One to Watch - UBS

  • 21 Jun 2006
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Picking a winner

Of all the banks on Asia's leveraged finance bandwagon, UBS looks the likeliest to succeed, Steve Garton reports.

Interest in leveraged finance really took off in Asia in the first half of 2006, with a number of well known commercial and investment banks dedicating resources to this high profile sector. The number of announced deals has yet to catch up and it will be some time before there is enough debt business to satisfy all the banks that have built teams.

The One To Watch nomination is a vote of confidence in UBS, which is surely best placed among all the pretenders to develop its expanded Asian leveraged finance unit into a sustainable business.

The bank has a successful merger and acquisition franchise that is well known across Asia, as well as an established Australian leveraged finance team under Kevin Bush, head of syndicated finance for Australia. It has proved both its ability and readiness to underwrite large loans, and looks to have made some very savvy hires over the course of the last year.

UBS recruited David Tropp, then Citigroup's head of global loans for Japan, in November 2005, naming him managing director of global leveraged finance and head of syndicated finance for Asia Pacific. Aaron Chow, another well known name in Asian loan circles, joined from DBS shortly after as executive director and head of syndicated finance for non-Japan Asia.

"Private equity sponsors are increasingly important for the leveraged finance business in Asia. Not only are they are growing in number but they also account for an increasingly large proportion of market volume," says Steve Bennett, an origination specialist who is now managing director and head of leveraged finance for Asia Pacific at UBS in Hong Kong. "We have put in place dedicated resources to provide M&A and financing ideas to this important client segment."

"UBS is focused on developing event-driven financing opportunities from companies that are looking at strategic M&A opportunities and private equity funds looking at leveraged buy-out opportunities," says David Tropp, who is based in Tokyo. "We look to provide access to a full range of financing structures, including senior debt, subordinated debt, mezzanine debt, high yield bonds and so on. In some cases, we also arrange for funds to be made available to support bidders in public-to-private acquisitions."

One example of UBS's ability to commit funds is its support of Singapore's PSA International in its bid for P&O in early 2006.

"The £4.2bn ($7.5bn) in financing we provided to PSA demonstrates UBS's ability to underwrite substantial amounts for its clients," says Chow. "This transaction demonstrates how we can build on our already successful M&A franchise."

In Australia, where leveraged finance is a more mature product, UBS is advising Australian support services firm Brambles on the disposal of its Cleanaway and Industrial Services businesses, which is likely to become the largest leveraged buy-out in the Australian market. Other mandates include the A$228m ($170m) debt financing of the acquisition of Worldwide Restaurant Concepts by Pacific Equity Partners in September 2005, where UBS ran the books alongside National Australia Bank.

If the bank can successfully "staple" financing to bids and auctions — as it has been looking to do on the Brambles sale — then the strength of its merger advisory business will surely help the leveraged finance team get ahead of the competition.

Key staff: Steve Bennett (managing director and head of leveraged finance for Asia Pacific), Kevin Bush (head of syndicated finance for Australia), Aaron Chow (executive director and head of syndicated finance for non-Japan Asia), David Tropp (managing director of global leveraged finance for and head of syndicated finance for Asia Pacific)
Key hires: Aaron Chow (DBS), David Tropp (Citigroup)
Key deal (2006): PSA International, £4.2bn underwriting commitment, January
Front office headcount: 15 (including Japan)

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  • 21 Jun 2006

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