EMEA Structured Equity House: HSBC

IFR Awards 2021
5 min read
Owen Wild

Picking up speed:
In a few dramatic years HSBC has gone from being a bit-part player in EMEA structured equity to having a leadership role in the major themes of 2021. HSBC is IFR’s EMEA Structured Equity House of the Year.

HSBC was dominant in UK equity-linked issuance in 2021 as British corporates were unusually keen to issue convertibles. The bank was active on all the airline convertibles issued across the region as the travel sector battled to survive the coronavirus pandemic. HSBC has also been regularly promoted to the global coordinator spot on transactions where it had been a bookrunner.

Consequently, a bank that five years ago didn't even rank in the top 10 in the asset class, is now a major player due to its leadership across multiple transactions in 2021, finishing third in the EMEA league tables.

“Clients we’ve spent five years talking to picked up the phone when Covid hit,” said Ilyas Amlani, the head of EMEA equity-linked.

HSBC's breakthrough year came in 2019 when it secured third position in the EMEA league tables. It was an impressive achievement for a team spearheaded by Nick Bevan, global co-head of strategic equity and financing, and Amlani, put together just two years earlier. But that rank was built on bookrunner roles where banks can contribute but are not leading the process. Becoming a true leader – and an award winner – required translating many of those roles into global coordinator mandates.

That is the objective of European banks in every aspect of ECM in their home regions, yet HSBC has actually done it – and in just two years.

When online clothing store ASOS raised £274m through an accelerated equity issue in the early stages of the pandemic in April 2020, HSBC was a bookrunner in a syndicate of five that included two global coordinators. When the UK retailer brought a CB a year later, HSBC was one of two banks on the top line.

It was a similar story with Safran, IAG, Jet2 and TUI.

Take TUI. It issued a €400m CB in April with HSBC as a bookrunner, yet the bank was a global coordinator when that bond was tapped a few months later, a highly unusual elevation.

“Throughout the year, we valued the intelligence that HSBC brought to us, in particular on the airline and travel sector, where they had acted on a number of other transactions,” said Gerd Leiding, head of capital markets at the travel company, adding that HSBC brought the idea of a tap and gave the company the confidence to go ahead.

Notably HSBC then appeared on the top line for the €1.13bn rights issue that followed.

Delivery Hero is probably the only source of frustration for HSBC. The bank has not been able to break into the trio that have been top line on its three jumbo trades since early 2020. However, HSBC is the only bookrunner to survive winnowing of the syndicate with each transaction.

In November 2020, HSBC was part of Lufthansa’s hugely successful €600m CB that was upsized and priced through terms. Later the same week HSBC was sole bookrunner on an S$850m (US$630m) CB for Singapore Airlines. That expertise was carried into 2021 for TUI, IAG, Jet2 and, in Asia, Cathay Pacific with HSBC the only bank to feature on all of those deals.

The team also made the most of the deals where it was not involved. When German online fashion retailer Zalando found a receptive market for €1bn of new paper in 2020, HSBC ensured the peer group was well aware of the transaction. That yielded transactions for ASOS and Global Fashion Group the following year.

German online retailer GFG had just turned Ebitda positive and issued seven-year CBs with a 1.25% coupon and 42.5% premium through Goldman Sachs and HSBC.

Matthew Price, CFO of GFG, said HSBC brought the idea of a CB, supporting the company through its debut transaction and has been active post-issuance with further ideas and investor feedback. “Their support, focus and skill in executing our first convertible bond was excellent and allowed us to achieve very appealing terms,” he said.

Market share in the UK, where corporates have traditionally shied away from equity-linked, was exceptional with HSBC leading five out of six trades, following on from two out of two at the end of 2020. It shows the success of efforts to plug the investment bank into HSBC’s extensive commercial banking relationships, but also many hours coaching lawyers, independent advisers and board members.

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