Against a challenging backdrop of slowing Chinese growth, a looming US rate hike and increasing geopolitical tensions, Goldman Sachs managed to seize market windows for major equity financings across the Asia-Pacific region.
The US investment bank led three out of the four largest IPOs and three of the five biggest follow-ons from the region, putting clear water between itself and its nearest rival in volume terms over IFR’s review period.
Goldman has worked hard to craft a reputation as the arranger of choice for Asia’s biggest equity offerings, and 2014 was no different as it continued to print the biggest deals from Greater China.
This year, however, it did more for key clients in Australia and continued to develop Asia’s equity capital markets with innovative transactions.
“This year has been full of uncertainty. Still, we have raised capital for our clients efficiently, while at the same time resisting margin compression,” said Jonathan Penkin, co-head of Goldman’s financing group, Asia-Pacific ex-Japan. “We will continue to lead the biggest deals in the region, rather than chase smaller transactions with multiple bookrunners.”
China was again the busiest market for Asian equity offerings during the year, but the mix of issuers is changing, with state-owned enterprises no longer the sole source of big deals. Here, Goldman played to its strengths, using its home advantage to win several mandates from Chinese technology companies for US listings, a sector that accounted for a major proportion of the year’s deal flow.
Goldman won a coveted bookrunner slot on the US$25bn New York Stock Exchange listing of Chinese e-commerce giant Alibaba Group – the stand-out deal of the year worldwide. Despite joining the deal at a much later stage than at least two other banks, Goldman was appointed sole stabilisation agent for the mammoth float, a prestigious role underlining the issuer’s trust in the bank.
Goldman also featured on many other equity offerings from US-listed Chinese tech companies in the year. It led the US$280m NYSE IPO of online cosmetics retailer Jumei International, the US$328m Nasdaq IPO of Weibo, the biggest Twitter-like microblogging service in China, and the US$821m dual-tranche CB and placement for Vipshop, a Chinese online discount retailer.
In Australia, efforts to build the franchise in recent years paid off, as Goldman successfully arranged the largest IPO, rights issue, institutional placement and block trade for the year, gaining market share in the process.
The A$2.34bn (US$2bn) entitlement offer of toll-road operator Transurban Group underlined the bank’s ability to take risk for the right deal, and the right client, with a nerve-shredding 30-day hard underwriting agreement to support an acquisition.
Other stand-out trades included the first subordinated convertible bond in China for Ping An Insurance. Goldman was joint bookrunner on the Rmb26bn (US$4.2bn) A-share deal, which was equity-like with a 3.3% premium and 0.8% initial coupon, that allowed the country’s second-largest insurer to improve its solvency ratio from 162.7% to 181.2% even before any of the bonds are converted.
Goldman also played a pivotal role in Dai-ichi Life Insurance’s ¥277bn (US$2.3bn) follow-on, which was the first equity offering in Japan to finance an acquisition before the M&A transaction had even closed, showcasing its ability to deliver creative solutions for Japanese companies that are increasingly looking to invest overseas.
The bank helped revive IPO markets in Japan and South Korea with its key involvement in the largest listings in each market during the review period.
It arranged the ¥318.5bn (US$3.09bn) float of Japan Display, the world’s largest maker of smartphone screens, in March, and it raised W1.16trn (US$1.1bn) for Samsung SDS, the IT services unit of South Korea’s largest conglomerate, in November.
Equity issuance in South and South-East Asia was thin in the period under review, but Goldman featured on a handful of meaningful transactions, including as sole lead on a Rp2.49trn (US$205m) block in Indonesia’s Matahari for CVC that excluded the IPO banks and on Yes Bank’s US$500m placement in India.
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