn’t take the expected route of a fully public rights issue. Instead, joint bookrunners Citi and VTB itself, used the Russian government’s desire for dilution and the public knowledge of the deal to enter negotiations with many of the world’s most prominent sovereign wealth funds and institutional investors.
Critics say it’s not proper ECM, more of a private investment in public equity. OK, it could be argued that it might not have deserved any league table credit (a battle the critics lost), but should it also get recognition as an ECM deal? We think so. There is no rule, after all, that says that an emerging markets bank with a more challenging equity story than its bigger competitor, shouldn’t take advantage of the situation in which it finds itself to raise equity and build a top-notch shareholder register.
The cornerstone group weren’t given guaranteed allocations, and a broad group of other investors also came in to the deal. It was a structure that delivered for issuer and investors — and that’s what ECM is all about.
One deal that we didn’t include was the rights issue for mining firm Lonmin. It was an important deal, well structured and took the full support of a loyal bank group. However, given the tragic circumstances behind the deal we don’t think it would be right to include in a celebration of ECM.
Accelerated deal of the year
Nominations: EADS/Daimler, Sberbank, TDC (March)
Distribution matters. Unarguable? Maybe not — there’s been more than enough said this year already — but we’ve taken it as a benchmark for this award. Perhaps that is the reason that none of the nominated deals was auctioned. We’ve also looked at profile — there were some great small deals, such as Barclays’ triple line deal for Mondi, and Credit Suisse’s capital raise for Dufry — but operating under heavy scrutiny counts for much. There were extra points for structure, where appropriate, and of course, quality execution above all.
The accelerated market was the biggest and most controversial element in EMEA ECM over the last year. One situation stood out from the rest as a myriad of state, financial and corporate parties re-organised their ownership of EADS, the aerospace and defence giant.
Daimler’s sale of EADS shares in April was the only one of a run of four trades in April not to be appointed through an auction, since Goldman Sachs and Morgan Stanley held the lock-up from their December sale.
The first sale for Daimler went well, coming as it did with – relative — clarity over the possible timing of further sales and the announcement of a buyback programme to support the shareholder register restructuring. But it was never going to come at a price that allowed Daimler to capture the upside. When it returned, in April, it could. The structure minimised the number of shares on offer, as the bookrunners bought shares to hedge the cash-settled derivative sold to Daimler which allowed it to keep some of the upside in the stock. It was an elegant solution to the blocking party problem inherent in such an obvious overhang situation. The deal was priced at the top of the range, with the tightest discount of any of the four trades, despite being the only one not auctioned.
The Russian government’s R160bn ($5.2bn) sale of 7.6% of Sberbank in September 2012 perhaps shouldn’t technically make it into the accelerated category – the deal was a fully-marketed offer. But it came on an accelerated timetable, with just enough room to get its highly-rated management team involved. “It showed that spending the time and selling a story is an undervalued approach in ECM,” says one banker. “It can be worthwhile to take some market risk for that.”
Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley and Sberbank ran what was the largest secondary offering for a Russian issuer. Yes, the market was expecting the deal and yes, the challenge posed by Russia’s domestic set-up meant that it was complicated, but this was nevertheless a landmark deal that delivered for the seller and for buyers.
The sale of Dkr2.5bn ($430m) TDC shares via sole bookrunner UBS in March, which followed an $850m sale the month before, was a tight club deal that emerged after reverse enquiries from three investors. It was a feat UBS replicated in other deals with patchy histories — such as sell-downs for National Express, which priced at a premium, DKSH and Ziggo — and showed how even accelerated offers can be de-risked.
Best deal in CEE, Russia and CIS
Nominations: Alior Bank, MegaFon
The Z2.1bn ($663m) IPO of Alior Bank makes it onto the shortlist ahead of another Polish bank listing, the Z4.4m ($1.4bn) re-IPO of Bank Zachodni WBK, the Santander subsidiary. Why? The latter was larger, came on a compressed timetable, and had to work around a European macro volatility during its four days of bookbuilding. But international investors are no strangers to established Polish banking stocks, nor are they unfamiliar with the Santander global story.
