FinanceAsia Achievement Awards — Part 2

We are pleased to announce the winners of our annual country awards for excellence in corporate finance.

FinanceAsia is pleased to announce the winners of this year's country awards. Congratulations to all the companies featured and their advisers.

In the coming days we will announce a further round of regional house awards. We will also host a dinner to present the awards in Hong Kong on January 27. 


Merger of Meituan and Dianping

Sole financial adviser: China Renaissance

Two of China’s biggest technology start-ups, group-buying platform Meituan and restaurant-review website Dianping, merged in early October to create the country’s largest online-to-offline (O2O) platform.

The landmark transaction, which values the combined group at more than $15 billion, is China’s largest internet company merger to date.

It not only successfully brought formal rivals Meituan and Dianping together but also won the support of a number of investors, including Dianping stakeholder Tencent, Meituan stakeholder Alibaba, and venture capital firm Sequoia Capital China, which invested in both companies.

The merger is also the latest consolidation of Chinese tech companies this year, following the alliances of rival online taxi-hailing services Didi Dache and Kuaidi Dache, and and, two Chinese versions of US site Craigslist.

The combination of Meituan and Dianping highlights the increasing need for integration because of intense competition in the fast-growing but cash-burning O2O business, a key part of China’s booming technology, media, and telecommunications scene.

It also helps to reshape China's IT landscape as the BAT triumvirate of Baidu, Alibaba and Tencent battle it out for supremacy. 

The marriage of Meituan and Dianping, backed by Alibaba and Tencent separately, could potentially throw a spanner in the ambitious expansion plans of Nuomi, Baidu’s O2O platform. Baidu, China's main internet search provider, is investing Rmb20 billion ($3.2 billion) over the next three years in Nuomi. 


HKBN $861 million Hong Kong IPO

Joint sponsors, global coordinators, and bookrunners: Goldman Sachs, JP Morgan, UBS

Joint bookrunners: CLSA, HSBC

Co-lead managers: BEA, BNP Paribas, Sun Hung Kai Financial

Financial advisor: Rothschild

In tycoon-dominated Hong Kong it was interesting to see an initial public offering from a privately run company that has taken on the incumbents to gain popularity among the territory’s 7.2 million people.

Founded in 1999, HKBN has grown into Hong Kong's largest provider of residential fibre broadband services by number of subscriptions. Heavy investment under the ownership of private equity firms CVC and Carlyle, as well as Singapore sovereign wealth fund GIC, got it off to a flying start.

It has wrested market share in residential broadband services at the expense of smaller operators HutchTel and i-Cable and is now targeting corporates in Hong Kong, hoping to move in on the clients of HKT Trust, which is backed by tycoon Richard Li.

A recurring theme during HKBN’s pre-marketing and bookbuild was that it was a growth story and yield play on Hong Kong’s domestic market, a rare combination.

The IPO was priced at a 4.81% yield for 2015 and 11.5% Ebitda, a premium over larger and more diversified rival HKT Trust’s 5.2% and 11.1%, respectively.

The IPO was priced at the top end of the marketed range at HK$9 a share, making it Hong Kong’s largest flotation and the territory's biggest IPO from the technology, media, and telecommunications sector since 2012 as of March. The shares have since risen 8.8% outperforming the Hang Seng Index. 

For investors in Hong Kong, it was also a refreshing change to see a homegrown company list instead of the usual fare of large, mainland Chinese companies.

The sale was the only Hong Kong IPO at the time with a private equity selldown through a 100% secondary share issuance. CVC reduced its stake from 76.3% to 6.6%.

Canada Pension Plan Investment Board came in as the deal’s sole cornerstone investor, pledging $200 million for 26.7% of the total deal.


Sun Pharmaceutical Industries’ $4 billion acquisition of Ranbaxy Laboratories

Adviser to target parent: Goldman Sachs

Target adviser: GCA Evercore, ICICI Bank, ICICI Securities

Acquirer adviser: Citi, Evercore

Target legal adviser: Luthra & Luthra Law Offices, Amarchand & Mangaldas & Suresh A Shroff & Co.

