Reaching new heights
Amid fierce competition and a drop in event-driven financings, arrangers faced greater challenges to make returns in 2018. One bank showed leadership with an array of acquisition and structured financings, and successful distribution. Citigroup is IFR’s Asia-Pacific Loan House of the Year.
Citigroup’s forte is the selective use of its balance sheet with a sharp focus on syndicating risk, which came under increasing scrutiny amid volatile financial market conditions, fewer lending opportunities and added pressure to generate income and meet budgets.
“Citi’s strength is evident in the depth and breadth of deals it closed, as well as thought leadership demonstrated in bespoke structured financing advisory. For example, bridge-to-bond, liability management and loan/bond/equity combo solutions for borrowers’ evolving needs,” said Benjamin Ng, Citigroup’s head of debt syndicate and acquisition finance in Asia.
The bank started the review period well, wrapping up a US$4.1bn leveraged financing supporting the acquisition of GLP, Asia’s biggest warehouse operator. Citigroup acted as equal underwriter and joint M&A adviser with one other bank, navigating structural challenges for the financing and the unique nature of the business.
The loan, which made possible one of the largest leveraged buyout loans from Asia, closed in December 2017 with 13 other lenders, representing a good mix of US, Asian and European banks.
Another event-driven financing that stood out was a NT$90bn (US$2.91bn) five-year term loan in April backing Advanced Semiconductor Engineering’s planned merger with peer Siliconware Precision Industries. Citigroup was coordinator on a facility that attracted 37 other banks and is Taiwan’s biggest and most widely syndicated acquisition financing ever.
Citigroup was also instrumental in a US$2.85bn 18-month bridge loan backing state-owned Indonesian miner Inalum for its purchase of a controlling stake in Freeport-McMoran’s local unit. The loan was cancelled in November after Inalum raised a US$4bn debut offshore bond on which Citigroup was one of the three global coordinators.
In neighbouring Malaysia, Citigroup acted as sole coordinator and underwriter on a US$310m debut acquisition loan in March for Top Glove, the world’s largest rubber glove manufacturer, for its acquisition of Aspion, the world’s largest surgical glove maker. The loan was split into conventional and murabaha structures, helping Top Glove maintain its mix of conventional and Islamic debt.
In May, Citigroup was one of two physical bookrunners on the first sterling-denominated Term Loan B for an Australian LBO – a £301m seven-year covenant-lite facility to finance private equity giant Carlyle Group’s purchase of Accolade Wines, the fifth-largest wine producer in the world.
India proved a fertile hunting ground for Citigroup despite intense competition and pricing compression. The US bank picked its spots well in the country, bagging lead roles on unusual opportunities such as the repricing and conversion of a US$250m brownfield project loan from 2016 for Fiat Indian Automobiles into a corporate financing. The exercise marked a rare amendment of an external commercial borrowing under Indian regulations.
Sizeable financings from frequent borrowers such as conglomerates Aditya Birla Group, Reliance Industries and Tata Group featured top-heavy arranger groups, but Citigroup distinguished itself. For example, it was one of the three key banks among 20 lenders on a US$2.275bn financing in November for US-based aluminium producer Novelis, an indirect subsidiary of Aditya Birla Group, for its purchase of rolled aluminium products supplier Aleris.
Citigroup also avoided pitfalls arising from India’s largest banking scandal that soured sentiment among lenders for financing sector borrowers. The US bank was one of the nine leads on a US$750m five-year loan for India’s largest mortgage lender Housing Development Finance Corp that closed in November with 12 other participants.
In August, Citigroup helped Charoen Pokphand Indonesia, the country’s largest poultry feed maker, to complete a US$630m-equivalent liability management, repricing and extension exercise for loans from 2014 and 2015.
Another example of Citigroup’s focused approach was a US$1.27bn secured loan in July for New York-listed Fly Leasing for its purchase of aircraft from Malaysia’s flagship budget airline AirAsia. Citigroup was one of four original mandated lead arrangers and bookrunners on the borrowing, which attracted 14 other lenders.
Other high-profile aircraft leasing loans that were well received included the US$750m five-year loan for BOC Aviation in October, the US$4bn dual-tranche financing for Australia’s Macquarie AirFinance in May, and a US$600m five-year borrowing for SMBC Aviation Capital in April.
Citigroup also sparkled in domestic markets with a Tk29.3bn (US$353m) dual-tranche loan in January for Banglalink Digital Communications, bringing a rare and the largest local currency syndicated financing in the country.
Debut borrowers in Citigroup’s roster included the likes of China’s online games and internet media provider NetEase and Indonesian state-owned electricity utility Perusahaan Listrik Negara, with both attracting strong responses from lenders.
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