FinanceAsia Achievement Awards — Part 3

We are pleased to announce the winners of our regional deal awards for 2015.

FinanceAsia is pleased to announce the winners of our regional deal awards for 2015. Congratulations to all the companies involved and their advisers.

On Monday we will announce the regional house winners, the firms that excelled through the year. We will host a dinner to present the awards in Hong Kong on January 27.


Tesco’s sale of Homeplus for $6.4 billion to MBK

Financial advisers to seller: HSBC, Barclays

Financial advisers to buyer: Deutsche Bank, Citi

Legal adviser to seller: Freshfields advised Tesco

Legal adviser to buyer: Cleary Gottlieb

Tesco’s sale of its Korean grocer to an MBK-led consortium marked a major step forward for private equity in Asia and a clean exit for the British firm.

This leveraged buyout is FinanceAsia’s Deal of the Year not just because of its size but also due to the use of “certain funds” provisions, which made payment almost as straightforward as a cashier's cheque.

Both these aspects of the deal furthered the development of the private equity market in Asia.

Aside from being MBK’s biggest deal to date, it is also the largest purchase ever by a private equity firm in Asia, according to data provider Dealogic.

Effective tactics by British-based global retailer Tesco helped to rustle up the capital needed to cut its debt.

The disposal was critical for Tesco as it helped reduce its leverage, cutting its adjusted debt/Ebitda ratio by around 0.35 times from 8.5 times at the end of fiscal year 2015.

At the same time, North Asia-focused MBK’s exhaustive preparation helped it to fend off fierce competition from larger, global rivals.

Tesco and its financial adviser HSBC marketed the business as a tightly run ship in one of Asia’s largest food retail markets. Operationally Homeplus is solid, with gross margins at about 9% Ebitda compared with closest rival E-Mart’s 7%.

They noted Homeplus’s growth potential given that about a third of the Korean market is still made up of family-run convenience stores that in the West have been largely pushed aside by supermarkets.

Tesco and HSBC also flagged Homeplus’s real estate portfolio, which one person familiar with the company valued at around $7.5 billion. Homeplus has 140 hypermarkets, 609 supermarkets, and 326 convenience stores. It also operates 139 shopping malls adjacent to its hypermarkets, with over 6,500 tenant leases.

These factors combined created a persuasive pitch that helped to offset potential buyer worries about flagging sales and a tough regulatory environment.

Korea’s Distribution Industry Development Act, aimed at protecting mom-and-pop stores, has limited Sunday opening hours at hypermarkets, dragging down Homeplus’s like-for-like sales over the past three years.

Planning permission for big box stores has also become tougher to obtain, making growth harder. 

The size of the business posed a challenge for the seller since few firms have the firepower and stature to create consortia that can afford the second-largest hypermarket chain in Korea after E-Mart.

Gaining the approval of Korean regulators was a second challenge. So, although several local retailers expressed an interest in Homeplus, Tesco and HSBC did not pursue them because anti-trust approval to seal any deal would have probably required selling major parts of the business.

Tesco wanted a clean sale with continued employment for staff, and it got just that.     


HDFC Bank's $1.6 billion concurrent ADS/QIP follow-on offering

Bookrunners on ADS tranche: Bank of America Merrill Lynch, Morgan Stanley, JP Morgan, Credit Suisse, UBS, Nomura, Goldman Sachs, Barclays

Bookrunners on QIP tranche: UBS, Nomura, Morgan Stanley, JP Morgan, JM Financial, Goldman Sachs, Bank of America Merrill Lynch, Credit Suisse, Barclays

HDFC Bank, India’s fourth-largest company by market capitalisation, executed in February the first concurrent qualified institutional placement and sale of American Depositary Shares in more than six years.

The country’s largest private bank by market capitalisation raised $1.27 billion from the ADS sale, which was launched simultaneously with a smaller QIP tranche of $324 million.

Even on a combined basis the two deals were not as big as some jumbo Asia ex-Japan equity offerings, particularly those coming out of Hong Kong and China. They nonetheless stood out from other equity deals this year because of the seamless execution over pricing in two distinct markets.

Due to the huge time difference between India and the US, there is only a 1-1/2 hours window in which to execute a trade when both markets are closed, making it almost impossible due to the size of the HDFC Bank offering.

