BEST FOLLOW-ON/ACCELERATED BOOKBUILD
Axis Bank’s Rp125bn ($1.77bn) qualified institutional placement
Bookrunners: Axis Capital, BNP Paribas, Citi, Credit Suisse, HSBC, JP Morgan, UBS and SBI Capital Markets
For the largest ever qualified institutional placement by a private sector lender in India, Axis Bank made a bold decision — to raise Rp125bn in a single day, at a time when the country’s markets were turbulent on the back of growth concerns and worries about the health of the financial system.
But Axis Bank was able to win over a horde of investors at home and from overseas for its placement in September.
The strength of Axis Bank’s name was reflected in the make-up of the final book, with institutional investors such as T Rowe Price and BlackRock placing orders, as well as Singapore’s sovereign wealth fund GIC and a force of Indian mutual funds. Ultimately, 75 institutional accounts put in enough orders to cover the deal twice over. Retail buyers showed similar enthusiasm.
The deal had a base size of 159m shares, which the bookrunners easily placed, giving them the opportunity to fully exercise a 39m greenshoe. Despite adding the extra shares, the syndicate was still able to price the deal with a tight discount of just 1.4% to the stock’s previous close. A broad mix of investors placed orders for the QIP, but the lead banks were mindful to allocate as much stock as possible with long-only accounts, who accounted for more than two-thirds of demand, leading to strong aftermarket performance.
Axis Bank’s transaction stood out for more than just the strong interest it generated, its tight pricing and outstanding execution. It is also taking GlobalCapital Asia’s award because of its wider impact on India’s equity capital markets.
Given a flow of negative macro news and generally poor credit conditions, the resounding success of Axis Bank’s transaction gave a much-needed boost of confidence to a local market suffering from various ailments including a series of high profile defaults by non-bank lenders.
It also paved the way for other financial institutions to tap the equity capital market for funds. For example, just a few weeks after Axis Bank’s QIP, non-bank Bajaj Finance was able to take home Rp84.6bn from a placement in early November.
BEST EQUITY-LINKED DEAL
iQiyi’s $1.2bn American Depository Share convertible bonds due 2025, puttable after four years
Bookrunners: Bank of America, Goldman Sachs and JP Morgan
In a busy year for the equity-linked market, American Depository Share (ADS) convertible bonds dominated issuance. But it was Chinese online video platform iQiyi that was among the first out of the gates in 2019, selling a $1.2bn CB in March. This is still the largest ever CB to have been issued by a US-listed Asian issuer.
The deal came less than five months after iQiyi took $750m from a separate CB transaction and just around a year after it listed on the Nasdaq with a chunky $2.4bn IPO.
Timing was everything. When China’s answer to Netflix hit the equity-linked market for the first time in November 2018, the market was in bad shape and technology stocks were out of favour. But for its blockbuster return in March, the company left nothing to chance. It picked an ideal window, coming soon after announcing strong 2018 earnings in early March, which drove a surge in its stock price to put it up 53.8% from the beginning of the year.
iQiyi also sought better terms versus its equity-linked debut and extended its maturity profile with a relatively rare six non-put four year maturity.
Investors showed their full support for the transaction. Asian investors covered the book within a few hours, after which European outright investors also gave their thumbs-up. By the time US markets opened, any price sensitivity was gone, making it evident that iQiyi would be pricing at the issuer-friendly end of the marketed price range.
The notes were on offer with a 2%-2.5% coupon range and an initial conversion premium of 27.5%-32.5%. After winning the most favourable terms, iQiyi added a layer of protection against diluting shareholders, entering into a series of capped call transactions with the bookrunners, which effectively boosted the conversion premium to 75%.
The deal was designed to capitalise on a resurgence in demand for the company. It certainly succeeded, reflected by the fact that numerous straight equity investors also made a play for the deal, allowing iQiyi to exercise a $150m greenshoe to rake in $1.2bn.
Its deal marked the beginning of a trend that showed no signs of abating when GlobalCapital Asia wrapped up its awards process. US-listed Asian technology giants like Pinduoduo, Qudian, Sea, Bilibili and YY, as well as Chinese logistics company Best, have all sold ADS-linked CBs since.
BEST ECM DEAL
Asset World Corp’s Bt48bn ($1.59bn) IPO
Global co-ordinators, bookrunners and underwriters: Bank of America, Morgan Stanley and UBS
Domestic co-ordinators, bookrunners and underwriters: Bualuang Securities, Kasikorn Securities, Phatra Securities and SCB Securities
International co-underwriters: Daiwa and Mizuho Securities
Domestic co-underwriters: CIMB, Krungsri Securities, KTB Securities, KT Zmico, Maybank Kim Eng Securities, Thanachart Securities, Tisco Securities and UOB Kay Hian Securities
Financial adviser: Phatra Securities
This year’s winner of the Best IPO and Best ECM deal is not your typical listing in Hong Kong or the US of a Chinese giant. Instead, GlobalCapital Asia has rewarded a jumbo IPO in Thailand, a deal which not only put the country on the ECM map during the awards period but also showed the opportunities and potential of the Thai equities market.
