It is a very rare year when UBS does not win best investment bank in Australia from FinanceAsia. And this was not one of those years.
In fact, 2020 marks the 17th year in 18 that UBS has been the undisputed number one in the country with an extremely strong presence across ECM, DCM and M&A.
We always look most closely at M&A because it is where investment banks typically add the most value. And despite the impact that Covid-19 had on overall deal flow, UBS announced 19 transactions during the course of our awards period.
The Swiss bank advised the target on Australia’s largest announced M&A deal of the year, the A$10.3 billion ($7.62 billion) proposed acquisition of Coca-Cola Amatil by Coca-Cola European Partners. Other landmark transactions include the $2.1 billion sale of AMP Life to Resolution Life and the $1.2 billion sale of Orora’s Australian fibre business to Nippon Paper.
In ECM, UBS had an especially strong lead over the rest of the pack according to Dealogic data and it achieved it by leading transactions across a broad range of sectors.
Of note was the A$2 billion ($1.48 billion) PAITRO (pro rata accelerated renounceable entitlement offer) for Sydney Airport in August. This represented the largest sole-led capital raising in Australia for five years and second largest ever.
Its size was commensurate with the impact that Covid-19 has had on the airline industry. Getting a good deal was critically important to the airline so that it could strengthen its balance sheet and weather different recovery scenarios. It worked: the deal set a floor for the company’s stock price, which has subsequently re-bounded.
On the DCM side, UBS was also very much in evidence when it came to the year’s most innovative deals. Here one deal in particular stood out: the $3 billion multi-tranche subordinated bond offering for Scentre.
The Swiss bank was sole structuring advisor for a deal, which re-opened the hybrid market to Australian corporates after a four-year hiatus and marked the first A-Reit issue since 2007.
This was a close call between Craigs and Forsyth Barr. The latter had a very strong lead in ECM and DCM, but what tilted us in favour of Craigs was its cross-border M&A work.
Craigs played a key role on New Zealand’s two largest M&A transactions in 2020: ANZ’s NZ$659 million sale of UDC Finance to Shinsei bank, which won our Deal of the Year and First Sentier Investors’ NZ$854 million ($605 million) acquisition of Ultrafast Fibre.
In both instances, Craigs was the sell-side advisor: joint with Morgan Stanley on ANZ’s divestment and sole on Waipa Networks and WEL Networks sale. A competitive auction process for both assets – New Zealand’s largest speciality finance company and its second largest fibre network – ensured a good price for the vendors.
Where Ultrafast Fibre was concerned, there was an NZ$200 million ($142 million) deferred consideration that will be paid to the vendors 18 months post completion.
When it came to ECM, Craigs participated on five transactions the largest of which was an NZ$301 million ($213 million) block trade for Oceania Healthcare.
Being a trusted partner is important for an investment bank and Oceania demonstrated its regard for Craigs by appointing it as a lead manager for its debut bond as well.
Other equity deals included an A$207 million ($147 million) rights issue and placement for Kathmandu Holdings and an NZ$58 million ($41 million) well supported placement for travel software company Serko.
Finally in relation to DCM, Craigs was also a joint lead manager for Mercury Energy, which became the first investment grade retail issuer to price below 2% and Summerset Holdings, which set a new pricing level for unrated retail targeted bonds.
BEST M&A HOUSE
Another year, another win for Goldman Sachs as Best M&A House. The US investment bank has a very strong franchise across Australasia, one that is underlined by its entrenched position at the top of the league table rankings.
When these awards were being decided in late November, Goldman had a leading 27.95% market share with 24 deals and accredited volume of $18.49 billion under its belt. It had a role on three of the top four announced deals.
On the buy side, it is advising Coca-Cola European Partners in its A$6.4 billion ($4.82 billion) acquisition of the 69.2% shares held by independent shareholders in ASX-listed bottler Coca-Cola Amatil.
It is also advised private equity group Bain Capital in its A$1.7 billion ($1.3 billion) takeover of Virgin Australia, which collapsed back in April when the Federal government declined to bail it out. The transaction closed in mid-November.
On the sell-side, its largest advisory role is for wealth manager AMP, which is being purchased by Los Angeles-based Ares Management.
The bank’s largest completed transaction came from advising hyperscale data centre platform AirTrunk, which sold an 88% stake to a consortium led by Macquarie Asia Infrastructure Fund 2 for $1.87 billion.
Other notable advisory mandates include its work for renewable energy company Infigen, which was the subject of competing off-market bids from Iberdrola and UAC Energy. A series of improved offers from both bidders culminated in a final bid from Iberdrola, with the Spanish group achieving control in August.
BEST LOCAL BOND HOUSE
The bank was top of the Dealogic tables when FinanceAsia decided the awards. Size does not count for everything, but it does count for a lot and ANZ banked 50 transactions in the Australian dollar denominated bond market to give a 15.56% market share and league table accreditation of $22.72 billion.
It also topped the ESG league tables with $1.099 billion via three deals. But what the magazine and the editorial board liked was the innovation and timing that ANZ brought to bear in how it executed deals.
One notable transaction was Woolworths A$1 billion deal in May, which re-opened the bond market after Covid-19 started ravaging spreads and issuance in March. That deal won our award for Best Capital Raise during Covid-19.