Eventually HDFC Bank launched the trade live in the US market at 11 am New York time and off-market in India at 9:30 pm Mumbai time. The decision meant HDFC Bank was exposed to higher market risk in the US since the ADS price could fall on news of the share sale.

Instead the ADS price traded up from the previous day's close of $56.54 to end the day at $57.76, where the final price was set. That meant the ADS tranche was priced at a 2.1 premium to pre-launch close and at par to the latest close.

Meanwhile, the QIP tranche was fully upsized by one third from the base size of Rs15 billion ($243 million) due to overwhelming demand. It priced at par to the last close at Rs1,067, which was the tightest end of the 0% to 1% discount marketed range.

Both deals were over four times oversubscribed and attracted demand of over $6 billion, which is very impressive considering they were both priced at parity to market.

It is worth noting that due to the simultaneous launch of the two tranches,  a typical T+6 settlement for Indian QIPs was shortened to T+3 in order to align with the settlement of the ADS.

Both the India shares and the ADS were trading near the offer price levels for a month before dropping further in April. They have both recovered since July.

HDFC Bank’s ADS/QIP combo offering is the only billion-dollar follow-on in Asia ex-Japan in four years to be offered without a discount to the last market price, according to data provider Dealogic.


CGN Power’s $3.6 billion HK IPO

Bookrunners: CICC, BAML, ABC International, Morgan Stanley, CLSA, Goldman Sachs, BNP Paribas, ICBC, BOCI, HSBC, Guotai Junan Securities, China Merchants Securities, JP Morgan, Credit Suisse, CCBI

The $3.6 billion initial public offering of China General Nuclear (CGN) Power has won this award in the face of strong competition from other jumbo transactions.

The country’s largest nuclear energy producer raised $3.6 billion (post-shoe) from its Hong Kong IPO after pricing 10.15 billion shares at the top of the HK$2.43 to HK$2.78 indicative price range in December 2014.

The transaction is not only the first ever global IPO by a pure nuclear power generator and but also the largest utility and energy sector IPO globally since Spain's $6.56 billion Iberdrola offering in 2007. The timing of CGN Power’s flotation also came as China moved to lift restrictions on new nuclear power plant construction after the Fukushima disaster in Japan in 2011.

CGN’s IPO proved to be a big success with the institutional tranche multiple-times oversubscribed and the retail offering 286 times covered. 

About 42% of the base-deal was allocated to 18 high-quality cornerstone investors, a good mixture of hedge funds, long-only institutional investors, and blue chip power companies, including Och-Ziff Capital Management, Singapore’s sovereign wealth fund GIC, China Development Bank, China Southern Power Grid, and China Reinsurance.

Its share price performed strongly on its trading debut on December 10, surging 24%, and remains well above the HK$3.00 mark as investors bet on the Chinese government’s drive to curb coal usage in favour of cleaner energy. 


Industrial Bank’s $2 billion A-share block trade

Bookrunner: Goldman Sachs

Hang Seng Bank’s Rmb12.7 billion ($2 billion) share sale in Industrial Bank was unprecedented because it was the first ever billion-dollar block executed publicly to institutional investors.

Share sales in China are often done in the form of private placements to minimise market risk. Before Industrial Bank’s deal in February, the largest block trade executed through an accelerated bookbuild was Founder Securities’s $504 million deal in December last year.

While the deal was well flagged by Hang Seng Bank as a means to improve its regulatory capital position, sole bookrunner Goldman Sachs timed the deal within three months after the launch of the Hong Kong-Shanghai Stock Connect, executing it when foreign interest in Chinese stocks remained high.

Despite wall-crossing the deal two weeks before launch on February 10, the selling pressure did not weigh on the stock as it traded up by over 2% during the period.

At the end the deal was priced at Rmb13.36 per share, representing a 7% discount to the last close of Rmb14.37.

Despite a 5% dilution incurred after the block trade, the stock traded steadily after market before a strong rally of nearly 50% in March/April, which paved the way for Hang Seng’s second selldown in May.

Notwithstanding China’s subsequent stock market rout in the summer, Industrial Bank has largely traded above the Rmb13.36 offer price. It closed at Rmb16.28 on November 19, at a 22% premium to the offer price.


