FinanceAsia will toast the winners at a cocktail reception at the Conrad in Tokyo on May 15.
BEST BANK
MUFG
MUFG's Nobuyuki Hirano
Mitsubishi UFJ Financial Group win this award due to the recent successes chalked up by its global alliance with Morgan Stanley and on account of its measured expansion in Southeast Asia.
Cooperation between financial institutions is notoriously hard to achieve but this Wall Street firm and MUFG are forging a deal machine. Together Morgan Stanley and MUFG have around 400 bankers based in Tokyo, more than global rivals on the ground. And while other Japanese houses have bigger domestic teams, they lack Morgan Stanley’s global network of about 2,000 bankers.
An illustration of how this combination is making waves is Morgan Stanley’s and MUFG’s sequence of leading roles for Suntory, even though the drinks group’s traditional go-to bank is rival megabank SMFG. Suntory even overlooked MUFG’s historic keiretsu links to rival brewer Kirin and Morgan Stanley’s advice to Kirin when a merger between the two was being contemplated in 2009.
Morgan Stanley was Suntory’s adviser on its $2.1 billion acquisition of Lucozade and Ribena. During Suntory’s $16 billion bid for US peer Beam, Morgan Stanley brought MUFG’s lending unit BTMU into the deal to provide a $13 billion bridge loan. MUFG was well positioned to finance this deal through its ownership of Union Bank of California. Morgan Stanley also had a leading role on Suntory Beverage & Food’s initial public offering of shares.
Such alliances need sponsorship from the top and a determination to overcome any bureaucratic inertia. MUFG president and chief executive Nobuyuki Hirano played an active role in getting internal approval for the loan to Suntory and pushed it through.
MUFG, Japan’s biggest bank, has also demonstrated it can expand in Asia and not overpay in the process. BTMU acquired 72% of Thailand’s Bank of Ayudhya for $5.3 billion in 2013, the largest-ever purchase of a Thai bank.
BTMU managed to secure an exception to the foreign ownership laws prohibiting control of Thai banks by foreigners.
It also paid a price equal to 2 times book value compared with rival SMFG’s acquisition in May of a 40% stake in Indonesia’s BTPN at about 4.5 times book value.
BEST INVESTMENT BANK
Nomura
Nomura's Koji Nagai
Nomura has regained its crown as Japan’s best investment bank after a solid performance at the heart of Japanese deal making.
In capital markets, Nomura won our Best House awards for DCM and ECM while in secondary markets it walked away with prizes for equity and fixed income.
Japan’s largest investment bank has cashed in on retail investors’ appetite for stocks spurred by the government’s pro-growth policies and a weaker yen.
Nomura used to best advantage its retail brokerage network to anchor deals even during volatile markets. Its prowess was demonstrated in March when Japan Display’s IPO road show was rained on by the Crimean crisis. Japan Display’s syndicate of bankers, including Nomura, simply beefed up the allocation to retail investors and the deal got done.
Under the leadership of chief executive Koji Nagai, who took the top job in 2012, the firm has put insider-trading scandals behind it and foreign expansion on the backburner as it focuses on its core strength – Japanese finance.
BEST M&A HOUSE
Morgan Stanley
Morgan Stanley’s global alliance with MUFG paid off in spades during the review period, helping them secure advisory mandates on some of the largest and most complex deals involving Japanese companies.
Japanese companies, faced with a saturated and mature domestic market, are either making acquisitions abroad or bulking up domestically. Morgan Stanley and MUFG have helped clients with both options recently, in the process ousting competitors from long-established advisory relationships.
Morgan Stanley advised Suntory when the Osaka-based firm paid $2.1 billion for the Lucozade and Ribena soft drink brands and bid $16 billion for Beam, owner of bourbon whiskey brand Jim Beam. That’s despite the fact Suntory had previously used other banks for advice, such as Nomura.
