Achievement Awards 2018: Deal Awards

We continue the announcement of our annual Achievement Awards winners with the outstanding deals by category across the region.

FinanceAsia is pleased to announce the winners of its deal awards, the second of a three-part series revealing our Achievement Awards for 2018.

We will announce the best organisations in a variety of categories tomorrow. But for now — the following deals were the most impressive among all those we considered across various categories.

 

 

 

 

DEAL OF THE YEAR, BEST M&A DEAL

Walmart’s $16 billion acquisition of a 77% stake in Flipkart Online Services

Sell side advisors: Goldman Sachs, Raine Group

Buy side advisors: Barclays, JP Morgan

Sell side legal advisors: J. Sagar Associates, Allen & Gledhill, Cyril Amarchand Mangaldas, Dentons Rodyk & Davidson, Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, Khaitan & Co, Allen & Overy, TriLegal Partners

Buy side legal advisors: Gibson Dunn & Crutcher, Hogan Lovells, Shardul Amarchand Mangaldas & Co, WongPartnership

If there ever was a deal that symbolises so many current market trends then this is it.  

First and foremost, it is an M&A deal which underscores the online revolution that is radically re-shaping the dynamics of consumer behaviour. And it does so in a country, which is set to become the world’s most populous within the next decade but remains underpenetrated on the e-commerce side.

It is also a deal, which telegraphs the valuation inflation that propelled the world’s biggest tech companies ever upwards for most of 2018. SoftBank Vision Fund, for example, almost doubled its return in Flipkart in the space of less than one year.

Goldman Sachs did a great job achieving a high valuation for its client of 4.6 times implied net FY18 sales at a time when Chinese comparables were trading around three times.  Amazon’s reported last minute bid must have been a great help in that respect.

Yet the deal appears to be a win-win for both sides. Walmart gets access to a fast growth market after exiting more developed ones in Western Europe. Flipkart, meanwhile, gets the financial muscle and supply chain expertise it needs in its battle to make sure Amazon does not win the hearts and minds of Indian consumers.

 

BEST EQUITY DEAL

Naspers $9.8 billion disposal of a 2% stake in Tencent

Joint global co-ordinators: Bank of America Merrill Lynch, Citi, Morgan Stanley

Legal advisors:

Issuer: Paul, Weiss, Rifkind, Wharton & Garrison, Webber Wentzel

Managers: Davis Polk & Wardwell, Werksman Attorneys

Naspers’ $9.8 billion selldown in Tencent will be talked about by stock market investors for the next decade or more.

There were many talking points – from the sheer size of the offering, and the surprise sale in one of the world’s top five valuable companies, to the sellers' mouth-watering investment returns of over 10,000 times since it invested in what was then a little-known startup in China in 2001.

It was a surprise to the market when the transaction was unveiled in March because Naspers had been a long-term shareholder and had not sold any of its stock in Tencent for the past 17 years. Coupled with the fact that Tencent is one of the most sought-after stocks globally, the transaction was a no-brainer for some money managers at that time.

In terms of execution, the deal was launched without price guidance to allow a full price discovery process for the 2% stake to be released into the market. In addition, the short notice from Naspers also suggested that the bookrunners had limited visibility on demand in the early stages of the bookbuild.

And while the share sale was priced at a 7.8% discount to the last closing price, Tencent shares actually stayed buoyant for the next trading day and ended up just 4.4% lower – a better-than-expected outcome for many investors that participated in the record-breaking block trade.

What made the transaction stand out as the Best Equity Deal of the year was its near perfect timing. The trade was executed right before a sharp downturn in global investor sentiment that brought Tencent shares as low as HK$252 ($32.19) – 38% below its HK$405 offer price in March.

The block sale was the biggest ever follow-on offering in Asia ex-Japan, overtaking Bank of China’s $9 billion dual-tranche rights issue in Hong Kong and Shanghai in 2010.

