BEST BANK FOR COVID RESPONSE
This year will go down in history for being unpredictable and volatile, with the Covid-19 pandemic wreaking havoc on the lives of people, economies, companies and capital markets. Everyone had to adjust to a new way of life, including banks that had to rapidly adapt to working from home, execute deals virtually and pitch to clients through video calls.
One bank stood out for its comprehensive response to the coronavirus crisis when faced with a test of resilience and when standard business continuity plans no longer applied. Deutsche Bank is GlobalCapital Asia’s best bank for Covid response in 2020.
The success of its measures in Asia were such that they were used as the benchmark for the bank’s response globally.
Deutsche Bank’s approach was three pronged. The first challenge was around finding a solution to allow clients to execute and settle trades safely and remotely. Deutsche leveraged on its Autobahn app to offer its clients access to information and services across asset classes. Autobahn saw a 300% increase in client demand for electronic execution access to onshore markets across Asia amid the pandemic.
It also offered dollar liquidity support wherever possible to clients facing a sudden shortage in funding. Its strong Asia-wide onshore market presence in a host of countries meant Deutsche was able to help clients sell more than $500m of synthetic notes and $1bn of total return swaps and credit-linked notes in Asia’s local currencies in 2020.
The second hurdle was tailoring unique solutions to meet its customers’ needs. One novel example was around the firm’s corporate banking team in Singapore helping a cable and wire maker set up a new legal entity in India through a capital injection.
Deutsche had to navigate lockdowns in both India and Singapore, a tight regulatory timeline, tricky foreign exchange conversion rules and caps on how much money can be injected in one go. This required close co-ordination between the bank’s service, product and coverage teams – in both Singapore and India.
The bank also worked with a number of other corporate clients to offer Covid specific support. These included helping a medical technology company track its payments for equipment delivery to China, offering payment support to a Chinese shareholder of a Portuguese client looking to donate medical equipment from the Mainland to the European country’s hospitals, and helping a Singapore client make timely payments to its staff.
The third leg of Deutsche’s Covid response was to ensure swift decision making regionally in Asia. It set up what it calls ‘crisis war rooms’ to tackle this. Each country in Asia set up a team to focus on local rules, with these meetings held daily at the peak of Covid. Secondly, an Asia Pacific wide weekly forum was held to share experiences of each country, and third a weekly forum for chief operating officers of different business lines was held to discuss the impact of the pandemic. Like a number of other banks, Deutsche also put together a split-team process in early February and moved to remote working when necessary.
Its ability to adapt was also evident in capital markets. On DCM, Deutsche was part of most, if not all, key themes this year, including the spike in liability management exercises and ESG-focused transactions. It was involved in India’s first public international social bond, helping Shriram Transport raise $500m. It worked with Kaisa Group, the Chinese property company, to launch the Mainland high yield market’s first sustainable perpetual bond.
It also braved turbulence stemming from Covid on Macau’s gambling industry, helping credits like Melco Resorts, Studio City and Wynn Macau tap the bond market.
In the equity market, it navigated a hit to 3SBio’s Hong Kong-listed shares due to the pandemic to find a window for the pharmaceutical company to sell a euro convertible bond while simultaneously repurchasing an old CB. Deutsche’s loans team, meanwhile, switched focus to executing more private transactions, while boosting emphasis on their existing roster of clients.
For understanding the tone of the market rapidly, offering innovative and much-needed solutions to its client base, and for adjusting its focus in line with the changing conditions, Deutsche Bank deserves kudos for its Covid response.
BEST ASIAN INVESTMENT BANK
Haitong International Securities
What ingredients make up the best Asian investment bank? A solid presence in the home market with a well-rounded geographic reach, a diversified business across all asset classes, a hefty client roster, and numbers that show growth — as well as the promise of more to come — are all important. Haitong International Securities found the right recipe this year to make it our winner of the best Asian investment bank award.