Morgan Stanley was also a force to be reckoned with in domestic transactions – winning mandates on deals such as the integration of the thermal power generating operations of Mitsubishi Heavy Industries and Hitachi.
The US bank’s role on Applied Materials’ $9.34 billion acquisition of Tokyo Electron too was noteworthy, providing a rare example of a Japanese company giving up independence in order to gain global market share. Tokyo Electron hired Morgan Stanley to negotiate with Applied Material’s adviser Goldman Sachs, despite its previous relationship with Nomura.
Morgan Stanley was also an adviser on FinanceAsia’s choice for Best M&A Deal, LIXIL’s $3.83 billion acquisition of Grohe and DBJ, the largest Japanese acquisition of a German company.
BEST ECM HOUSE
Nomura
Nomura's Toshiyasu Iiyama
Nomura is our choice for Best ECM House because of its leading role in some of the largest equity issues, including Suntory Beverage & Food’s $4 billion IPO, Japan Display’s $3 billion listing and Mitsubishi Motors’ $2.56 billion follow-on share offering, and because of its distribution network and innovation.
Nomura was comfortably top of the league tables in terms of market share, value, fees and number of issue. It helped clients such as Suntory expand beyond their stagnant domestic market. Suntory’s IPO helped it reduce debt and prepare for future growth. Dentsu’s $1.24 billion follow-on issue helped relieve pressure on its credit rating as a result of overseas expansion.
Nomura managed to help issuers raise capital despite tough market conditions. The benchmark Nikkei 225 index dropped 20% between May 22 and June 13, coinciding with Suntory’s IPO, which still priced above the bottom of the marketing range and at a premium to its peers.
Morgan Stanley drew close to distributing nearly as large a part of the institutional tranche of IPOs internationally during 2013/2014, but Nomura held onto its lead. Nomura’s retail prowess in Japan also helped it to pull away from the rest. It dominates the field in terms of branches, customer accounts and value under custody. Retail demand helped anchor deals in volatile markets, including Japan Display’s IPO, which only got done after the company’s bankers –including Nomura – beefed up the allocation to retail investors.
Nomura also helped develop Japan’s capital markets with the first commitment-type rights offering, by IR Japan last April, and with the first such deal that US investors could participate in, namely Nichi-ko’s 13.5 billion yen transaction in November.
Nomura advised on the first US-dollar convertible from a Japanese issuer in over a decade. Shizuoka Bank combined a zero-coupon convertible bond with a share buyback keeping the probability of conversion low enough and satisfying its dollar-funding needs.
Nomura also led rare public offerings without listings, known as POWLs in the industry, for two European companies: Belgian post group bppost in June and French-Italian clothing firm Moncler in December. The deals brought diversity to Japanese investors and a reliable chunk of demand, a quasi-cornerstone bid, from Japan for issuers. Experience in a post office share offering also puts Nomura in an enviable position ahead of Japan Post’s expected IPO, which bankers expect will be one of the world’s largest.
BEST DCM HOUSE
Nomura
This award seeks to recognise a well-rounded franchise in both Japanese and international markets, which have historically tended to be somewhat disengaged from each other. Nomura has gone some way in bridging that gap.
In the period under consideration, Nomura won mandates as a joint book runner for several Japanese issuers raising funds internationally and on the same terms as the foreign banks. It was the only Japanese house to do so. Nomura was on the biggest number of international deals compared with other Japanese banks and was present on the year’s most notable deals, including SoftBank’s $3.3 billion dual currency high yield global bond offering due 2020, Rabobank’s four-tranche Y101.5 billion Samurai and NTT Docomo’s Y50 billion 10-year bond offering.
Nomura was active helping debut issuers sell domestic bonds, working on five out of seven inaugural deals. It was also bookrunner on all bar one of the domestic straight bond transactions above Y50 billion. This includes Takeda Pharmaceutical’s Y120 billion bond, SoftBank’s Y400 billion retail offering, and Sony’s Y150 billion bond.