The bookrunners for Alior had a harder task in marketing a start-up bank that is growing rapidly from a low base, and that was coming out of the troubled Carlo Tassara group. It doesn’t quite have the significance for the European IPO market of MegaFon (and hence isn’t on the IPO award shortlist) but competes as a pure CEE story.
The IPO of MegaFon (see IPO section for full details) was a big event for the whole European market — the second largest deal of the year behind Telefonica Deutschland — and was also important in the context of the Russian market, where it became one of the biggest and most liquid consumer-facing stocks available to investors.
The biggest deals in Russia during the period came from the big two banks. Sberbank’s secondary sale and VTB Group’s primary issuance both represented landmarks for the market in their own ways, and both are nominated in our product categories. Which was best?
Best deal in the Middle East and Africa (including Turkey)
Nominations: Aksa, Al Noor Hospitals Group, Impala Platinum, Pegasus
Bank of America Merrill Lynch’s secondary public offering of Turkish energy firm Aksa Enerji narrowly avoided social unrest that pushed the country’s XU100 index down 15% in the week after the deal priced. A careful execution process — including pre-sounding and a five-day roadshow — helped market the story and score pricing at a premium to many peers. The proof of the value of that cautious approach showed in the solidity of the Aksa shares in the aftermarket despite a deep and wide Turkish sell-off.
Barclays scored a hit with its first deal in Turkey, on the $330m IPO of airline Pegasus in April. It was a rare corporate deal for the country, giving bankers the opportunity to escape the slim fees in privatisation deals. The deal contained a domestic offering, which meant extending the deal to five-weeks and leaving it exposed to volatile European markets. But demand stayed strong, with significant participation by generalist UK funds despite Pegasus’ emerging markets status.
Al Noor Hospitals Group came through the same volatility to price at a premium to key comparable NMC Health, which listed in 2012. Joint global co-ordinators Deutsche Bank and Goldman Sachs took care to ensure that the deal was allocated to quality accounts to avoid the aftermarket troubles that can hit gulf IPOs. It was Goldman Sachs’ first deal in the gulf, but Deutsche Bank’s strong MENA business had worked on NMC Health’s float.
Impala Platinum’s $500m raise was one of few South African deals in 2013 after a busy 2012. The dual tranche structure — the first for more than 10 years — allowed sole global co-ordinator UBS to seize on domestic and equity-linked demand, bringing in extra interest from fixed income and non-traditional investors.
Best equity‐linked deal
Nomination: Volkswagen
Volkswagen’s €2.5bn mandatory convertible in November was we felt undisputed in its category. It raised €2.5bn at pricing that was unprecedented for a European issuer, opening up the market for others such as ArcelorMittal. It was the biggest every mandatory convertible bond offering ever in EMEA.
It’s not to say that there weren’t other, important deals. BNP Paribas’ convertible for Gulf Keystone Petroleum showed how the CB market can be used even by an issuer in a difficult geography at a difficult time — it had to navigate negative news that broke during its bookbuild — and for a natural resources company in an early phase of its development.
Exchangeables too, were well-represented, and included structuring challenges such the OHL-OHL Mexico and the Amorim Energia-Galp deals.
But for size, pricing, structuring and innovation, we couldn’t hand-on-heart give the award to anything else but Volkswagen.
ECM bank of the year — western Europe
Nominations: Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs, Morgan Stanley, UBS
The western Europe award captures the biggest EMEA markets of the last year, with 60% of all issuance concentrated in the five core markets of the United Kingdom, France, Germany, the Netherlands and Italy.
We sifted the nominations with three criteria, seeking to recognise the banks that took the leading positions on the most important deals, those that showed off their capability across the full product spectrum, and those that executed deals for the greatest diversity of issuers.
Bank of America Merrill Lynch repeatedly showed its equity-linked credentials, particularly with deals for Volkswagen and ArcelorMittal and in IPOs with the tough marketing and investor education assignment that came with Partnership Assurance.
But while it no doubt has the distribution platform, shown by its number one Extel rankings for pan-European research, equity sales and broker in corporate access, the case for BofA Merrill we feel rests on balance sheet — or, as the bank would no doubt prefer it to be called: capital commitment for clients. It has led nine of the 28 capital-committed blocks in western Europe this year, more than any other bank, and made itself central to the unfolding EADS situation with bookrunner roles on three of the selldowns.
