How we chose Australia and NZ's outstanding deals

FinanceAsia picked the best capital markets deals in Australia and New Zealand last year. This is why they won our 2017 Achievement Awards.

The 2017 winners of FinanceAsia’s Annual Achievement Awards for Australia and New Zealand were announced in December. The following issuers and firms showed originality and tenacity in their ability to tap capital markets and meet funding needs. These deals were chosen for their deft execution and clever market timing.

Netwealth, A$264 million

Credit Suisse, UBS

The primary equity markets in Australia were sluggish in 2017 and those companies that did list often struggled in the aftermarket. Not Netwealth. The investment platform operator’s share price rallied 44% on its November 20 trading debut after pricing at the top of the 27 times to 32 times bookbuild range. More than 150 institutional accounts and six retail networks were engaged during the roadshow, with investors attracted to Netwealth’s scalable business model. The founding directors retained over 50% of shares following the IPO, offering comfort that the company will stay on track. By early December the shares remained buoyant, trading some 48% above the issue price.

Nufarm entitlement offer, A$446 million
JP Morgan, UBS

Shareholders embraced Nufarm’s ambitious expansion strategy this year committing A$446 million in new equity to assist in its acquisition of crop protection products from Adama Agricultural Solutions and Syngenta. Nufarm had funding certainty through the bid with a volume underwrite from UBS. The deal priced at a reasonably tight 11.8% discount to TERP given Sumitomo – a 22.4% shareholder – did not participate. Excluding Sumitomo, the issue had a 95% institutional take-up and a 77% retail take-up. The stock opened higher after the post-trading halt and has remained above the theoretical rights price since.

CKI consortium takeover of DUET Group, A$7.4 billion

Advisors to CKI consortium: Morgan Stanley
Advisors to DUET Group: Gresham, Macquarie Capital

There were plenty of large-scale deals in 2017 and a number that involved long and complex negotiations, but for swiftness and elegance our judges liked the public market takeover of diversified energy investor DUET in January. The deal was led by Hong Kong-based Cheung Kong Infrastructure, which had only recently been knocked back on its bid to buy Ausgrid. This was an important test for the Australian government’s willingness to support foreign investment in critical local infrastructure. CKI now has a significant multi-utility platform in the country. Shareholders also did well achieving a 27.5% price premium to the shares’ three-month volume-weighted average price.

AOFM 10-year Treasury Bond, A$11 billion

ANZ, Commonwealth Bank of Australia, Deutsche Bank, Westpac

Sometimes big deals are hard for our judges to ignore. The bond transaction by the Australian Office of Financial Management in February 2017 marked the biggest print by the sovereign borrower and the largest-ever for the country’s debt markets. Demand was strong for the long-dated securities and the book attracted orders for twice the number of bonds on offer, with significant interest from offshore accounts in the UK and Asia. Early price indications were tightened after only a few hours and the bonds eventually priced at 14 basis points above 10-year futures.

Bank of Queensland conditional pass-through covered bond, €500 million

BNP Paribas, Commerzbank, ING, National Australia Bank, UBS

Another first for Australia’s financial borrowers, the Bank of Queensland’s (BoQ) inaugural conditional pass-through covered bond is joint winner of the Best International Bond category for 2017. The programme was established in May and BoQ executed the transaction in June. Despite the inaugural nature of the trade and BoQ’s domicile, the new issue concession was in line with other programmatic European covered bond issues in the low single digits. A total of 59 investors participated with all major covered bond buyers represented.

Commonwealth Bank of Australia 30-year fixed senior unsecured bonds, US$1.5 billion
Commonwealth Bank of Australia, Goldman Sachs, JP Morgan, Morgan Stanley

Taking advantage of a recent sell-off in US rates, the Commonwealth Bank of Australia (CBA) jumped through an issuance window in July to price the first ever 30-year senior unsecured benchmark bond issued by an Australian bank. The only other local names to have previously printed a senior bullet with this tenor are mining companies BHP and Newcrest Mining. The deal attracted strong interest from asset manager and insurance buyers and the orderbook peaked at $3.7 billion. The bonds priced flat to CBA’s expected 10-year new issue price.

Queensland Treasury Corporation 7-year fixed senior unsecured bonds, A$750 million

ANZ, Bank of America Merrill Lynch, National Australia Bank

The winner of our inaugural Best Green Bond award goes to QTC’s mega A$750 million transaction executed in March. The proceeds are being applied primarily to low-carbon transport projects being undertaken in Queensland. It was the largest green bond at the time, highlighting the potential depth of the Australian market for such instruments. A total of 35% of investors in the bonds had dedicated green/SRI mandates while another 56% were investors with established ESG frameworks. The transaction sparked conversations between investors and the Queensland government about its effort to mitigate the impacts of climate change.

Westpac perpetual NC10 AT1, US$1.25 billion

Citi, HSBC, JP Morgan, UBS

In its first offshore foray for tier-1 capital in over a decade, Westpac exceeded its expectations on volume and price. The September deal marked the only AT1 security issue by an Australian bank in SEC-registered format. At the peak of the bookbuild the lead managers had generated around $11 billion of interest from 500 investors. The high demand allowed the deal team to accelerate the marketing process and launch the transaction on the second day of the roadshow. Final pricing was more than 50 basis points inside equivalent pricing for an Aussie dollar issue.

Latitude credit card ABS Trust 2017-1, A$1 billion

Bank of America Merrill Lynch, Deutsche Bank, National Australia Bank

This innovative deal by non-bank finance company Latitude represented a double first in Australia – the first credit card asset-backed issuance and the first transaction to employ a master trust structure. Following a two-week global roadshow, the order book topped out at A$4 billion and the deal was upsized from A$750 million. A total of 38 investors participated from Australia, the UK, US, Japan, Korea, and Singapore. A$260 million of the notes were pre-placed to a single Asian investor demonstrating strong offshore appetite for clever Aussie deals.

New Grafton Correctional Facility PPP, A$742 million

ANZ, Commonwealth Bank of Australia, Investec, Macquarie Capital, National Australia Bank, Korea Development Bank, Norinchukin Bank, AustralianSuper

The success of the syndication on this public-private partnership and the fact it was twice oversubscribed shows that ample appetite exists for well-structured infrastructure assets that provide long-term cash flows. The privatisation of prisons is controversial, raising questions about whether profit-driven companies are best placed to run facilities aimed at rehabilitating so-called customers and reducing the likelihood they will return for a second visit. With the funds now raised and construction underway, it is now over to the Northern Pathways consortium to deliver on its promise to provide tax-payers with value for money and limit reoffending.

Bapcor’s acquisition of Hellaby, NZ$352 million

Advisors to Bapcor: FNZC, Morgan Stanley
Advisor to Hellaby: Forsyth Barr

Hostile takeovers of this magnitude are uncommon in New Zealand. Hellaby’s board strongly and publicly opposed the approach from Bapcor from the outset, setting a significant challenge for advisors on both sides. While some shareholders were ready to sell at the first offer price of NAZ$3.30 per share, others held on until ASX-listed Bapcor increased its offer for the Kiwi automotive business. Eventually control was achieved without board support and without access to full due diligence. The price was boosted to NZ$3.60 per share, demonstrating Bapcor’s high level of conviction to extract synergies.

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