 

BEST IPO

Vinhomes VND30.8 trillion ($1.349 billion) Initial Equity Offering

Joint global co-ordinators: Citi, Credit Suisse, Deutsche Bank, Morgan Stanley

Joint bookrunners: HSBC, Maybank Kim Eng Securities, Saigon Securities

Legal advisors: Latham & Watkins, Allen & Overy, VILAF

There was never any doubt about Vinhomes winning this award even though the Vietnamese equity market entered a well-flagged correction shortly after it was completed.

The group’s Initial Equity Offering, as flotations are known in Vietnam, represents the nation’s largest ever. And the deal is a record-breaking one for the wider region too, ranking as South East Asia’s largest equity deal of the year.

It helped Vietnam to leapfrog the Philippines and Malaysia for overall issuance volumes during 2018 according to Dealogic figures. That is no small achievement for a country, which has been coming from a long way from behind for some time.

Vinhomes is one of the flagship entities of the all-conquering Vingroup and its listing is typical of the way the latter operates. It was restructured and brought to market in record time by Vietnamese standards, raising much-needed cash for the group as it continues with its highly ambitious expansion plans.

 

BEST INVESTMENT GRADE BOND

ChemChina’s $6.4 billion equivalent six-tranche bond

Joint global co-ordinators: Bank of America Merrill Lynch, Barclays, BNP Paribas, Bank of China International, Citic Bank, Commerzbank, Credit Agricole, Credit Suisse, First Abu Dhabi Bank, HSBC, Industrial Bank, Morgan Stanley, MUFG, Natixis, Rabobank, Santander, Soc Gen, Unicredit.

Legal advisors:

Issuer: Latham & Watkins, Jingtian & Gongcheng

Managers: Commerce & Finance, Davis Polk & Wardell

There is plenty of symbolism behind this award, which makes it so much more than just an investment grade bond. ChemChina came to the bond markets to refinance part of the bridge loan that it took out to fund China’s largest-ever foreign takeover of Swiss pesticides and seeds company, Syngenta.

The increasing polarity between China and much of the West means that the world’s third largest chemicals company may hold that record for some time. But what may change is its own standing in the global league tables if rumours about a merger with Sinochem are true.

This speculation is one of the reasons why ChemChina’s six-tranche bond issue has held up well in the secondary market despite the fact that it was one of the last deals to come to market in March before the Asian bond markets headed south.

ChemChina timed its bond deal, the region’s largest ever in Reg S format, very well. It established a solid credit curve for itself and managed to diversify its funding base in the process. One of the most notable aspects of the euro-tranche – the largest ever by a Chinese corporate – was how much paper was placed with new investors in the UK, Ireland, Germany and Austria.  

 

BEST HIGH-YIELD BOND

NagaCorp’s $300 million 9.375% May 2021 bond

Joint global co-ordinators: Credit Suisse, Morgan Stanley

Legal advisors:

Issuer: Freshfields Bruckhaus Deringer, Maples & Calder, HML Law Group

Managers: Latham & Watkins, DFDL

One of the key criteria for this award was a deal which worked for both issuer and investor. That made for a tough call in a year when practically every single high-yield bond ended up trading below its issue price.

But this deal is in a league of its own: to the extent that even the DCM head of a non-syndicate bank suggested it should win.

It is a standout on a number of levels. It has not only performed well in the primary and secondary markets, but it has also introduced a whole new country to the international capital markets to boot.

The lack of a sovereign benchmark, however, effectively doubled the complexity of bringing a debut credit like this to market. It meant that the issuer and its syndicate had to work exceptionally hard to get investors’ heads around Cambodian country risk in addition to NagaCorp’s balance sheet.

The deal also priced in mid-May at a time when the emerging markets were coming under intense pressure and Chinese high-yield credits were starting to re-price at double 2017 levels.

In a year when so many assumptions have been turned on their heads, it is perhaps fitting that the best high-yield deal came from a gaming company out of a country which is frontier as they get.