In addition, Nomura acted as lead manager on all the major Samurai deals and as joint book runner on the four Samurai deals above Y100 billion, excluding JP Morgan’s self-led issue. Nomura also advised four of the year’s five debut Samurai bond issuers, namely Pohjola Bank, Credit Agricole, Svensla Handlesbanken and Development Bank of Mongolia.
BEST SAMURAI HOUSE
Daiwa
Daiwa's Hidenobu Shirota
This category is incredibly competitive but Daiwa rose above the rest and stands out as this year’s best Samurai house. Unlike some of the commercial houses Daiwa, as a pure investment bank, cannot take advantage of strong lending relationships to secure mandates. To compensate for this, Daiwa has provided excellent service. In the words of one issuer: “We are not easy to work with but Daiwa goes that extra yard help us get deals done despite our limitations.”
Daiwa ranks second as underwriter for all Samurai bonds for the period under consideration, according to ThomsonReuters league tables.
The bank has a strong record with Japan Bank of International Cooperation-guaranteed inaugural Samurai issuers, having been selected by 10 of 11 borrowers and been involved in 12 of 14 deals, topping the bookrunner league tables in this category. Its bookrunning role in both the JBIC-guaranteed bonds that came to market last year, namely the Y22.4 billion 10-year deal from the Central Bank of Tunisia and the Y30 billion 10-year bond from the Development Bank of Mongolia, reflects in competence in this area.
It displayed a broad geographic range, advising issuers from Australia, North Asia, Latin America as well as from across Europe, winning the confidence of supranational, sovereign and agency borrowers and emerging market issuers, such as the Slovak Republic’s inaugural dual-tranche three- and five-year Samurai. Daiwa also advised Rabobank on its Y101.5 billion samurai, which paved the way for a flood of other Samurai issues in the second half of the year.
Finally, Daiwa distinguished itself by galvanising investor interest despite challenging market conditions by initiating roadshows outside of Tokyo. The bank performed particularly well in its distribution performance, ranking first in 2013 in terms of the percentage of paper placed with investors.
BEST EQUITIES TRADING HOUSE
Nomura
During a volatile 12 months for Japanese equities Nomura played a vital role by providing liquidity. The Japanese brokerage is widely credited with being responsible for the largest percentage of commission-weighted trading in equities. Nomura’s share is boosted by its extensive research into Japanese companies, which keeps institutional investors engaged and paying fees.
It has a broad, well-supported franchise from cash equities, through structured retail products to prime services.
Nomura also kept investors informed via events such as the Nomura Investment Forum held in December in Tokyo, where 235 Asian companies met with 1,700 global investors from around the world.
Nomura was also the winner of our Best ECM house award.
BEST FX HOUSE
Deutsche
Deutsche's Tomoo Onishi
Deutsche wins this award thanks to its uninterrupted provision of liquidity for retail and institutional clients during a volatile year’s trading, as well as its large market share of 16.5% of flows and leading technology.
The transaction volume from the apocryphal Mrs Watanabe is now larger than interbank transactions and is still growing, spurred on by Abenomics. Deutsche commands a market share of 24.9% of the retail aggregated flow in Japan, up from 20.2% in 2012, and trades with the large majority of the margin FX companies in Japan that service the Mrs Watanabes.
Deutsche is now expanding this business model elsewhere into Asia. And as FX trading for retail brokers and institutional investors has become more electronic, so Deutsche has made its technology faster and platforms more stable. Deutsche was among the first to place servers in Tokyo three years ago and last year it redesigned its interface with clients with an ultra-low latency product called Rapid.
For corporate customers Deutsche introduced its Autobahn Corporate Treasury in Japan in 2013, which helps with the internal control of subsidiaries in Asia as well as trades on behalf of subsidiaries. Deutsche also expanded its Japanese-speaking service desks in Asia to service Japanese corporates moving business overseas.