Hyundai Heavy Industries' $221.6 million exchangeable bonds 

Bookrunners: Bank of America Merrill Lynch, HSBC

Korea’s largest shipbuilder Hyundai Heavy Industries priced a $221.6 million exchangeable bond into shares of Hyundai Merchant Marine in June, ending a 18-month hiatus in Korean equity-linked issuance.

The transaction stood out over what was a particularly quiet year for Asia ex-Japan equity-linked issuance because it was one of the few first-time issuers in the asset class during the awards period.

Being a first time issuer Hyundai Heavy Industries would have found it hard to establish a credit profile to achieve a zero coupon and zero yield structure. To make things worse, the outlook of Korea’s shipbuilding industry was rather negative at the time of the issuance.

Korea’s exports fell by 1.8% from a year earlier in June, its sixth consecutive monthly decline. At the same time, shares in Hyundai Merchant Marine witnessed a heavy selloff, shedding a quarter of their value since the beginning of the year. That meant it was almost technically impossible to print a double-zero paper as the company wished.

Understanding the discrepancies between the reality and the expectations of management, joint bookrunners Bank of America Merrill Lynch and HSBC brought to the table a ground-breaking solution by introducing a third-party guarantee from Korea Development Bank, which has effectively the same credit profile as the Korean government.

It is the first time an Asian convertible or exchangeable bond issuer has applied credit enhancement through a third-party guarantee. That allowed Hyundai Heavy Industries to execute a five-year, three-put deal with a conversion premium of 37.5%, the highest among all US-denominated equity-linked issuances since 2007.

The deal is also credited as the first Asian equity-linked issuance with a stock borrow agreement from a third party. Prior to the launch of the deal, Hyundai Samho Heavy Industries agreed to pledge its entire 5.13% stake in Hyundai Merchant Marine to HSBC as part of the agreement to provide equity hedge facilities.

As a result, Hyundai Heavy Industries’s exchangeable bond was five times oversubscribed with 70 accounts, including both long-only investors and hedge funds.

It proved successful and the bond traded up to around 103 in the immediate aftermarket.


China National Chemical Corporation’s $8.98 billion acquisition of Pirelli

Advisers to acquirer: JP Morgan, Rothschild, Morgan Stanley, Intermonte Holding SIM, ChemChina Finance

Advisers to seller: Goldman Sachs, Deutsche Bank, Intesa Sanpaolo, Lazard, Mediobanca, Leonardo & Co, UniCredit, Bank of America Merrill Lynch, Ligerion Capital, Goldman Sachs, Deutsche Bank, Citi

Restructurings of Chinese state-owned enterprises accounted for a hefty slice of this year's record-breaking volume of mergers and acquisitions in Asia ex-Japan’s market.

However, while huge in some cases, many of these deals were directed by central government. So it is a different Chinese SOE M&A that has caught our attention and which, for us, best exemplifies a deal that has truly added value.

Under the leadership of energetic chairman Ren Jianxin, China National Chemical Corporation (better known as ChemChina) has been an active acquirer. However, its acquisition of Pirelli showed the increasingly international reach of its ambition.

The Italian company is renowned for luxury tyres but has faced fierce competition from larger rivals such as Goodyear, Michelin, Bridgestone, and others.

ChemChina, whose China National Tire & Rubber subsidiary produces industrial vehicle tyres, liked the classy appeal of Pirelli. But the latter’s management didn’t want a deal that might lead to production facilities and intellectual property being relocated to China. So ChemChina promised to keep the management and manufacturing independent, and to retain Marco Tronchetti Provera as chief executive officer.

It initially acquired a 26.2% stake in Pirelli from Camfin at €15 a share. Camfin is a financial company that is 50% owned by Russian oil company Rosneft, with the rest held by Provera and Italian banks Intesa Sanpaolo and UniCredit.

Camfin took some of proceeds from its sale and bought Pirelli shares via a newly-established joint stock company called Bidco, which is controlled by ChemChina and Camfin. ChemChina then made a mandatory public tender for Pirelli at €15 a share, which it completed in November.

Ultimately, ChemChina gained majority control of Pirelli, Camfin received an enhanced minority stake, and the two equally split the 16-person board of directors.  

