That is Mark Renton's coined acronym for China, India and Australia. The managing director, head of investment banking Asia-Pacific for Citi, says that the three principal countries - China, India and Australia - are showing signs of continued investment banking prospects. While most headlines have been about credit crunches and subprime woes, in the last couple of weeks Citi has priced several Indian equity deals, including an $875 million CB transaction for Tata Steel and an IPO for Central Bank of India and closed the Cemex/Rinker transaction in Australia, which at $15.3 billion is the largest all-cash deal to date in the Australian M&A market. "Markets are very much open in Asia, you have a re-pricing of risk around the world but to date, Asia has shown strong resilience across the region to the problems in the US subprime market," says Renton.
He of course starts with a caveat, saying: "Our near-term view is clearly that some of the exuberance has dissipated" recognising that borrowing costs are on the rise. But Renton says that there's still a large number of $1 billion to $5 billion IPOs in the pipeline, if only one or two more $10 billion IPOs on the horizon in China. In the last six months, Citi has been involved on the $1.9 billion deal for China Coal and the $5.9 billion listing of Citic Bank, which remains Asia's largest IPO for the year. "The pipeline for China is the busiest it has ever been, I don't really see the volatility having too much impact on the deal flow from China," says Renton.
Plus, there is an insatiate appetite for outbound acquisitions and Renton expects more significant outbound China M&A deals that may even top the largest to date, the PetroChina acquisition of PetroKazakhstan. Renton notes that of the 10 largest emerging market companies in the world, six are now Chinese, compared to none just 10 years ago. "You are seeing the development of a number of world class companies in China, global champions, and they will increasingly look outside of their domestic markets for acquisitions," says Renton.
Similarly, he points out that India's corporations are making major acquisitions, referring to Tata Steel's $13 billion purchase of Corus Group, Wipro's announced acquisition of Infocrossing for $600 million, Hindalco's $6 billion buyout of Novelis and Suzlon's $1.6 billion acquisition of REPower to name a few. And while Tata Steel is now going to have to pay more for Corus - a financing which Citi is arranging - as the credit squeeze pushed the cost of borrowing up, Renton is still very bullish on India.
"The psychology of India's corporate heads has changed; they are more risk-tolerant and interested in emerging as national champions," reasons Renton. Provided the borrowing costs steady out, he sees Indian corporations as likely to continue to look overseas "for expertise and resources, even if this is slightly counter-intuitive because when you think about it, their greatest growth potential is probably still domestic".
And finally, he reckons Australia, buoyed by commodity liquidity, will also stay the course on its outbound acquisitions and local consolidation efforts.
"China, India and Australia represent a significant portion of the activity in the region, it's where much of the business will be coming from. But you have to remember that there is also a steady flow now coming from Korea and the Asean region too," says Renton. "This is why Asia offers so much from a career perspective, you have a number of countries across the region with different DNA, that all require different strategies and skill sets. It is an immensely challenging yet rewarding job to be charged with managing such a region."
That's one of the reason's Renton, who has been working as an investment banker in the region for the past two-and-a-half years enjoys Asia. While most bankers enthuse about loving the region and the work (it's good public relations), his actions speak louder than words. He first visited China in 1987, which automatically puts him in a more rarefied crowd, and he also took vacations in the region for the past few decades - proudly talking about how his son, who is just eight, has visited destinations from Laos to Lijiang, making him more travelled than most in Asia. Renton's office is full of the signs of an old Asian hand - a Tibetan Thanka from one client, casino chips from another.
And so Renton enjoys stepping back, and taking a macro-view of the region that so fascinates him. He views Japan as re-emerging, and seeking a greater economic and political influence in the region, while Korea, which had stepped into the void that Japan left behind during its own domestic financial woes, will continue to look more outward than ever. South Korea's Doosan's announcement that it will buy the bobcat, utility equipment and attachments business units of Ingersoll Rand for $4.9 billion, is a prime example of Korea's ongoing efforts to be a global player, says Renton. And he sees India as finally representing the political and economic counterpoint to China that it's long been billed to be ready to fill.
Meanwhile, he says Western Europe and the US are essentially trying to figure out politically how to respond to the new economic reality that is unfolding in Asia. "You have a situation where the number of actors that have a role - and a meaningful role - has greatly increased so that you have an absolutely fascinating environment," says Renton.
In terms of future career moves, Renton clearly he is very happy where he is right now given the dynamics that are driving Asia to the forefront of the world map. "You have China and India increasingly looking overseas for acquisitions, corporate Japan is back engaging with Asia, you have hedge fund, private equity and Middle East money flowing into the region.
The pools of capital really are in Asia - as an investment banker, Asia is at the epicentre of the global capital markets and the place to be."
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