IFR Magazine - October 27, 2018

(Frankie) #1

Top news


Strong get stronger in equities


„ People & Markets Big five US banks enjoy 18% surge in equities revenue this year


BY STEVE SLATER


%QUITIESûDESKSûAREûENJOYINGûAû
RESURGENCEûASû7ALLû3TREETSûlNESTû
POWERûAHEADûFORûTHEIRûBESTûYEARû
SINCEûTHEûlNANCIALûCRISIS ûTHANKSûTOû
NEWûTECHNOLOGY ûVOLATILEûMARKETS û
NEWû%UROPEANûREGULATIONSûANDû
THEûBENElTSûOFûSCALE
2EVENUESûFROMûEQUITIESûTRADINGû
ATûTHEûBIGûlVEû53ûINVESTMENTûBANKSû
TOPPEDû53BNûINûTHEûlRSTûNINEû
MONTHSûOFûTHEûYEAR ûUPûûFROMû
LASTûYEARûANDûTHEûHIGHESTûTALLYûSINCEû
THEûLANDSCAPEûWASûTRANSFORMEDûINû

)Nû%UROPE ûUBS and BARCLAYS
AREûFARINGûWELL ûBUTûDEUTSCHE
BANK ûCREDIT SUISSE and smaller
lRMSûAREûTHEûONESûLOSINGûSHARE
4HEûSTRUGGLEûFORûSMALLERûBANKSû
ANDûBROKERAGESûCOULDûSEEûSOMEû
CONSOLIDATE ûFORMûJOINTûEQUITIESû
VENTURESûORûCOLLAPSEûINûTHEûNEXTû
YEARûORûTWO ûBANKERSûSAYû)FûTHEYû
AREûSTRUGGLINGûINûONEûOFûTHEûBESTû
YEARS ûAûDOWNTURNûINûûORû
ûCOULDûTURNûTHEûSCREW
&ORûTHEûSUCCESSFULûBANKS ûTHEû
RESURGENCEûVINDICATESûHEAVYû
EQUITIESûINVESTMENTûAûCOUPLEûOFû
YEARSûAGOûDESPITEûSTIFFûCOMPETITIONû
AND ûATûTHATûTIME ûFALLINGûINCOME
h7EûAREûSEEINGûAûNUMBERûOFû
TRENDSûnûTECHNOLOGYûISûCHANGINGû
THEûINDUSTRYûFROMûAûCOSTû


PERSPECTIVEûBUTûITûCANûALSOûBEûSEENû
ASûAûCOMPETITIVEûADVANTAGE vûSAIDû
$AVIDû2USSELL ûGLOBALûCO
HEADûOFû
EQUITIESûATû-ORGANû3TANLEY
h)NûADDITION ûREGULATIONûISûAû
MAJORûDYNAMICûWHICHûISûCHANGINGû
THEûMETHODOLOGYûOFûINVESTING û
ESPECIALLYûINû%UROPE vûHEûTOLDû)&2
h!LLûTHESEûTHEMESûCOMBINEDû
AREûDRIVINGûAûSIGNIlCANTûCHANGEû
ACROSSûTHEûINDUSTRY ûANDûTHEû
SELLSIDEûlRMSûDOINGûWELLûAREû
THOSEûTHATûADAPTEDûTHEûQUICKESTû
BYûUTILISINGûTHEIRûGLOBALûFOOTPRINTû
ANDûTECHNOLOGYûCAPABILITIESv

BIGGER AND BETTER
4HEûTHIRDûQUARTERûCONTINUEDûAû
TRENDûSEENûINûTHEûlRSTûHALFûOFûTHISû
YEAR ûTHOUGHûATûAûSLIGHTLYûSLOWERû
PACEûOFûGROWTH
JP MORGANSûTHIRD
QUARTERû
EQUITIESûREVENUEûROSEûûFROMûAû
YEARûAGO ûOUTPACINGûTHEûAVERAGEûû
RISEûACROSSûTHEûlVEûBIGû53ûBANKSû
5"3ûLASTûWEEKûREPORTEDûAûûRISEû
INûEQUITIESûREVENUES ûWHILEû
"ARCLAYSûENJOYEDûAûûJUMP
&ORûTHEûlRSTûNINEûMONTHSûOFûTHEû
YEAR ûMORGAN STANLEYSûEQUITIESû
REVENUESûTOPPEDû53BN ûUPûû
ANDûTHEûlRSTûTIMEûANYûBANKûHASûHITû
THATûLEVELûBYûTHISûSTAGEûOFûAûYEARû
SINCEû
GOLDMAN SACHSûRANKEDûSECONDû
WITHû53BNûINûREVENUES ûUPû