Acquirer legal adviser: Shearman & Sterling, Crawford Bayley & Co, S. H. Bathiya & Associates

Daiichi Sankyo probably rues acquiring 63.9% of generic drug maker Ranbaxy Laboratories for $4.5 billion in 2008. Observers at the time said the Japanese company paid too much. Subsequently the US authorities accused two Ranbaxy plants of falsifying data and selling sub-par drugs in 2007. Ranbaxy pleaded guilty and paid $500 million in fines in 2013.

By selling Ranbaxy to Sun Pharma in April 2015, Daiichi got to leave with its dignity – and most of its original money. Sun Pharma acquired Ranbaxy through an all-share swap, exchanging 0.8 of its shares for each Ranbaxy share. Daiichi then sold its Sun Pharma shares for a princely $3.2 billion.

For Sun Pharma, Ranbaxy is all about opportunity. The purchase means the specialist drug firm has almost doubled its scale and gained global heft in the generics drug market. The purchase makes it the world’s fifth-largest generic pharmaceutical company by revenues. And Sun Pharma anticipates $300 million in synergies by 2018.

The consolidation may hurt in the short-term. Indeed, while Sun Pharma’s revenues grew by 49.6% to Rs2.18 trillion ($32.97 billion) in the first half of the 2015/2016 fiscal year, its net profit fell 46% in the second quarter to Rs11.07 billion. The drop was partly due to restructuring costs.

But this acquisition is about the long game. Sun Pharma has gained enormous clout, reducing its dependence on the US market. And once it has resolved the outstanding issues with the US Food and Drug Administration at three Ranbaxy plants – something it is actively working to fix – it stands to enjoy more upside in the United States too.

For Sun Pharma, it is a potentially revolutionary acquisition. For Daiichi, it is a face-saving end to a troubled enterprise.


PT Hanjaya Mandala Sampoerna Rp20.3 trillion ($1.4 billion) rights issue and share placement

Joint global coordinators: Goldman Sachs, JP Morgan

Bookrunners: Citi, Credit Suisse, Mandiri Sekuritas

Philip Morris International, the world’s largest tobacco manufacturer, completed Indonesia’s largest equity transaction this year from a $1.4 billion rights shares placement in its local unit Sampoerna.

The landmark deal was the largest-ever secondary placement in Southeast Asia and also the largest equity offering in Indonesia since 2008.

It has clearly been unfavourable for issuers to conduct equity offerings in Indonesia this year due to the head winds of a sharply depreciating local currency and net capital outflows. For Sampoerna, the sale's timing was also far from ideal as the market was still recovering after a global equities selloff from mid-June to late-August.

And yet Sampoerna overcame these hurdles to price a $1.4 billion deal – massive by Indonesian standards – at the top of its Rp65,000 to Rp77,000 indicative price range.

Credit is given to the bookrunners for their thorough pre-deal preparations, including running an extensive three-week anchor process to solicit demand in excess of the deal size.

Adding to the strong work by the joint global coordinators was their ability to price the deal at 29 times forecast 2016 earnings, a hefty 71.5% premium to Sampoerna's parent Philip Morris and a 110% premium to Gudang Garam, the closest direct comparable company.

Indonesian shares were not a strong draw for for foreign capital this year but Sampoerna nonetheless managed to attract more than $700 million of international fund money. In the end, more than half of the deal was placed with international funds, with the rest going to domestic long-only funds.

The final allocation was skewed towards long-term investors, sending a vote of confidence to market participants over the company’s prospects.

Immediately after pricing the stock traded up by 14.7% to close at Rp88,835. It has subsequently risen further to close at Rp93,350 on November 18.


SoftBank’s $1 billion investment in Coupang

Sole financial adviser to Coupang: Goldman Sachs

Legal adviser to Coupang: Fenwick & West 

Legal adviser to Softbank: Paul Hastings

Japan’s SoftBank announced that it would invest $1 billion in the Korean e-commerce start-up on June 3, the largest single-round of investment ever in an unlisted Korean company and the third-biggest in Asia after Alibaba and Xiaomi.

Softbank's purchase of the roughly 20% stake valued Coupang at around $5 billion, according to a person familiar with the matter, marking it out as one of Asia’s highly prized unicorns and the only one in Korea. 

The deal also illustrates an important trend for Korea. After decades of chaebol-driven economic growth, Korea is nurturing a fresh batch of innovative start-ups to pave the way for the country’s next phase of development. 