The results aren’t always pretty but there’s no doubt that it’s a weapon that many of competitors would love to have at their disposal. Over-aggressive or super-committed? You decide.
Deutsche Bank leads the all-ECM EMEA league tables, yet has languished in the emerging markets rankings — showing just how strong it was in western Europe. Its equity-linked business, strong relative to its competitors in 2011-12 is now arguably even further ahead as success breeds success. And while there have been plenty of disappointments in IPOs that haven’t quite worked out, or blocks that serendipity turned into big, positive P&L events, there’s an all-round performance that we just couldn’t ignore. It was involved in 36 (40%) of the 88 deals of $500m or more in the period, and 59 overall, by the far the largest of its peers. Including its self-led capital increase, it had the biggest market share.
In terms of cash equity capital markets, Goldman Sachs leads the league tables by a country mile — helped in no small measure by its signature ability to win sole book mandates on the biggest accelerated deals. In this awards period, that includes three of the six largest sole-leads: Continental, Volvo and Telefonica.
It was no slouch in IPOs, either, leading Countrywide — among eight sponsor-backed deals — to a spot on the IPO shortlist. Only in equity-linked has it again under-performed, although it was global co-ordinator for ArcelorMittal and its mandatory exchangeable. Positions on both of the two worst-performing rights issues of the year — KPN and FirstGroup — almost knock it off the shortlist. But it just couldn’t be ignored given its role in re-opening markets with deals like Direct Line, innovating with trades for ArcelorMittal and EADS, and being ahead of the pack when opportunities arose, such as in the first week of January when it brought LEG Immobilen, Direct Line, Arcelor and Delta Lloyd.
Morgan Stanley was the leading house for a key theme of 2012-13, sponsor-related IPOs, running eight deals. It was super-strong in FIG with as many lead roles on the biggest deals (see FIG award nominations, below) as any of its less capital-constrained peers, and won its share of accelerated business (although it admits to wearing more Hugo Boss than it expected to).
This was the year that UBS decided what it wanted to be in the post-crisis world of investment banking. Shot of much of its balance sheet-heavy fixed income business, it has focused on its equities franchise, which had delivered results across blocks, IPOs and equity-linked. It has the breadth of equity platform, the ever-strengthening links with its wealth management business, and a growing confidence in its banking and advisory offering. In a year in which block trades have hogged the headlines, it has stood out for its approach and track record. No failures and several coups have come about as it hones a de-risked club style strategy, and unearths reverse enquiry that others miss.
ECM bank for financial institutions
Nominations: Citi, Deutsche Bank, Morgan Stanley
Three banks met our criteria for FIG house of the year, in bringing a diversity of deals — including, in a low-key year for bank rights issues, doing business for insurance and other non-bank financials — leading the way on the larger, high-profile situations, and supporting the most challenging situations.
While Citi had a quiet year overall, it shone in two areas: CEEMEA and FIG. The latter saw it bookrun five of the 10 largest deals (VTB, Halkbank, Commerzbank, PKO BP and Bank Zachodni WBK) and 10 of the largest 30 offerings. Its work on VTB to bringing in some of the world’s biggest and most high profile investors, including sovereign wealth funds, showed its marketing and structuring reach. It delivered an upfront underwrite for Commerzbank, used its experience on its own Akbank sale to smoothly execute Turkey’s Halkbank sale, and maintained a leading position in Poland with the PKO block and Zachodni re-IPO.
Deutsche Bank, too delivered on size, not least in its execution of its own €2.9bn capital raise which it had covered in 90 minutes from launch. It was leading from the front for Commerzbank and Banco Popular — two deals that, despite not being entirely smooth, showed its ability to back the tougher situations. The IPO of Esure looked at the time of execution to be a contender for one of the deals of the year, but subsequent disappointment will always reflect, rightly or wrongly, on the lead banks.
And Morgan Stanley showed the strength of its FIG advisory franchise with a similar number of lead positions on the biggest transactions (Sberbank, Nordea Bank, Direct Line and Danske Bank) while not having the balance sheet luxury of its peers.