BEST FIXED INCOME HOUSE
Nomura
Nomura’s strengths as a domestic fixed-income powerhouse are well established, ranking highly in both domestic and international surveys as a brokerage and research house for FX and rates. It is also well known for its structuring expertise and bespoke financing solutions, facilitating market access, capital preservation, yield enhancement, and alpha generation for its clients.
Nomura has a solid foothold in both yen and non-yen products, the only Japanese house to rank in the top five in both categories, benefiting from an increasingly strong international fixed-income franchise. It has gained considerable market share since 2009 in US Treasuries, US dollar-denominated mortgage-backed pass-through securities and non-yen-denominated investment grade credit, while boosting its yen product offering overseas.
Meanwhile, its global market share has steadily increased from 4.2% in the first half of financial year 2011/12, to 4.3% in 2012/13, and 4.9% in 2013/14.
Nomura is the leading providing of JGBs, with an 11.9% market share. It was the top dealer in JGB auctions for the period January to September 2013.
BEST ISSUER
Rabobank
Rabobank has been a consistent borrower in Japan since 2008, with twice-yearly Samurai deals of around $1 billion equivalent. This has allowed the Dutch bank to secure a reliable and affordable funding source during periods of high volatility, when other markets may have been closed. The bank is a well-known and popular name in Japan and, unusually for a foreign borrower, has an office in Tokyo dedicated purely to fundraising activities in Japan.
Rabobank successfully navigated the first half of 2013 when it priced a Y101.5 billion samurai even as the Bank of Japan’s extremely accommodative monetary policies caused violent shifts in nominal yen rates and European credit spreads were tightening.
Yields on 10-year Japanese Government Bonds (JGBs) went from 0.44% on April 4 2013 to 0.60% on May 9 and 0.862% on May 14. Meanwhile, European borrowers had seen their own spreads tighten sharply over the previous year as existential worries faded in the eurozone and economic conditions stabilized. So much so that Rabobank was looking at a spread in the mid-teens by May 2013, a difficult pill for investors to swallow. What’s more, Rabobank’s credit curve flattened significantly, with the difference in spreads from three-year to five-year fixed-rated tenors tightening from a 15bp-spread in October 2012 to just 4bp in May 2013.
Eventually, Rabobank priced a four-tranche Samurai consisting of a Y41.3 billion three-year fixed-rate at offered side swaps plus 10bp, a Y11.8 billion three-year floating rate at three-month yen Libor plus 20bp, a Y4.9 billion five-year floating rate at three-month yen Libor plus 24bp and a Y43.5 billion five-year fixed-rate at offered side swaps plus 14bp. The latter was the lowest spread achieved by a borrower in the Samurai market a since 2007, when National Bank of Australia priced at offered side swaps plus 8bp.
Several big-ticket investors did not participate in the deal, unable to accept the new spread regime. Despite this, Rabobank was able to garner Y100 billion in orders from over 100 investors not just from the Tokyo area, but also - and again unusually for a foreign borrower - regional buyers as a result of extensive meetings throughout Japan.
The deal re-opened the market for other high-grade names and heralded a new rates and spreads environment in the Samurai market.
BEST LAW FIRM
Linklaters
Linklaters' John Maxwell
Linklaters has a rounded practice in Tokyo that offers integrated Japanese and international legal advice across a broad range of practice areas, which makes it tricky to compare to the more niche Wall Street firms that make a specialisation of advising on landmark securities and M&A transactions.
However Linklaters had an excellent year, advising on such landmark deals such as our Best Cross-Border M&A deal, it helped LIXIL with its $3.84 billion acquisition of 87.5% of Grohe and BTMU on its $5.6 billion acquisition of a stake in Bank of Ayudhya in Thailand.
In capital markets, it advised on Sharp’s 120 billion yen global stock offer and in debt it worked with Softbank on its 200 billion yen retail offering of corporate hybrid securities.
Linklaters also worked on a plethora of smaller deals across all asset classes and industry sectors, showing a commitment to service in Japan that marks it out as the country’s best firm.