The tie-up ensured Pirelli got direct access China’s booming car market, while ChemChina gained a prestigious product range to complement its more utilitarian products. The world’s other tyre companies, meanwhile, now have to worry about an enhanced rival. 


Petronas's $5 billion bond

Bookrunners: Bank of America Merrill Lynch, CIMB, Citi, JP Morgan, Morgan Stanley, Deutsche Bank, HSBC, Maybank, Mitsubishi UFG Financial Group

Malaysia's Petroliam Nasional, or Petronas, sold $5 billion of dollar-denominated bonds in March, its first foray into the debt market in six years.

Despite the slump in global oil prices, broader debt worries, and an unhelpful political backdrop as a corruption scandal dogged the government, Petronas’s offering was able to capture a sizeable order book from global investors who viewed the state-owned oil giant as a low-volatility bet. 

For Petronas, it was a well-timed deal as it joined a global oil company rush to raise cheap money to help bolster balance sheets hurt by the slide in oil prices.

The $5 billion offering was launched as the cost of insuring Malaysia sovereign debt rose sharply compared with its Southeast Asian peers, due to growing concerns about state investor 1MDB’s $11 billion debt burden.

Petronas’s 144A/Reg S offering in March comprised a $1.25 billion five-year sukuk plus $750 million seven-year, $1.5 billion 10-year and $1.5 billion 30-year conventional bonds, making it one of the largest corporate debt sales this year.

The final order book reached more than $12.4 billion from 770 accounts. As a result, Petronas was able to price Asia’s biggest corporate dollar bond issue since Alibaba sold $8 billion worth of notes in November 2014. Pricing on the 30-year dollar bond also tightened by 30 basis points from initial price guidance of US Treasuries plus 220 bp. Meanwhile, the Islamic tranche – raised via special purpose vehicle Petronas Global Sukuk – US priced at Treasuries plus 110bp, which was 25bp tighter than the initial price guidance area.

In order to improve communications with investors globally, Petronas divided executives into two separate teams, meeting more than 190 institutional investors in seven centres across Asia, the Middle East, Europe, and the US. As a result of this global roadshow, the company generated an indication of interest of more than $7 billion prior to any announcements.

Despite some volatility at the time around US Treasury rates, oil prices, and the start of quantitative easing in the eurozone, the deal priced successfully through Petronas's secondary market yield curve – by as much as 27bp in some cases. It also conceded just 10bp to 15bp to comparable bonds issued by some of the global oil majors.

Petronas was able to blank out some of the negative noise surrounding Malaysia, including the weak ringgit, to achieve optimal pricing.


Trade and Development Bank of Mongolia $500 million bond

Bookrunners: Bank of America Merrill Lynch, ING, Deutsche Bank

Trade and Development Bank of Mongolia sold a $500 million five-year note in May, the country’s first dollar offering in three years.

Guaranteed by the government of Mongolia, the bond offering from TDBM was a testament to the enduring appetite of emerging market investors for the country’s debt in the face of a slowdown in the Mongolian economy. The Asian Development Bank at that time predicted GDP growth in Mongolia would slow sharply to 3% in 2015, down from 7.8% in 2014 and 11.6% in 2013, after a drop in resource prices.

Mongolia’s growth suffered in 2014 from the slowdown in coal exports to China and a drop in foreign direct investment due to uncertainty over the nation’s regulatory framework and the fall in coal prices.

TDBM is the largest lender in Mongolia, with assets of $2.9 billion at the end of 2014, and attempted to issue a five-year dollar bond in June of 2014, having indicated a yield of 11.25%. After a failed attempt, the company was able to return to the market with more favourable pricing, thanks to the efforts made by the bookrunners ahead of the official launch.

“Both the investors and TDBM were happy about the final results,” a debt capital markets banker familiar with the transaction told FinanceAsia. “I think it is a win-win for both parties.”

TDBM, which is rated B2/B+, initially went out with a price guidance area of 9.75%, before tightening the deal to a final price guidance of 9.375% to 9.5%. It eventually priced the deal at the bottom end of that range after receiving a meaningful order book from yield-hungry investors.

Final orders were in excess of $2.3 billion and spread across 230 accounts. US investors took half of the notes, in part due to strong appetite from asset managers and sovereign funds seeking high-yield names in the absence of Chinese property credits. The remainder was split between European and Asian accounts.

