Steadfast since the crisis
Asia is central to UBS's global equity market ambitions. As Mark B Johnson reports, the firm is reaping the benefits of its steady commitment since the financial crisis.
UBS has established itself firmly as a regular contender for one of the top three slots in the Asian equity capital markets league tables. The bank's strategy is to achieve blanket coverage of the region. Its large investment banking and ECM teams are keen to offer imaginative solutions and top class deal execution, as both a local house in each market and a global powerhouse.
Matthew Koder, co-head of global equity capital markets at UBS, has no doubt where the firm will focus much of its efforts in the years ahead. "Asia is absolutely vital to the firm's success in the future," he says. "[Non-Japan] Asia is the main capital markets platform in the [Asia Pacific] region and it is our intention to be continuously at least in the top three in all the main individual markets."
Koder is based in Hong Kong, where he is also head of Asia Pacific ECM. "This shows how important we see the region as being to the firm's future," he comments.
Koder arrived at UBS from Goldman Sachs in 2003. Since then, the bank has won more than its fair share of major Chinese deals and of accelerated bookbuild block trades, both areas that Koder and UBS have identified as vital for the firm's success. Such deals leverage the bank's large balance sheet, extensive investment banking coverage, top ranked research and powerful global equity sales and trading.
John Sturmey, managing director and head of syndicate at UBS in Hong Kong, considers the UBS ECM model as one that is based on a well diversified mix of clients from north to southeast Asia.
"The major franchise deals in the region are not necessarily always the most profitable," he reports, "but we also mine many different seams for our mandates and often turn up very profitable transactions in the small to mid-cap space."
Koder says that even in the difficult times during and after the Asian financial crisis and in the years that followed, UBS stuck firm with its policy of regional coverage. "Within this region we have stayed resolute and committed even through less fortunate times for these economies and capital markets," he says.
This is borne out in UBS's success in small markets such as the Philippines, as well as much larger ones like China, Singapore, Taiwan or South Korea.
Our commitment even to less lucrative markets like the Philippines has seen the reward of three interesting transactions already in 2006," Koder adds.
UBS led energy company First Gen Corp's $170m IPO in January, property firm Megaworld's $106m follow-on offer in April and food and beverage company Universal Robina's $236m share sale in February.
Sutha Kandiah, executive director and head of ECM for southeast Asia, argues that UBS has a sustainable, relationship-driven business model that can ride the cycles through bullish and bearish times ahead.
"We are," he claims, "one of few bulge bracket investment banks in southeast Asia with a unique proposition to offer our clients, holding securities licences in each of Singapore, Malaysia, Indonesia, Thailand and the Philippines, with sales, research, trading and country coverage on the ground since the 1997 crisis. As the region has recovered over the last few years and growth has picked up, we are being rewarded by our clients for the long term support and relationships we have built with them during the good and bad times."
UBS has enjoyed huge success in China, leading, for example, mobile phone maker Foxcom International's $476m IPO in January 2005 and shipping company China Cosco's $1.225bn flotation in June last year. And of course, the $11.2bn Bank of China IPO in May.
Having been a relative laggard in India, Koder argues that UBS is now at the top of the heap. "We were relatively weak in that market until a few years ago, but we were ranked number one for international capital raising in the country in 2005 and we are now one of the leading equities houses in the country."
Notable UBS deals in India include Jet Airways' $433m IPO in February 2005, a $558m block trade in mobile phone company Bharti Televentures in March last year and Infosys Technologies' $1.072bn ADS issue that May.
|Key clients: Bank of China, China Cosco Holdings, Link REIT, Shinhan Financial Group, Korea Exchange Bank, LG Philips, SK Corp, Chunghwa Telecom, Ranbaxy Laboratories, Infosys
Best deal of 2006: Bank of China's $9.73bn IPO ($11.2bn with greenshoe)
League table positions (2001-05): 3, 5, 4, 5, 2