Australia/New Zealand Equity House
In another difficult year for Australia’s equity capital markets, one bank dominated primary fundraising. For leading almost every trade to top the league tables by a mile, and for an enviable execution performance, UBS is IFR Asia’s Australia Equity House of the Year.
No stranger to the top of the league tables, UBS showed no signs of resting on its laurels in Australia’s equity capital markets. It brought innovative deals to the market, executed trades flawlessly, and showed the guts to hard underwrite transactions even in challenging markets.
“We continued to dominate Australian equity capital markets by bringing more issuers to the market over the review period than any other bank, using a range of equity structures,” said Simon Cox, managing director and head of ECM syndication at UBS Australia.
The bank topped the league tables for the review period with a whopping 24.2% market share, having headed 34 deals for A$5.35bn (US$5.26bn). Second placed Macquarie led 18 deals for only A$2.22bn – less than half UBS’s tally.
The sheer domination meant UBS led almost every deal done in Australia during the review period, introducing a number of unusual structures in an effort to deliver the best solution to its clients.
UBS in February jointly led an A$992m fundraising for West Australian Newspapers Holdings in a deal that stood out from the pack. The company raised A$652m through a four-for-seven entitlement offer of convertible unsecured loan securities (CULS) and a further A$40m through a public equity offer.
CULS convert on a one-for-one basis into ordinary shares, but only if the acquisition is completed. If the acquisition does not happen, the CULS are redeemed, with holders getting their money back plus a 2.5%–4.5% redemption premium to the last share price.
The product had been used before in Australia, but not since 2006, and was seen as an effective way of allowing the company to finance a major acquisition without requiring equity investors to take on a huge amount of risk on the acquisition. WAN’s CULS ensured funding certainty for the equity component of the acquisition consideration. The company’s existing institutional shareholders, with the exception of acquisition target Seven Group Holdings, subscribed to around 90% of their entitlements.
In addition to the CULS, an A$300m block placement was completed, as Seven Group Holdings sold shares at A$5.60 – a premium to the A$5.20 CULS entitlement price. The block shares also came with the entitlement to buy CULS at A$5.20.
UBS underwrote some jumbo blocks in difficult markets. During the review period, it underwrote more substantial transactions than any other bank in the Australian market.
In March, it acted as sole underwriter for ACP Magazines, a subsidiary of Australian media group Nine Entertainment, on the A$562m sale of its 49.1% stake in used-car website carsales.com in an opportunistic block trade, allowing ACP’s ultimate owners CVC Capital Partners to exit a major investment in the capital markets rather than through a time-consuming strategic sale.
ACP sold 114.2m carsales.com shares at A$4.92 each, a discount of 6.1% to the March 4 close of A$5.24. It is understood that there was no formal pitching for the deal, even though analysts had not expected Nine to be a long-term holder of the stock, but that UBS instead approached the vendor with a proposal formulated over the weekend.
It was also sole lead and underwriter on Transurban’s A$903m block trade – the largest in 2011 – and the third largest in Australia in the last five years. The sale was conducted before market at the underwritten fixed price of A$5.23 for a narrow discount of just 2.4%. Similarly, UBS underwrote Leighton Holdings’ A$757m accelerated renounceable entitlement offer in April.
Australia’s IPO market suffered from continued uncertainty over the 12 months, but UBS began the review period on a high with its joint bookrunner role on the A$4.1bn IPO of QR National, the country’s second largest listing on record.