By investor type asset managers bought 90% of the TDBM paper, followed by banks with 5% and private banks and others with 5%.


ICBC's Rmb12 billion Basel AT1/Preference Share Inaugural Offering

Sole global coordinator: ICBC International

Joint bookrunners: ICBC International, Goldman Sachs, UBS, Bank of America Merrill Lynch

Whilst Industrial and Commercial Bank of China's multi-tranche deal included both euro and US dollars, what made it a standout, and FinanceAsia’s 2015 Local Currency Bond of the Year, was its massive Rmb12 billion tranche.
The establishment of sources of renminbi liquidity outside of China is arguably the most important local currency story of the decade. So the fact that ICBC went to market with the largest offshore renminbi-dominated issuance ever was the distinguishing feature that made this deal especially impressive.
Executing such a large offshore renminbi issuance required extensive preparation and exquisite foresight. Notably, to this effect, foreseeing that clearing such a large transaction in the default offshore renminbi clearing hub of Hong Kong’s Central Moneymarkets Unit would be problematic, arrangers instead opted for Euroclear.
In addition to meticulous planning on the execution, the issuer won accolades on its extensive road show. The bank formed three teams to lead investor education in the US, Europe, and Asia -- simultaneously meeting key investors in all the major financial hubs.
Those efforts paid off in distribution. Although Europe and the US constituted little of the offshore renminbi tranche, they formed cornerstone distributions in the euro and US dollar tranches. Additionally, quality Asian buyers showed strong interest in the deal with fund managers taking up 19%, central banks taking 21%, and insurance firms taking 45% of the deal.
A concurrent multi-currency 144a issuance from a Chinese bank with multiple tranches is of itself worthy of attention, though ICBC was the second Chinese bank to go to market with an additional tier-1 issue this year. But the truly standout size of the renminbi local currency tranche made ICBC a clear choice for deal of the year in this category.

PBoC’s Rmb5 billion one-year debut bond

Joint global coordinators: ICBC, HSBC 

Joint bookrunners: ICBC, HSBC, ABC, BOC, Bank of Communications, China Construction Bank, Standard Chartered

The People’s Bank of China issued short-term debt in the international bond market for the first time in late October to underline the Chinese yuan’s growing international importance and to highlight strengthening Sino-British ties during President Xi Jinping’s visit to the UK.

The PBoC’s first-ever overseas offering set a benchmark for future borrowers in London, while cementing the city’s role as a preferred destination for offshore renminbi business. It was also intended to encourage European companies to raise renminbi funds directly for their Chinese investments.

The Chinese central bank raised Rmb5 billion ($799 million) from the sale of a one-year bill after capturing an order book totaling more than Rmb30 billion from central banks and sovereign wealth funds around the world.

It initially went out with price guidance of 3.3% before tightening to five basis points either side of 3.15%. Final pricing of the London listed notes was settled at 3.1%.

Asia investors took 51% of the bond and Latin American and European investors 25% and 24%, respectively. By investor type commercial banks took 47%, central banks and public sector funds 38% and fund managers and private banks 14% and 1%, respectively.


Republic of Philippines' $2 billion 25-year sovereign bond issue

Bookrunner parents: Deutsche Bank, HSBC, Citi, Credit Suisse, Goldman Sachs, JP Morgan, Morgan Stanley, Standard Chartered Bank, UBS

It’s rare for a repeat issuance to win in FinanceAsia’s country deal of the year category but in the case of the Republic of Philippines’s $2 billion 25-year unsecured bond offering, consistency is what makes the deal such a standout – coupled with terrific timing and a tender switch that once again marked the sovereign out as one of the region’s savviest borrowers.

Time and again bankers throughout the industry cited the Philippines as the touchstone for sovereign issuance in the region.

“You can set your watch by them,” a DCM banker involved with the deal said of the sovereign borrower's reliability.

Rapid same-day execution marks the issuance out as unique in 2015. Given the degree of volatility seen in Asian capital markets, with China intervening in equity markets after a slump in prices and G3 currency debt issuance set to drop below $170 billion from more than $200 billion last year, the Philippines treasury spotted an opportunity and capitalised.