SoftBank's backing of the theme has reinvigorated Korean venture companies and cast a brighter light on the growth potential of Korean companies according to analysts. 

Coupang, whilst still unprofitable, has become one of the world's most disruptive e-commerce companies, taking market share from high-street retailers and logistics firms. It is now the number one seller of diaper and baby products, surpassing hypermarkets Homeplus and E-Mart. Local delivery providers have filed complaints against Coupang's fleet of delivery trucks – perhaps a hallmark of its success.

It is also one of the world’s fastest-growing firms, with gross merchandise volume rising 80% year-on-year. Founded in 2010 by Harvard dropout Bom Kim, Coupang is now Korea’s largest online commerce firm by revenue.

Coupang benefits from Korea's super-wired online shopping habits, speedy broadband infrastructure, and dense population, which makes fast deliveries easier. Korea has the largest mobile-commerce penetration rate globally, with mobile shoppers representing 40.9% of total population. According to Coupang, mobile accounts for 85% of its traffic.

Korea also had the world’s highest broadband penetration rate of 95% in 2014. 

The Korea Online Shopping Association forecasts that online shopping will account for 30% of the domestic retail market by 2020. 

SoftBank's capital will likely be used for expanding Coupang's distribution, an unsettling prospect for smaller competitors such as Ticket Monster, better known as TMON.

In April, Groupon entered into an agreement to sell 46% of TMON to KKR and Anchor Equity Partners for $360 million, valuing TMON at $782 million on a fully-diluted basis. Shortly afterwards SoftBank announced its much larger investment in Coupang, an unpleasant surprise for TMON's private equity investors who hope to grab its market share, according to a person familiar with the deals.  

Goldman has worked with Coupang since its early days and helped pair the Korean firm with savvy internet investor Masayoshi Son, SoftBank's chief executive officer, who was also an early investor in China's Alibaba. 


Petronas $5 billion four-tranche bond

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

Malaysia's Petroliam Nasional Bhd, 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 view 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, reflecting an enduring investor appetite for Malaysia’s most important state-owned enterprise even as economic growth slowed.

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 220bp. Meanwhile, the Islamic tranche – raised via special purpose vehicle Petronas Global Sukuk – priced at 110bp over Treasuries, which was 25bp tighter than initial price guidance.

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 formal launch.

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.


Republic of Philippines $2 billion 25-year sovereign bond issuance

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.


DBS $1 billion inaugural covered bond

Joint global coordinators: DBS, Deutsche Bank, JP Morgan and Societe Generale

DBS Bank placed the first Singaporean benchmark in offshore covered bonds following an inaugural $1 billion offering, setting a benchmark for other Asian banks.

The long-awaited transaction, which was flagged eight years ago, is part of the bank’s newly established covered bond programme and provided a yardstick for Kookmin Bank's $500 million October offering -- the first since the passing of the Korean Covered Bond Act in April 2014. 

Only mortgage loans and government bonds can be used as collateral, giving investors a higher level of confidence in the midst of volatile market.

It took Singapore a number of years to get a regulatory framework in place for an asset class that has exploded in popularity and globally now tops the €2.5 trillion ($2.7 trillion) mark. Covered bonds have proved particularly popular in Europe where it was one of the few forms of debt to remain open to bank issuers during the global financial crisis. 

Covered bonds are a type of fixed income security backed by an asset pool (normally residential mortgages) that remain on the balance sheet unlike other forms of securitised debt. Their over-collateralisation means they attract a higher credit rating and lower cost of funding than senior debt, albeit one that tiers assets.

For DBS Bank, that meant an AAA/AAA rating for this three-year deal compared with a standalone credit rating of Aa1/AA-. Pricing at 37bp over mid-swaps was also about 23bp inside the theoretical level of its senior debt.


CTBC’s $380 million acquisition of Citic Bank International (China) 

Acquirer Adviser: Morgan Stanley

Target adviser: Citic Securities and ABC International

CTBC, one of Taiwan’s largest privately owned banks, bought a 100% stake in Citic Bank International (China) for $380 million in May.

The deal is the first-ever 100% acquisition of a Chinese bank by a Taiwanese financial institution and also the largest banking merger or acquisition in China by a Taiwanese financial entity since Fubon FHC bought 80% of First Sino Bank for $896 million in 2013.