Haitong’s business was strong across both ECM and DCM. Working on international Chinese deals was, of course, the bread and butter of the bank’s investment banking business. That played out through its portfolio of having worked on about 40 Hong Kong IPOs during GlobalCapital Asia’s awards period, of the roughly 130 transactions that were priced. Of those deals, it held the role of sponsor on five IPOs during the first half of the year.
Its coverage of the Hong Kong IPO market was also diverse, given it worked on transactions in the entertainment, healthcare and banking industries.
Its key deals included a $1.38bn IPO for Hangzhou Tigermed Consulting and Zai Lab’s secondary listing on the bourse, with Haitong one of the sponsors on the former and a bookrunner on the latter. It was also among the bookrunners on JD.com’s blockbuster secondary IPO in Hong Kong, which took the gong of best ECM deal and best IPO of 2020.
Haitong’s Hong Kong ECM credentials have long been established under the leadership of veteran banker Kenneth Ho, managing director of ECM. But this year, the bank’s franchise added more feathers to its cap outside of the city.
After having entered the US market in 2018, Haitong has been positioning itself there for IPO mandates. By mid-October this year, Haitong had worked on three US listings in 2020, including the high-profile transaction by Chinese electric carmaker XPeng.
On top of that, it expanded its presence in India, having consolidated some of its India business in 2016. This year, Haitong worked on Gland Pharma’s Rp65bn ($870.6m) India IPO, the largest pharmaceutical listing in the country, as a bookrunning lead manager. The deal was Haitong’s first ever India IPO. It was also the only Chinese firm to feature on the deal.
These strong results have been thanks to long and concerted efforts by the investment bank’s senior management, which have also spent time this year bringing in new blood to the firm.
Haitong’s group head of corporate finance and co-chairman of investment banking is Sean Huang, a veteran banker who has worked at the firm since 2012. But Haitong made two senior hires this year. It tapped Li Kefei as co-chairman of investment banking, hiring him from Deutsche Bank where he had been co-head of ECM for Asia Pacific. Haitong also brought in David Ng as vice-chairman of investment banking. Ng had previously been at Nomura as managing director of Asia investment banking.
Haitong’s DCM business, particularly high yield, also flourished despite a volatile year for the market, due to the bank’s work over the past few years to grow its sales and distribution network, including by building relationships with global asset management firms like BlackRock, Eastspring Investments and PAG.
The DCM business’s main clientele were Chinese names seeking dollar funding, including firms like KWG Group Holdings, Seazen Group and state-owned China National Chemical Corp.
The efforts put behind-the-scenes to boost the investment banking division is reflected in the numbers. DCM revenues were $180m with a fifth place ranking in Asia ex-Japan and a market share of 4.11% this awards period, versus slightly bigger revenues of $207m, a third place ranking and a 4.64% share of the market last year.
Haitong’s bankers are already planning ahead. In DCM for instance, the firm has a seven-member team in China to cater just to local government financing vehicles, which are frequently seen in the dollar bond market. But having realised that Haitong’s relationship with state-owned enterprises is not as strong as its peers, the bank plans to set up a similar team to focus on central government SOEs.
Similarly, in ECM, it is hoping to marry its India and US build-out and help Indian companies looking for IPOs in the US following a regulatory change this year. There is rising interest for India into US IPOs — and Haitong looks set to play a big role in the market.
BEST INVESTMENT BANK
What a year it has been. The Covid-19 pandemic has cost lives, led to economic turmoil across the globe and forced difficult — and sometimes controversial — decisions from governments.
In this context, it may seem almost perverse to be wondering about the impact on investment banks. But there are reasons to extol the virtue of a global financial system that, after being cast in the role of the villain in the last crisis, has proved a something of a hero in this one. Banks have helped ease the damage of the crisis, making sure funding channels remain open, finding ways to keep up capital market supply despite travel bans and lockdowns, and providing a crucial source of support for their most important clients.