 

BEST LOCAL CURRENCY BOND

Temasek Holdings S$500 million ($362.5 million) 2.7% institutional and retail bond

Global co-ordinator: DBS

Joint bookrunners: HSBC, OCBC, Standard Chartered, UOB

Legal advisors:

Issuer: Allen & Gledhill, Latham & Watkins

Managers: Allen & Gledhill

This is always a challenging award to judge. There are always so many and often very innovative deals across a variety of wildly different jurisdictions.

Temasek is also one of the region’s most seasoned and reputed borrowers. So why choose a triple-A rated credit for an awards category, which generally rewards issuers and transactions that break new ground?

The answer lies in the broader Singapore dollar bond market, which has endured a painful period over the past few years after credit stress across the offshore oil & gas industry triggered a series of defaults.

The fallout was particularly hard on some of the city state’s less-experienced retail and high-net-worth borrowers who have found it difficult to stomach the losses.

Temasek’s bond was the government’s response to turn a new chapter. New guidelines have been issued to encourage retail bond offerings by highly rated credits and the retail tranche of Temasek’s deal was the result.

It was also accompanied by an extensive marketing effort to educate the wider public about what a bond is and how it can trade down as well as up. The government has set a new template for others to follow.


BEST BELT AND ROAD DEAL

Bank of China's $3.2 billion multi-tranche & multi-currency bond

Joint global coordinators; Bank of China, Citi, DBS, Mizuho, OCBC, Standard Chartered

Joint bookrunners: Agricultural Bank of China, Bank of Communications, Bank of China International, China Everbright Bank, China Minsheng Bank, China Construction Bank, Commonwealth Bank of Australia, First Abu Dhabi Bank, ANZ, Westpac, Bank of New Zealand, Credit Agricole, Commerzbank, ING, UBS

Legal Advisors:

Issuer: Linklaters, JunZeJun

Managers: Clifford Chance, Jingtian & Gongcheng

Bank of China continued to break new records in 2018, with its multi-tranche, multi-currency and multi-jurisdiction offshore bond in April which set new standards for issuance.

This was the first international capital market transaction by a Chinese bank to follow the "One Belt One Road” initiative and development strategy supported by the Chinese government in 2018.

Despite heightened volatility in the fixed income market in the first half of the year, the managers and bookrunners worked tirelessly in four jurisdictions to ensure the success of the issue.

The four-tranche issue (US dollars, Euros, New Zealand and Australian dollars) was rare as there was no physical management roadshow organised. The bookrunners conducted telephone and video calls to drum up demand across the globe.

Despite the large issue size of $3.2 billion and the unique multi-tranche and multi-currency structure of its kind, the transaction was completed within 16 hours from launch.

All four tranches of the transaction priced at the tightest end of the guidance, with the $1.3 billion US dollar tranche oversubscribed twice over with 80 investors at the close.

 

BEST EQUITY FINANCING (early stage to pre-IPO)

Ant Financial's $14 billion Series C funding

Financial advisors: Deutsche Bank, Citi, China International Capital Corp, CITIC Securities, JPMorgan, Morgan Stanley

Legal advisors: 

To Ant Financial: Simpson Thacher & Bartlett, King & Wood Mallesons

To financial advisors: Sullivan & Cromwell LLP

To selected investors: Kirkland & Ellis, Allen & Overy

Few new-economy companies in Asia have withstood the winter chill in capital markets this year. An exception has been Ant Financial, the operator of China’s largest online payment platform. Shrugging off the choppiness in the market, it raised $14 billion in June in what turned out to be the single-largest confirmed fundraising round in history, according to data provider Crunchbase.

The money raised will boost the company’s coffers ahead of an anticipated initial public offering, which could come as soon as next year, sources close to the deal told FinanceAsia.