The acquisition of Shenzhen-headquartered CBI China, a wholly owned subsidiary of China Citic Bank International under Chinese conglomerate Citic Group, tripled CTBC’s assets.

Meanwhile, China Citic Bank bought a 3.8% stake in CTBC via a private placement for $429 million, a strategic investment into CTBC, one of the most internationalised Taiwanese financial firms.

The transactions not only represent a further milestone in cross-strait financial cooperation but also offer a good opportunity for CTBC to expand its presence and business scope in China. As a result, CTBC will expand its operations in China from three branches to six and begin to catch up with DBS Bank, which runs about 30 branches in the country.

The Taiwanese bank could also engage in derivative products business as well as apply for licence to conduct retail renminbi business in mainland China.

The move puts CTBC one step further on the road to becoming a regional financial institution after the bank bought the Japanese commercial lender Tokyo Star Bank for $542 million through a 100% share-swap transaction in late 2013. 


Jasmine Broadband Internet Infrastructure Fund $1.7 billion IPO

Bookrunners: Morgan Stanley, Bualuang Securities

Thai telecommunications services provider Jasmine International completed a $1.7 billion initial public offering of Jasmine Broadband Internet Infrastructure Fund (Jasif) in January, even as the overhang of a potential US interest rate hike dented investor demand for yield-play assets.

Sole international bookrunner Morgan Stanley and domestic bookrunner Bualuang Securities were clearly aware of the huge demand needed to cover the deal. The duo organised management roadshows two months ahead of the formal bookbuild to provide sufficient time to educate investors and collect pre-launch indications.

The deal was executed against a backdrop of rising emerging market yields, providing investors with a wider selection of alternative high-yielding assets.

However, Jasif was still able to attract sufficient demand due to an attractive growth outlook for the broadband market in Thailand, one of the least penetrated markets in Asia.

In the end Jasif priced the deal at the bottom of the Bt10 to Bt10.5 per share indicative range, equating to an attractive 2015 dividend yield of 9%. By comparison, listed Thai rivals BTS Rail Mass Transit Growth Infrastructure Fund and Digital Telecommunications Infrastructure Fund yielded 7.2% and 8% at the time.

While Thai equity deals tend to be highly domestic, local demand accounted for slightly less than half of Jasif’s IPO. Foreign investors, particularly US yield-focused funds, were clearly convinced by the long-term prospects of the broadband assets, as well as the potential upside from future asset injections from its sponsor and de facto parent, Jasmine International.

Aftermarket performance has been relatively stable since its debut in February, with the stock hovering around its IPO offer price in mid-November. Over the same time period Thailand's benchmark SET Index has slipped by more than 12%. 


Home Credit Vietnam Finance Company $50 million senior secured loan

Sole originator, structurer, and lender: Credit Suisse

Joint mandated lead arrangers: Maybank International, Vietnam Joint Stock Commercial Bank for Industry and Trade (Vietinbank), Filiale Deutschlan

When it comes to Vietnam, this year FinanceAsia’s editorial team has placed a particular premium on rewarding a precedent-setting, first-time, scalable deal, that has opened new avenues for finance in the country.

With that in mind, Home Credit Vietnam Finance Company stands out this year after securing the first-ever international financing for the foreign subsidiary of a consumer finance company in Vietnam .

Though relatively small compared with other submissions in this category, at $50 million, the innovative transaction provides a new channel for consumer finance companies in Vietnam to raise capital.

Previously limited only to parent company funding, Credit Suisse structured a security collateralisation on Home Credit’s domestic assets, allowing them to access borrowing from domestic banks like Vietinbank, which was never previously possible for consumer finance companies under local law.  

The deal allowed Home Credit to capitalise on its local assets of small consumer loans to secure additional growth capital from local lenders, instead of relying on its parent company in the Czech Republic.

The deal was the first of its kind and completed in October but Credit Suisse claims that it has since been mandated by two additional Vietnam-based consumer finance lenders, in deals that will settle in the next two months. This provides evidence that the initial innovation of the deal is recognised as viable and more desirable financial structure for this sector.

Given Vietnam’s economic fundamentals, where a young middle class is fast emerging, opening a new channel of funding to support the small loan needs of that growing segment makes Home Credit’s senior secured loan the clear winner this year.

¬ Haymarket Media Limited. All rights reserved.
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