ûONûTHEûYEARûANDû*0û-ORGANû
FOLLOWEDûATû53BN ûUPû
4HOSEûTHREEûAREûCEMENTINGûTHEIRû
TOPûPOSITIONSûACROSSûTHEûFULLûSUITEûOFû
EQUITIESûPRODUCTS ûWHILEûBANK OF
AMERICA MERRILL LYNCH and CITIGROUP
ALSOûPOSTEDûDECENTûGROWTH
4HEûCLEARûCASUALTIESûHAVEûBEENû
$EUTSCHEûANDû#REDITû3UISSE
$EUTSCHESû53BNûFROMû
EQUITIESûTRADINGûTHISûYEARûISûDOWNû
ûFROMû53BNûATûTHEûSAMEû
STAGEûOFû
#REDITû3UISSE ûSTILLûTOûRELEASEûITSû
THIRD
QUARTERûRESULTS ûREPORTEDû
lRST
HALFûEQUITIESûREVENUESûOFû
53BN ûDOWNûûFROMû
53BNûTHREEûYEARSûAGO
4HEûTWOûBANKSûBETWEENûTHEMû
HAVEûLOSTûABOUTû53BNûINûANNUALû
EQUITIESûREVENUEûINûTHREEûYEARS û
ALTHOUGHûINû#REDITû3UISSESûCASEû
CHANGESûINûBUSINESSûSTRUCTUREûMAYû
HAVEûEXAGGERATEDûTHEûFALL

MIFID BOOST
.EWû-I&)$û))ûREGULATIONSûINû
%UROPEûHAVEûCAUSEDûCLIENTSûTOû
SLASHûTHEûNUMBERûOFûBANKSûTHEYû
DEALûWITH ûINDUSTRYûSOURCESûSAID
h7EVEûDElNITIVELYûSEENûOURSELVESû
PICKINGûUPûMARKETûSHAREû!NDû
-I&)$û))ûISûANûIMPORTANTûDRIVERûOFûnû
ITûISûNOTûTHEûONLYûONEûnûOFûSOMETHINGû
THATSûHAPPENINGûACROSSûTHEûSYSTEM û
WHICHûISûCONSOLIDATIONûINûTHEûTOP

THREEûSCALEûPLAYERSvû'OLDMANSû
lNANCEûCHIEFû-ARTINû#HAVEZûTOLDû
INVESTORSûAFTERûTHIRD
QUARTERûRESULTS
-ORGANû3TANLEYSû2USSELLûSAIDû
CONSOLIDATIONûHADûBEENûACCELERATEDû
BYû-I&)$û))ûh4HEûMARKETûISû
DElNITELYûSEEINGûAûCONCENTRATIONû
OFûWALLETûINTOûFEWERûHANDSv
(EûSAIDû-I&)$û))ûHADûSEENû
BUYSIDEûlRMSûDECIDEûWHOûTHEYû
VALUEûFORûRESEARCHûANDûADVISORY û
WHILEûALSOûGOINGûTOûBANKSûWITHû
THEûBESTûEXECUTIONûPLATFORMS
4HEûBIGûBANKSûAREûALSOûBENElTINGû
FROMûINVESTMENTûINûTHEIRûPLATFORMSû
INûTHEûPASTûCOUPLEûOFûYEARS ûASûTHEYû
SOUGHTûTOûlLLûGAPSûACROSSûCASHû
EQUITIES ûEQUITYûDERIVATIVESûANDû
PRIMEûBROKINGû4HOSEûMOVESûHAVEû
PAIDûOFFûASûHEDGEûFUNDSûANDûOTHERû
BUYSIDERSûLOOKûTOûUSEûFEWERûBANKSû
ACROSSûTHEûPRODUCTûSUITE
)NûTHEûPROCESS ûBANKSûCANûWINûNOTû
ONLYûAûBIGGERûSHAREûOFûBIGûWALLETS û
BUTûALSOûMOREûHIGH
MARGINûBUSINESSû
SUCHûASûSTRUCTUREDûDERIVATIVES
*0û-ORGAN ûTHEûMARKETûLEADERûINû
EQUITYûDERIVATIVES ûRAMPEDûUPûCASHû
EQUITIESûANDûPRIMEûBROKINGûTWOû
YEARSûAGOûANDûMADEûSIGNIlCANTûHIRES û
WHILEû#ITIGROUPûPICKEDûOUTûEQUITIESû
ASûAûKEYûAREAûFORûINVESTMENT
h7EREûGAININGûSHARE ûMOSTû
NOTABLYûINûCASHûANDûPRIME vû*0û
-ORGANû#&/û-ARIANNEû,AKEûSAIDû
AFTERûTHIRD
QUARTERûRESULTS