Then there was its work for AusNet Services, which launched the largest subordinated bond deal on record for an Australian corporate in October. The 60 non-call five-year floating rate note (FRN) also marked the first sub debt since 2015.
The electricity distributor liked the structure because it gave it 50% equity treatment and investors liked the deal as it traded well and was up by about three points at the end of November.
Then finally there is ANZ’s ESG work, which stands out year-after-year. Notable here was the largest-ever green bond by an Australian corporate: a A$500 million transaction for Lendlease in late October. This too has benefitted from solid market momentum, trading up five points within a month of launch.
BEST INTERNATIONAL BOND HOUSE
This is now the third year in a row that Citi has won Best International Bond House. This is reinforced by its commanding league table position with 17.03% market share when we decided the awards in late-November.
The US bank had accredited volume of $5.59 billion across 24 transactions. These spanned the full gamut of onshore and offshore issuance from sovereign, corporates and financial institution borrowers.
Citi was, for example, one of the lead managers on two of the record-breaking offerings issued by the Australian Office of Financial Management (AOFM) in May and June.
It was also extremely active managing deals for borrowers impacted by Covid-19. Chief among these was Qantas, which issued an A$500 million ($377 million) 10-year deal in September and Westfield-owner Scentre, which won our award for best Hybrid Deal of the Year.
Australia is always an extremely active market for FIG issuance and in 2020 Citi helped one borrower to set a new template. This was a $500 million AT1 deal for QBE Insurance Group.
What was unusual about the perpetual non-call five-year deal was its unique write-off loss absorption feature. In a first of its kind for Australia, write-off is contingent on the occurrence of a point of non-viability (PONV) trigger.
The deal did not contain a variable conversion loss absorption feature. This meant that it was accounted for as equity on the insurer’s balance sheet.
Strong demand enabled the deal to be upsized from $400 million to $500 million and price through its existing curve.
Citi was also a joint bookrunner on National Australia Bank’s A$600 million ($452 million) issue, which represented the domestic bond market’s largest-ever wholesale transaction.
BEST DEBT FINANCE HOUSE
Each year, a different bank tends to shine when it comes to the debt finance and in 2020 the editorial advisory board were most impressed with Westpac.
When it comes to structured bonds, Westpac was the only domestic bank that was on all four of the market’s largest deals. Top of the rankings was its own A$2.75 billion ($1.89) billion mortgage pass through FRN issued via its Series 2020-1 WST vehicle.
Westpac was also one of the bookrunners on: the Liberty Series 2020-3 residential mortgage backed security (RMBS) issue; the Firstmac Mortgage Funding Trust Series 2-2020 RMBS and the Pepper I-Prime 2020-1 Trust transaction.
In terms of project financing and syndicated lending there was one very prominent deal, which stood out. This was the A$1.6 billion ($1.2 billion) offering for Queen’s Wharf in Brisbane.
The five-and-a-half year transaction was one that could have easily fallen by the wayside as a result of Covid-19. But it made it through to completion and on the same pre-pandemic terms.
Westpac was able to pull this off alongside the other Chinese and Japanese mandated lead arrangers for a number of reasons. Firstly, the financing was compartmentalised to appeal to different lenders, with a split between the entertainment sector and tourism and leisure sector.
Secondly, the ownership structure facilitated the participation of a geographically diverse banking group. The complex is 50% owned by Australia’s Star Group, with Hong Kong’s Chow Tai Fook and the Far East Consortium each owning 25%. As a result, there was strong participation from a roster of Chinese and Taiwanese banks.
BEST SUSTAINABLE FINANCE HOUSE
National Australia Bank
A well-deserved winner, National Australia Bank led the most ESG transactions during FinanceAsia’s awards period according to Dealogic data.
What really impressed the judges was the breadth and innovative nature of the transactions that it led. Particularly noteworthy is the A$600 million ($452 million) bond for Sydney Airport, which also won our award for Best Sustainable Finance Deal by a corporate.
This transaction was a true world-first and incredibly important because it helps to bridge the ESG divide between the bank and bond markets. Sustainability-linked loans are becoming increasingly prevalent in the bank market, but so far it has been hard to migrate the structure to the bond market.
In this instance, a 20-year tranche was syndicated in the US private placement market. The novel twist is a two-way coupon that will move up or down subject to Sydney Airport’s ability to meet pre-set sustainability targets.
Over the course of the year, National Australia Bank also put its balance sheet to work in the burgeoning sustainability-linked loan market. This resulted in transactions for: Investa Commercial Property Fund, dairy processer Synlait, district heating company Coriance and crude oil shipping company, Euronav.
There was a strong roster of ESG deals in the bond market too. These included a lead management role on Australia’s first Covid-labelled social bond for Shinhan Bank.
The bank was also the sole lead for Australia’s first 100% green asset-backed security (ABS) transaction for debut issuer Brighte. The deal was backed by solar and battery installation receivables. It marked an important transaction: highlighting how securitisation is a viable funding option for fintech lenders.
Other National Australia Bank deals include: Housing New Zealand’s tap and new issue Wellbeing bond, Auckland Council’s third green bond, New South Wales Treasury Corp’s second green bond and Lendlease’s first green bond.