Seeing opportunity where others were fearful of market conditions, the Philippines went to market in January with the first sovereign international bond offering and liability management exercise of 2015. The transaction came two weeks after Moody’s upgraded the Republic’s credit ratings from Baa3 to Baa2, the latest in a long running streak of upgrades that has solidified the country's investment grade status.

In evidence of their skill in timing the transaction priced at 3.95%, using a strong order book to tighten their price by 25bp inside initial guidance.

The issuance is the largest single tranche international bond offering ever by the Philippines sovereign.


Baosteel's Rmb4 billion three-year exchangeable bond issue

Sole Sponsor: China International Capital Corporation

Bookrunner parents: China International Capital Corporation, Credit Suisse, UBS

For creating a first of its kind in China, that subsequently established a market for the product, Baosteel’s Rmb4billion public offering of exchangeable bonds in the A-share market is FinanceAsia’s Most Innovative Deal.
The deal set a precedent in China for a crucial new funding diversification strategy that was subsequently exploited by Tasly Holdings, Tsinghua, and Shanghai Guosheng within the year.
But establishing the new product wasn’t a walk in the park. Key to this year’s Most Innovative Deal was the sole sponsor CICC, which maintains the largest dedicated fixed income research team in the Greater China region.
Working with regulators to tailor the product to the China market and educating investors that banks described as particularly cautious towards new China products, the Baosteel deal exhibited the most noteworthy innovation of this year’s deals.
Exchangeable bonds were the perfect advent for the China A-shares market. Closed on December 12, 2014, the company was able to exchange its shares and reduce its stock holdings while retaining the funds, right before a period of declining Chinese share prices.
With a three-year coupon set at 1.5%, and New China Life Insurance as the underlying asset, the deal provided a particularly opportune new avenue for China’s state-owned enterprises for funding diversification.


Shenton Aircraft Investment I's $808 million asset-backed securities issue

Bookrunners: BOCI, Citi, Goldman Sachs

China’s aircraft industry is growing quickly as a fast-emerging middle class spends more of its income on travel. Boeing estimates that the country will need 6,330 planes over the next 20 years.

Funding the acquisition of so many aircraft will be a challenge. This is why Bank of China’s aviation leasing operation, BOC Aviation, issued a $750 million five-year bond in March, and could do an IPO in 2016. It also explains why the company opted to securitise a portfolio of its aircraft and their receivables.

Asset-backed securities based upon aircraft receivables have been conducted in the US and Europe before but has never been attempted in Asia.

Moreover, China’s securitisation market remains relatively nascent. That helps to explain why the bookrunners decided to choose a US dollar-denominated ABS with a Reg S/144A structure – to help attract US-based investors more familiar with aircraft ABS.

The transaction involved BOC Aviation selling a portfolio of 24 aircraft and their operating leases to Shenton Aircraft Investment I, a special purpose vehicle. BOC Aviation continues to service the planes, which have an average age of just 4.6 years. Typical ABS transactions have portfolios older than this. 

The notes were issued in two tranches; a $747.4 million of senior Series A notes, rated A by Fitch and Standard & Poor’s, which offered a 4.75% coupon and was sold at 99.04 to yield 5%. There was also $60.5 million of subordinated Series B notes, rated BBB by both agencies. These were priced at 99.74 to yield 5.875% on a 5.75% coupon. The weighted average life of both tranches is 5.8 years.

Bankers expect more such deals to follow, not least from the aircraft leasing subsidiaries of the other major Chinese banks, as the number of consumers looking to fly continues to soar. BOC Aviation’s deal offers a useful benchmark.


Agricultural Bank of China's $1 billion green bond

Joint global coordinators: ABC International, Barclays, HSBC, JP Morgan

Joint bookrunners: Bank of America Merrill Lynch, Goldman Sachs, Morgan Stanley, Standard Chartered, Wells Fargo Securities

Agricultural Bank of China, the country's fourth-largest lender by market value, issued its first-ever green bond in August, paving the way for more Asian green offerings, including one from Japanese lender Sumitomo Mitsui Banking Corp, which raised $500 million the very next day.

ABC raised almost $1 billion as part of a broader Beijing-orchestrated campaign to tackle pollution and promote renewable energy.