Calsonic gears up for Magneti buyout


„ Loans KKR-owned auto parts maker drives largest Asian LBO financing


BY WAKAKO SATO


*APANESEûAUTOûPARTSûMAKERûCALSONIC
KANSEIûISûRAISINGûABOUTûõBNûTOû
SUPPORTûITSûõBNûACQUISITIONûOFû
THEûHIGH
TECHûCARûPARTSûUNITûOFû
)TALYSû&IATû#HRYSLERû!UTOMOBILES û
INûWHATûWILLûBEû!SIASûLARGESTû
LEVERAGEDûBUYOUTûLOAN
Mizuho Bank ûMUFG ûSumitomo
Mitsui Banking Corp and Sumitomo
Mitsui Trust BankûHAVEûUNDERWRITTENû
THEûõBN
EQUIVALENTûSEVEN
YEARû
SENIORûlNANCINGûBACKINGûTHEû
BUYOUTûOFûMAGNETI MARELLI ûWHICHû
SPECIALISESûINûLIGHTING ûPOWERTRAINSû
ANDûHIGH
TECHûELECTRONICS


#ALSONICû+ANSEIûISûFOLLOWINGûAû
DIFFERENTûSYNDICATIONûSTRATEGYû
COMPAREDûWITHûAûPREVIOUSûLOANû
THATûWASûAGREEDûûMONTHSûAGOû
4HATûcBNû53BNûTHEN û
SEVEN
YEARûFACILITY ûWHICHûBACKEDû
ITSûLEVERAGEDûBUYOUTûBYû53û
PRIVATEûEQUITYûGIANTû++2 ûWASûAû
RAREû*APANESEûCOVENANT
LITEûDEAL
&IVEûBANKSûCLUBBEDûTHEû
lNANCINGûDESPITEûTHEûLARGEûSIZEû
ANDûAûSOMEWHATûHIGHûLEVERAGEûOFû
ûTIMESû4HATûLOANûWILLûREMAINû
UNTOUCHEDûANDûWILLûNOTûBEû
RElNANCEDûASû#ALSONICûRAISESûTHEû
NEWûLOANûFORû-AGNETISûBUYOUTû
4HEûTOTALûOUTSTANDINGûDEBTûFORû

BOTHûCOMPANIESûWILLûBEûAROUNDû
cTRN ûREPRESENTINGûLEVERAGEûOFû
LESSûTHANûSIXûTIMES
h4HEûLEVERAGEûMULTIPLEûISû
QUITEûMODESTûBECAUSEûOFûTHEûAUTOû
PARTSûSECTOR vûONEûSOURCEûSAID û
POINTINGûTOûTHEûROBUSTûCOMBINEDû
EARNINGSûOFûTHEûTWOûENTITIESûANDû
THEûSYNERGIESûTHEûACQUISITIONû
WILLûBRING

INTERNATIONAL SCOPE
3HARESûOFû#ALSONICûANDû-AGNETIû
WILLûFORMûTHEûCOLLATERALûFORûTHEû
NEWûLOAN ûTHREE
QUARTERSûOFû
WHICHûWILLûBEûDENOMINATEDûINû
YENûANDûTHEûREMAINDERûINûEUROS

4HATûSHOULDûHELPûWIDENûTHEû
UNIVERSEûOFûLENDERS ûWITHûEXISTINGû
%UROPEANûLENDERSûTOû-AGNETIûKEENû
TOûRENEWûTHEIRûRELATIONSHIPSûWITHû
THEûTARGETûANDûFORGEûAûNEWûONEû
WITHû#ALSONICû)NTERNATIONALû
BANKSûINû!SIAûHAVEûALREADYûBEENû
SOUNDEDûOUTûONûTHEûNEWûLOAN
(OWEVER ûTIGHTûPRICINGûANDû
ABUNDANTûLIQUIDITYûAMONGûTHEûFOURû
*APANESEûLEADSûCOULDûRESULTûINûLIMITEDû
SYNDICATIONû4HEûPRICINGûOFûTHEûNEWû
lNANCINGûISûLIKELYûTOûBEûSIMILARûTOûTHEû
PREVIOUSûcBNû,"/ûLOAN ûWHICHû
PAIDûAROUNDûBPûOVERû,IBOR
h)ûAMûHEARINGûITûISûAû*APANESEû
PRICING ûWHICHûISûPROBABLYûTOOû
TIGHTûFORû%UROPEANûBANKS vû
ANOTHERûSOURCEûSAID
Free download pdf