Merrill appoints heads of private equity client coverage

The appointments of Gibb and Sawhney reflect the growing importance of private equity money in the region.
In a move that stresses the growing importance of private equity clients in the region, Merrill Lynch has appointed the current heads of its Asia financial industries and leveraged finance groups as co-heads of the bankÆs Asia Financial Sponsors Group.

In their new roles, Richard Gibb and Ajay Sawhney will work closely to expand the bankÆs coverage of these types of clients with the aim of introducing them to the best deals within the M&A and capital markets space. The group will be adding additional manpower over the coming 12 months, according to an internal announcement.

In addition to their new positions, Gibb will continue as co-head of the Asia FIG group together with Michael Tan, while Sawhney will remain head of the leveraged finance group.

Like other investment banks, Merrill has been focusing increasingly on private equity and hedge fund clients in the past 18 months since Sheldon Trainor moved over from Morgan Stanley to become head of Asia investment banking and origination. This has included putting the bankÆs own capital at work and people familiar with the appointments of Gibb and Sawhney say the moves are a signal that the bank is taking on more risk in the region.

Compared with most of its rivals, Merrill also appears to have made a bigger shift away from the ôleague table businessö in favour of more privately negotiated deals and, in the past year, a significant portion of its equity capital market activities has involved transactions outside the public markets.

The focus on private equity money is logical, given that this group of investors accounted for 25% of M&A volumes globally in 2006 compared with only 5% in 2000, according to Dealogic. The compiler of financial market data also estimates that global private equity assets amounted to about $200 billion at the end of last year and says some international players now allocate as much as 25% of their assets to Asia.

The worldÆs biggest private equity firms, such as Carlyle, KKR, Bain, Newbridge, Texas Pacific and Oaktree, are now actively making investments in Asia and in addition to those the region is also starting to see a growing number of ôhomegrownö firms making their mark, including MBK and Affinity Partners.

In January 2006, Merrill acted as M&A adviser for AffinityÆs acquisition of a 44.3% stake in oil & gas services company Jaya Holdings and the subsequent general offer. It was also lead arranger and sole bookrunner for a financing facility used in connection with these transactions that was pre-funded by Merrill Lynch Capital Corp.

The investment bank is also the financial adviser to a MBK-led consortium with regard to its October agreement to buy out TaiwanÆs largest cable TV systems operator, China Network Systems. The $1.6 billion deal, which marks the single largest investment to date by MBK, is expected to close in the first half of this year.
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