Property developer and investor Asset World Corp’s Bt48bn IPO, the largest ever corporate listing in Thailand, stood out in 2019.
The listing was in early October, which meant work started during the volatile late summer months, when regional financial markets were being tormented by the tit-for-tat trade related tensions between China and the US. Asset World wanted some serious amounts of capital to develop properties it had been acquiring. But given the timing and the fact that it was coming from an emerging market where billion-dollar IPOs are rare, the deal needed plenty of work behind the scenes.
For this, the syndicate took the company’s management team on a three-week global cornerstone roadshow, meeting with around 100 investors. This sparked the interest of Singapore’s sovereign wealth fund GIC, which held three meetings and seven calls with Asset World’s management, while the bookrunners also set up talks for the investor with real estate agents.
Those efforts paid off spectacularly, with the IPO getting a $678 cornerstone tranche comprising 13 accounts. GIC alone took $300m, while Singapore’s Maitri Asset Management came in for $20m and Malaysia’s Affin Hwang Capital $10m. Ten domestic investors, including the local arms of global funds, subscribed for the other $348m.
But while securing cornerstones, the syndicate had other challenges to overcome as well. The issuer is part of local billionaire Charoen Sirivadhanabhakdi’s TCC Group, which has seven other listed companies, some in Thailand. This meant the leads had to make sure all the Singaporean and Thai regulations were met, including the no-conflict of interest rules between Asset World’s IPO and the existing listed companies.
With all the boxes ticked beforehand, bookbuilding was a huge success as the company’s attractive portfolio of properties drew in investors. Asset World holds mainly freehold real estate that it owns outright, rather than leasehold property that in Thailand are limited to 30-year contracts.
That held plenty of appeal. International accounts took home 53% of the IPO and domestic investors 47%. The bookrunners also managed to keep the allocation to retail investors below 16% versus the typical 30%, which led to steady trading in the aftermarket.
There was one last icing on the cake too. Asset World’s stock was the first to be included in Thailand’s SET50 and SET100 indexes just three days after listing. The fast track process was thanks to Asset World’s Bt185.7bn market capitalization, which is more than 1% of the total market capitalization of the Thai stock exchange.
Its impressive performance also came at a time when new Chinese stocks listed in Hong Kong or in the US underperformed in the secondary market.
Asset World’s IPO signalled a growing equities market in Thailand, giving confidence to other issuers as well. Two chunky domestic listings followed in the fourth quarter of the year.
As emerging markets across southeast Asia become increasingly sophisticated, an IPO pipeline is steadily building up for 2020. For putting Thai ECM, and southeast Asia ECM, on solid footing, Asset World’s IPO is a winner.
Alibaba Group Holding’s HK$88bn ($11.3bn) secondary listing in Hong Kong
Sponsors, global co-ordinators, bookrunners and lead managers: CICC and Credit Suisse
Global co-ordinators, bookrunners and lead managers: Citi, JP Morgan and Morgan Stanley
Bookrunners and lead managers: HSBC and ICBC International
Senior lead managers: Deutsche Bank, DBS and Mizuho
Lead managers: ABC International, BOC International, BoCom International, CCB International, CLSA, CMB International and Yunfeng Securities
Alibaba Group Holding’s mammoth secondary listing in Hong Kong was opened for bookbuilding during our awards period, but was priced a few days after our deadline closed. Nevertheless, it deserves a special mention and kudos for pulling off one of the most-talked about deals of 2019.
The triumphant return to Hong Kong by the Chinese e-commerce giant came at a time of great upset in the special administrative region. In the week Alibaba’s listing was launched, protesters had brought Hong Kong’s central business district to a gridlock, before clashing with the police over the course of the week.
Such a tumultuous backdrop unsurprisingly hamstrung IPOs. In Alibaba’s case, it was forced to turn investor meetings at the beginning of its roadshow into phone calls.
But the syndicate and company management persevered. Propelling the transaction forward were two things: a blowout promotional shopping event, Single’s Day, which saw $38bn in sales, and strong third-quarter earnings reported just days before the IPO launch.
The timing, despite the noise in Hong Kong, was spot on. Orders came flowing in from global long-only investors and hedge funds, sovereign wealth funds, regional institutions and emerging market specialist investors, as well as investors from mainland China, including the sovereign.