Savvy investment banks have also been able to highlight opportunities for corporations that can contribute to the fight against Covid-19, whether the medical or economic impact. They have also been able to cast a spotlight on those companies that look likely to prosper in a post-Covid world. Credit Suisse has achieved remarkable success on both fronts.
Take the HK$10bn follow-on offering of shares in Alibaba Health, a deal that clearly benefited from a surge of interest in healthcare stocks in the midst of the pandemic. Credit Suisse worked alongside Citi as a placing agent for the deal. That followed its success as a sponsor and global co-ordinator on Alibaba’s mammoth Hong Kong secondary listing in November 2019, a deal worth HK$101bn ($13bn) after the greenshoe was exercised.
It also closed an innovative transaction for Weigao, another Chinese healthcare company. The $150m deal was the first exchangeable bond from an Asian healthcare company and the first equity-linked deal under the H-Share Full Circulation Scheme, which allows large shareholders of Hong Kong-listed Mainland companies to sell their stocks.
These two deals are just part of an impressive year for the equity team, which ran Citi close for our best equity house award. Although the sheer size of some transactions is enough to turn heads — its work for the Alibaba companies being an obvious example — the variety of transactions it has brought to the market is just as impressive.
It has scored in the chapter 19c market, which allow easier secondary listings in Hong Kong for innovative companies, bringing a $3.1bn deal for NetEase. It showed its geographical diversity with a pair of block trades in Vietnamese real estate developer Vinhomes, worth a combined $304m. It helped China Yangtze Power closed a $2bn GDR listing, taking advantage of the Shanghai-London Stock Connect. There is little, it seems, that this ECM team cannot do.
The bond team also had a stellar year, despite clear difficulties in the high yield segment, which is undoubtedly Credit Suisse’s market of choice. It defied volatile periods – and sometimes nervous investors – to bring a raft of deals for Chinese property companies, including advising on crucial liability management exercises for China South City Holdings, Greentown China Holdings, Modern Land China Co and Times China Holdings.
Credit Suisse also flexed its ratings advisory muscles in its work for a range of issuers from different sectors and different countries, including Cambodia casino operator Naga Corp, Philippine financial institution Rizal Commercial Banking Corp and Indonesian developer Lippo Karawaci.
That offers a glimpse of one of the big strengths of Credit Suisse’s business. Like most banks, it relies on China for the bulk of its high yield supply – but it has plenty of other avenues to explore when Chinese high yield hits a roadblock.
In the loan market, Credit Suisse showed the breadth and depth of its business in a year when volumes took a big hit due to the pandemic. The bank nevertheless worked on deals for Vietnamese borrowers like VPBank Finance and Vinpearl Joint Stock Company, sovereigns like Pakistan and Laos, and high quality credits like Ant Financial, which wrapped up a $3.5bn amendment and extension and raised a further $3bn at the end of 2019.
Credit Suisse was quick to adapt to the changing conditions in the loan market. It leveraged its close relationships with business owners and entrepreneurs to offer them private loan solutions when the public syndication market was in turmoil. It similarly leaned on its private banking investor clients for distributing deals when bank liquidity was thin. That rapid switch in focus is testament to the strength of the bank’s established loans business.
The market that may have been hardest hit by the coronavirus this year is M&A, which is much harder to close over Zoom calls. Nonetheless, Credit Suisse impressed with its advisory work this year, closing Wanda Sports’ $730m sale of the Ironman triathlon franchise, two deals for Zijin Mining Group worth almost $1.2bn and a $650m investment in Vinhomes from a group led by private equity firm KKR.
It has undoubtedly been a difficult, unpredictable year for investment banks. They had to adjust to periods of extreme volatility, find ways to move forward despite clients and employees working from home and prove their ability to bring innovative deals that offer glimmers of hope amid an otherwise depressing year. Credit Suisse’s investment banking team, led by Edwin Low and Zeth Hung, has done all of the above. It has been a remarkable performance.