The Chinese bank, which is rated A1/A/A, sold the trail-blazing bond in three tranches, including a $400 million three-year note, a $500 million five-year bond, and a Rmb600 million ($95 million) two-year issue, according to a term sheet seen by FinanceAsia.

The Beijing-based lender attracted an order book of more than $4 billion for the US dollar tranche. It also drew Rmb5.5 billion-worth of demand for the renminbi part, matching the order book China Construction Bank achieved with a straight renminbi bond issue days earlier.

ABC priced its three-year and five-year dollar offerings at US Treasuries plus 120bp and 140bp, respectively. That is after tightening guidance for both deals by around 20bp. The renminbi-denominated bond was priced to yield 4.15% after guidance was tightened to 4.2% from an initial 4.45%.

The issuance of environmental securities in Asia is still fairly limited compared with Europe but that looks set to change as the region steps up its climate change response.  Green bond issuance globally totaled $40 billion in 2014 but is seen by some rising to $1 trillion by 2020. The London-based Climate Bonds Initiative, which advocates capital markets solutions for climate change, believes China will become the biggest player by 2018.
The inaugural ABC green bond issue marks an important milestone in the expansion of the asset class, making it an easy winner of this category this year.

AAG Energy's $250 million RBL facility for expanding production capacity in China

Mandated Lead Arrangers: HSBC, Societe Generale, Standard Chartered

AAG Energy, a leading and independent coal-bed methane producer in China, secured a $250 million reserve-based lending facility in July, a month after its IPO, enabing the company to expand its capital-intensive business in the face of falling oil prices.

At the financial close, the loan is the largest oil and gas financing in Asia in 2015, according to a sale document seen by FinanceAsia.

“Given the complexity of the oil and gas knowledge, the latest loan from AAG sets new benchmarks for financing coal-bed methane and unconventional energy projects in emerging markets,” a banker familiar with the transaction told FinanceAsia

The June listing was AAG's second attempt after a $200 million IPO in 2012 was pulled after investors failed to give it a market value high enough to satisfy shareholders.

Unlike conventional gas, whose selling prices are state-stipulated, coal-bed methane producers are free to negotiate their prices with buyers. Producers can enjoy government subsidy and a tax rebate from the selling the natural gas as Beijing promotes greater use of clean energy.

Beijing said last year that it plans by 2030 to cut greenhouse gas emission relative to gross domestic product by 65% from 2005 levels.


China National Chemical Corporation/CNRC Marco Polo Holdings' €6.8 billion leveraged financing

Bookrunners: China Construction Bank, Intesa Sanpaolo, JP Morgan, UniCredit

One of the key signs of a good leveraged financing is the willingness of underwriters to financially support the deal to ensure the acquisition succeeds, and then their ability to syndicate the funding.

The financing of China National Chemical Corporation’s, or ChemChina's, acquisition of Italian tyre-maker Pirelli is a classic example.

Unusually, ChemChina did not opt for cheap onshore state bank funding. Instead, JP Morgan was the key bank behind the deal. In addition to acting as the key financial adviser to ChemChina over the M&A, the US bank also underwrote and coordinated this €6.8 billion ($7.3 billion) 1.5 year loan to support the acquisition.

The willingness of the US bank to step up with such a large credit line in a currency that is not its core strength for a Chinese state-owned enterprise speaks volumes about how much JP Morgan values its relationship with ChemChina. That makes sense, given that the SOE is arguably the most entrepreneurial and internationally growth-minded of the state conglomerates operating in China.

While JP Morgan was willing to support the entire deal, it preferred to syndicate out the risk. Ultimately it gained support from another 14 banks, include China Construction Bank, which took a rare euro position on the loan as a bookrunner.

The deal was not complicated in terms of structure but it did exactly what was required – supporting ChemChina in its acquisition. Bankers familiar with the deal say similar structures can be used for other corporate consolidations but they caution that the target, like Pirelli, needs to possess low leverage levels and strong cash flow to succeed.

Nevertheless, ChemChina’s success is believed to have interested others in the possibilities.


Huawei Technology’s $1.5 billion syndicated loan

Mandated lead arrangers: ANZ, BBVA, Bank of China, Mitsubishi UFJ Financial Group, Citi, DBS, HSBC, ING, ICBC, Mizuho, Standard Chartered, Sumitomo Mitsui Financial Group

Huawei Technology, the Chinese telecoms equipment maker, raised $1.5 billion through the sale of a dual-currency loan, making its fourth foray into the international syndicated loan markets since 2011.