The funding included both US dollar and renminbi tranches. The dollar share made up over $10 billion, with a list of star-studded investors like Singaporean sovereign wealth funds GIC and Temasek, as well as US private equity firm Warburg Pincus.

Ant did not release any public details of its valuation after the funding round, but sources familiar with the deal now value Ant Financial at around $155 billion. This makes it one of the world’s most valuable financial firms.

 

BEST ESG DEAL

Government of Indonesia's $1.25 billion Green Sukuk

Joint bookrunners: Abu Dhabi Islamic Bank, CIMB, Citi, Dubai Islamic Bank, HSBC  

Co-managers: Bahana Sekuritas, Danareksa Sekuritas, Trimegah Sekuritas 

Green bond assurance provider: CICERO

Green structuring advisor: HSBC

Legal advisors:

Issuer: Clifford Chance

Managers: Norton Rose Fulbright

In February, the Republic of Indonesia broke new grounds by issuing the world’s first ever sovereign green sukuk, which sent a clear message to the global investment community that the country is committed to environmental protection.

The $1.25 billion trust certificate was also Asia’s first ever sovereign green bond issuance.

The green sukuk was part of the Indonesian government’s newly established green bond and green Sukuk framework, which includes a broad range of project categories covering mitigation and adaptation project types across a range of line ministries, necessary to meet the country’s climate change challenges.

The transaction was well-distributed into high-quality accounts, mostly top-tier fund managers and banks. From a geographical perspective, the five-year green sukuk tranche issuance was 32% placed into Islamic investors (Middle East and Malaysia), 18% into the US, 15% into Europe, 25% into Asia (ex-Indo and Malaysia), and 10% into Indonesia.

Use of proceeds includes renewable energy, energy efficiency, resilience to climate change for highly vulnerable areas and sectors/ disaster risk reduction, sustainable transport, waste to energy and waste management, sustainable management of natural resources, green tourism, green buildings and sustainable agriculture.

 

BEST PRIVATE EQUITY DEAL

Luckin Coffee's fund raising led by Centurium Capital

The $200 million Series A funding round for Beijing-based Chinese coffee brand and professional coffee service provider Luckin Coffee in July was as textbook a deal as it is possible to get. It is the one of which private equity firms dream.

Led by Centurium Capital Partners - which was a very early backer of the company - the espresso-fuelled unicorn Luckin Coffee was one of the world’s fastest companies to hit a $1 billion valuation after it raised the round in mid-July.

Founded by former Car Inc chief operating officer Jenny Qian late last year, Luckin Coffee only soft-launched in January. By the time it inked its Series A funding, it had expanded into 13 first and second-tier cities with 525 stores, becoming the country’s second-largest coffee chain after arch-rival Starbucks.

The Series A round of fundraising stands as a testament to the vision of Centurium. Headed by David Li, quondam managing director of Warburg Pincus, he managed to attract a who’s who of international investors to the deal. Not only Chinese private equity funds Dazheng Capital, Joy Capital and Legend Capital, but the crema was that he also caught the eye of GIC Private, the sovereign wealth fund established by the government of Singapore in 1981.

The deal is everything that is exciting about private equity in China. Luckin Coffee has been growing rapidly and, with its new retail model, it is perceived as desirable by consumers. More to the point it has brought something new to the coffee experience. Its app with canny promotions and digital payment service (the company’s stores do not accept cash) have been as critical to its success as its 30-minute delivery service.

And by the way, Luckin Coffee’s coffee is cheaper than that from the Seattle behemoth too.

There is clearly something in the brew, because by the time it closed its $200 million Series B funding in mid-December Luckin had expanded to 1,700 stores across 21 cities. The company claims that customers in Beijing and Shanghai have a Luckin Coffee shop within a five-minute walk.

Not only did the Series A investors participate again, Centurium was able to add CICC to the mix. No wonder that the company claims a valuation of $2.2 billion.

¬ Haymarket Media Limited. All rights reserved.

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