Their interest was unsurprising to some extent. Asian investors had been waiting for Alibaba to return since 2014 when it passed over Hong Kong for its stringent listing rules and floated on the New York Stock Exchange instead. When it finally came back, investors were more than ready. Mainland-based buyers also had the exciting prospect of Alibaba’s HKEX-traded shares being included in the Hong Kong-Shanghai and Shenzhen stock connects within a few months.
In addition, the Alibaba deal was just what Hong Kong and the HKEX needed at the time. Swooping in with a HK$88bn flotation, the firm was able to demonstrate that there was enough liquidity in the SAR’s stock markets despite the headlines, in a huge vote of confidence for the city.
Despite being worth more than $11bn, the IPO was covered multiple times over, showing the ability of the market to digest billions. Following the success of the trade, Hong Kong’s benchmark Hang Seng index traded up for around a week, after days of poor performance.
In the short run, Alibaba gave a lift to Hong Kong’s stock exchange with its near-perfect IPO execution. But perhaps Alibaba’s most noteworthy impact will be in the long term, encouraging other US-listed Chinese firms to list closer to home. While not everyone has the clout of Alibaba, it has shown that returning with a secondary listing can be done, and done well.
BEST ECM HOUSE
Bank of America
Asia’s equity markets had to endure some big headwinds in 2019. Trade negotiations between China and the US and the eruption of the ongoing protests in Hong Kong meant ECM bankers had to be sharp when spotting windows for deals. Bank of America did that better than its peers during the awards period, making it GlobalCapital Asia’s ECM House of the year.
The success did not come overnight, but was the result of a concerted effort by the bank to broaden and strengthen its ECM franchise since last year.
It did so in a number of ways. First was making some key, strategic hires. In April 2018, the bank tapped veteran ECM banker Tucker Highfield as co-head of Asia Pacific ECM, working alongside Shu Nagata, now also an ECM co-head after heading up Japan ECM coverage at BofA. Highfield joined after around 13 years at Credit Suisse, where he was most recently the head of syndicate for Asia ex-Japan.
BofA also transferred Anvita Arora from London to lead the region’s equity-linked origination business from Hong Kong and to fill the newly-created South Asia ECM head position last year.
Those efforts have borne fruit. The bank’s league table position during the awards period was the result of its ability to execute deals from IPOs to equity-linked bonds, as well as primary and secondary market placements. It had a 3.11% market share among Asia ex-Japan ECM bookrunners during this awards period, versus a 1.41% market share during the same period two years ago, shows Dealogic.
In terms of revenues, it came in sixth during the awards period for Asia ex-Japan ex A-share league tables, raking in $65.49m for a 3.96% market share, compared to ninth place for $42m and a 2.58% share of the market two years ago, according to Dealogic.
One business line that BofA has embedded itself in is that of Chinese technology companies raising funds in the US, which has surged since the new economy trend started to take off last year.
Among the key American Depository Share (ADS) trades the bank led with senior syndicate roles were Tencent Music Entertainment Group’s $1.1bn New York Stock Exchange listing, Pinduoduo’s $1.38bn follow-on and iQiyi’s $1.2bn convertible bond — GlobalCapital Asia’s best equity-linked deal of 2019. In some cases, including with Pinduoduo, BofA managed to do the CB and a follow-on offering for the company, despite not having been involved in its IPO.
BofA has brandished its equity-linked strength throughout the year, boosting its deal flow from two trades during the 2018 awards period — both for real estate companies — to seven during the latest period.
The bank’s franchise in Greater China still needs more thrust to catch up with the likes of Morgan Stanley and Goldman Sachs. But BofA nevertheless maintained a strong overall market share in Asia ex-Japan ECM, ranking fourth by global co-ordinators during this year’s awards period, according to Dealogic data.
With its growing foothold in southeast Asia, BofA ran the international leg of GlobalCapital Asia’s best IPO, Asset World Corp’s record $1.6bn listing in Thailand, alongside Morgan Stanley and UBS. In India, the US firm worked across various deals, helping Standard Life Aberdeen sell down $1.1bn of its position in HDFC Life through three block trades, as well as working with Kotak Mahindra Capital and Morgan Stanley on Vodafone Idea’s $3.6bn rights issue.
The bank’s experience in India was also called upon when Embassy Real Estate Investment Trust held the country’s first real estate investment trust IPO for Rp47.6bn ($673.4m) in March. It was one of four global co-ordinators among a syndicate of 12 bookrunning lead managers.
BofA did not just chase the big deals. The bank has used its reputation as a sound voice in the room to gain mandates and execute transactions worth billions of dollars as well as those worth less than $100m, so long as they are revenue generating, said bankers at the firm.
In a year that saw bouts of volatility, banks needed to be versatile, capturing business across different asset classes and regions. BofA was able to do that. Its efforts at refocusing its business last year benefitted its ECM franchise in 2019, making it a worthy pick of the Best ECM House of the year.