It helped bring Zachodni, Direct Line and Partnership Assurance to market, while it was the global co-ordinator for the Swedish government’s $3bn Nordea sale (the largest ever Scandinavian accelerated offer), and for a $1.2bn accelerated primary block for Danske Bank in October 2012. As a glo-co on Erste Bank’s pre-placement and at-market rights issue, it created a structure that helped de-risk what could have been a difficult deal. It could still get its cheque-book out, however, signing up for a slug of the Banco Popular rights issue.
ECM bank of the year — CEEMEA
Nominations: Citi, Credit Suisse, Morgan Stanley, Sberbank
Citi, with its emerging markets footprint and lending relationships, really should be top of the CEEMEA league tables, but over the awards period it was far and away the leader with nearly twice as much credit as the next bank. Sure, some of that came from low-margin government business, but it was on plenty of other important situations, too.
Credit Suisse, too, has made CEEMEA into a speciality, and had a hand in five of the 14 transactions of $500m or more in the region over the period. It was a joint bookrunner on MegaFon, and used much of what it learned there, in bringing Kazakhstan’s Kcell to market shortly afterwards.
Morgan Stanley has also led many of the big ticket deals in the region (six of the $500m offers including award-nominated Sberbank, MegaFon and Alior Bank) and brought a wide range of secondary deals, such as a $370m selldown in South Africa’s Absa Group.
Sberbank has been exceptional in Russia, and been part of deals that have introduced new practices for the market — such as on-exchange offers to retail, carrying out stabilisation in local shares and conventional settlement of ABBs while showing that all-domestic deals can succeed without London-listed GDRs — as well as taking leading roles on the selldown of its own stock by the Russian government, and in the IPO of MegaFon.
IPO bank of the year
Nominations: Goldman Sachs, Morgan Stanley
The IPO market was back on form in 2012-13, though deals were still often challenging. Almost every big bank enjoyed some success, but two stood out for the roles on so many of the important deals, the range of issuers and geographies in which they were active, and for avoiding many of the sub-optimal outcomes that often seem inherent in the business.
Goldman Sachs and Morgan Stanley steered their IPO candidates safely through difficult markets. Both worked on the IPO of Direct Line, which opened the UK market up in October and prompted a run of strong deals at the end of the year.
The pair were each involved in most of the strongest IPOs of the year – the deals that re-opened markets, sold tough or unusual equity stories, navigated volatile periods and offered sensible pricing for all involved. They tended more than other banks to pick up those left lead roles, putting them in the driving seat of deals.
They excelled in more niche achievements, too. Goldman Sachs ran an IPO for CVC Credit Partners, which brought credit exposure to equity investors and attracted jealous glances from other syndicates. Morgan Stanley, along with JP Morgan, turned Deutsche Annington’s IPO from surprise failure to even more surprising success.
And they each brought the mid-cap private equity IPOs that have driven UK issuance over the year.
No other banks worked so consistently on so many transactions throughout the review period.
Equity‐linked ECM bank of the year
Nomination: Deutsche Bank
The principle of EuroWeek’s awards shortlist is that we would be happy for any of the listed candidates to win. For both of our equity-linked awards this year, that is only one candidate.
Deutsche Bank, again, dominated equity-linked issuance. It had a place on almost all of the year’s landmark deals: Volkswagen and ArcelorMittal’s mandatories, GBL, Deutsche Post and Nokia were the largest of 17 deals that gave it a 16.5% market share.
While BNP Paribas gave it a run for its money, and other houses are starting to gain momentum, we think it is fair to say that Deutsche is still indisputably the most important equity-linked house in EMEA.
A note on our methodology
This year saw much more volume than the previous awards’ season, but still many of the most successful managed their way through lingering volatility and negative sentiment. There is nothing wrong with deals straight from the cookie cutter but they didn’t score highly on our list.
Third and fourth: value, for the issuing and investing clients. That might be price, or it might be market access, but to score highly deals have to be judged on their outcomes in the short and medium term.
Fifth, we wanted to reward deals that had an impact on the wider world of ECM: those that set new benchmarks in industries, sectors, geographies.
And sixth, we felt that size presents its own challenges, and should therefore count towards an overall assessment.
We chose our bank shortlists with reference to the deal nominations, and based on relevance across the sectors, geographies and themes that have been important for the market this year.