With the volume of bank loans in Asia dropping significantly this year, Huawei's syndicated loan stood out from the crowd with its international expansion story. 

As a household name in China, Huawei plans to use the newly raised proceeds to fund its international expansion, expanding the number of its retail outlets to 70,000 stores by the end of 2017 from about 30,000 stores now.

The firm has largely been known for its manufacturing of networking equipment ranging from internet modern to smartphone, and its operational and consulting services in the most recent years. Although Huawei isn’t as popular as Apple or Samsung, it has been building up its own smartphone brand, targeting mid-range customers. 

According to research firm IDC, Huawei shipped 75 million smartphones last year, up from 52 million a year earlier. The smartphone sales made Huawei the world’s third-largest vendor last year, IDC said.

As a result of strong demand from investors, the loan was subsequently upsized from an originally planned $1.2 billion to $1.5 billion, underlining their confidence in the privately-held technology giant.

Given its strong corporate governance, the loan achieved a very competitive pricing at margin of 1.15% versus 1.55% in the 2014 transaction.


Haitong Securities' $4.3 billion H-share private placement

Global coordinators and placing agents: Haitong International, Macquarie, UBS, JP Morgan

Haitong Securities’s $4.3 billion share sale was a clear winner as Best FIG Deal of the year as it was the first H-share placement with a pre-approval structure.

Approval from the China Securities Regulatory Commission is generally considered a prerequisite for H-share private placements before any marketing begins. Since CSRC approvals normally take months, it is not logical to start marketing or fix terms anytime earlier as deteriorating market conditions or company operations could potentially derail a deal.

Haitong also required shareholder approval because the proposed offering – 128% of total H-shares – exceeded the general mandate, which allowed issuance of up to 25% of the enlarged share capital.

Haitong and its deal advisers worked against received wisdom by introducing a price-adjustment mechanism, whereby the company was able to adjust the subscription price based on changes in market prices.

That allowed the joint global coordinators to bring in all seven investors in December 2014, six months before the arrival of the CSRC approval.

The initial price was set at HK$15.62 but Haitong’s H-shares rallied to around HK$23 as Chinese stock markets in general rose sharply. Under the price-adjustment mechanism, the final price was adjusted to HK$17.18, representing a discount of 7.6% to the pre-announcement close.

Haitong shares held up mostly after the deal execution on May 14 before dropping below water in July following the boarder market decline.

Successful execution of the deal – the largest single follow-on offering in Asia ex-Japan in 2015 – shows that Haitong and its advisers are innovative in developing new deal structures in order to adapt to changes in market conditions.


Carlyle’s partial divestment of’s financial adviser: China Renaissance's legal adviser: Kirkland & Ellis LLP and Tencent’s legal adviser: Skadden, Arps, Slate, Meagher & Flom

In August 2014 Carlyle acquired a minority stake in, China’s second-largest online classifieds operator.

The private equity firm then worked with Ganji’s management to improve its operating efficiency, bolster its online-to-offline (O2O) presence, and seal a partnership with former rival

The investment’s success was boosted by Carlyle’s improvements to Ganji’s sales force, particularly its franchise agency channel. It encouraged best practice sharing between Ganji and its hotels in China: Kaiyuan Hotels, Crystal Orange Hotel and Plateno Group.

Carlyle also helped Ganji to diversify from online classifieds into O2O local services, especially second-hand car brokerage.

In April this year Carlyle partially exited Ganji, dubbed the Craigslist of China, via a trade sale to a consortium led by for a mixture of cash and shares. The deal created China’s largest online classifieds firm. bought 43.2% of Ganji for 34 million newly issued ordinary shares of and $412.2 million in cash, totaling $1.56 billion based on the closing trading price of's shares in New York on April 16.

Carlyle advised Ganji on structuring the alliance, assessing synergies, as well as post-deal integration.

Best M&A and Best Leveraged Financing award details amended to recognise China National Chemical Corporation is known as ChemChina, not ChinaChem.

Best Green Bond award amended to recognise joint-bookrunners on the deal, in addition to joint global coordinators.

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