sections

Thursday, 18 October 2018

EMEA Mid-Market Equity House: Berenberg

  • Print
  • Share
  • Save

The disruptor

Having conquered its home market of Germany, Berenberg is rapidly building in the UK and elsewhere in Europe. In five years it has established itself as a leading ECM house that does things differently, making it IFR’s inaugural EMEA Mid-Market Equity House.

In five years Berenberg has gone from irritating Commerzbank to battling Deutsche Bank and being the leading German bank in ECM, when until recently Deutsche was considered among the best in Europe.

It hasn’t stopped there and in the past year has risen to prominence in the UK while adding emerging markets and Scandinavia to its repertoire.

The bank has acted as a disruptor, reviving failed deals and pushing the boundaries with what can be done – as illustrated by 19 sole bookrunner roles – and on its current trajectory will break into the top 10 banks in EMEA in the near future.

Five years ago, Berenberg operated below most people’s radar in ECM. That all changed with Talanx.

In September 2012, the German insurance firm cancelled its €700m float nine days into pre-marketing, blaming the banks for getting the valuation completely wrong. A week later the deal was revived, with Berenberg jumping from a lowly co-bookrunner role to global coordinator in the process as two bulge-bracket banks were demoted.

Skip to September 2017 and Berenberg once again resurrected a cancelled deal. German battery company Varta’s listing ambitions had fallen flat in late 2016, but returned with Berenberg drafted in as sole global coordinator, having not been involved previously.

Under Berenberg’s stewardship, Varta was priced at the top of the range and closed with a first day pop of 14.57%. At the time of writing, the shares were more than 30% above pricing.

“It has been a very busy year,” said Oliver Diehl, global head of equity capital markets at Berenberg.

Of Berenberg’s bookrunner roles during the IFR Awards period, the year-on-year progression is stark. The number of deals across equity and equity-linked has risen to 44 from 17 and US$4.1bn of league table credit, versus US$1.2bn last year. In 2012, Berenberg mustered just seven deals; now it ranks 14th in all of EMEA.

The bank completed six German IPOs in 2017 – making it the number one bank in its home market by both proceeds and number of deals. Activity included three joint global coordinator roles – for meal kit company HelloFresh, restaurant chain Vapiano and engineering business Aumann – in addition to the sole glo-co role on Varta.

Diehl said that the bank hardly missed a German float this year, but added that work outside its home market has been essential in recasting the firm’s capabilities.

“It has been very busy in Germany and Switzerland, but what is noteworthy is that we have improved our position in the UK,” he said. “This year has been about harvesting the fruits of our efforts over the last five years in corporate broking and taking market share.”

That work was rewarded in September with a sole bookrunner role on a UK IPO, rare in itself, with Berenberg pricing a £125.4m AIM listing for Alpha Financial Markets Consulting. Pricing came towards the top of guidance and the stock has traded at a modest premium since. A listing for City Pubs Group, on which Berenberg was top line, was priced after the awards period.

The bank continued to expand its reach with a Stockholm IPO for fashion retailer Boozt.com and top-line roles on haulage firm Waberer International’s Ft22.56bn (US$83m) Budapest float and Griffin Premium’s Z463.5m (US$118m) Warsaw listing.

“Outside of Germany, Switzerland and the UK, we don’t have any bankers on the ground doing origination, so we are a bit more opportunistic,” said Diehl. “What we try to do is position our research, where we cover around 730 stocks throughout Europe and that number is increasing. Then it is about identifying the key shareholder and making cold calls. We are not afraid of picking up the phone and getting out in front of new clients.”

When it comes to blocks, Berenberg has defied convention. In the space of two weeks, the bank on a sole basis sold over 30% in both The Gym Group and XLMedia. Berenberg hadn’t even been involved in any previous Gym Group trades.

To see the digital version of this review, please click here.

To purchase printed copies or a PDF of this review, please email gloria.balbastro@tr.com.

  • Print
  • Share
  • Save