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Best Global emerging markets M&A house: Credit Suisse |
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Also nominated: Goldman Sachs and Morgan Stanley |
Whether it be Telefonica’s $9.8 billion acquisition of Brasilcel and Vivo from Portugal Telecom, VimpelCom’s $24 billion purchase of Wind and Orascom from Weather Investments or Qatar Holding’s $2.3 billion purchase of Harrods, Credit Suisse has demonstrated a breadth of business in emerging markets M&A that few can match.
The bank combines sector expertise with market knowledge – and with a presence in 50 emerging countries that local know-how is a lot greater than at many other firms.
The Swiss lender ticks the boxes for all sub-sets of emerging markets M&A too: pure domestic deals, emerging markets-to-emerging markets, inbound into emerging markets from the developed markets, and outbound from emerging markets to the industrialized world.
In 2010 the main M&A trends were domestic consolidation and emerging markets-to-emerging markets deals. This year the big theme is developed-market companies buying in emerging economies.
What marks Credit Suisse out has been its ability to identify these trends early. “It is important to be nimble,” says Vikas Seth, co-head of global emerging markets M&A at the firm. “The market is constantly changing.”
For example, Seth and his co-head, Marcus Silberman, identified cash-rich developed-market companies that had an interest in buying assets in emerging markets through regular trips to countries such as Sweden and Switzerland. That diligence paid off when Credit Suisse acted as financial adviser to Swedish firm Schneider Electric in its $650 million acquisition of Beijing Leader & Harvest last month from two financial sponsors.
Two other notable inbound emerging transactions were Telefonica’s acquisition of the 50% stake in Brasilcel that it did not own already from Portugal Telecom, and Vallar’s acquisition of a 25% stake in Indonesia’s Bumi Resources (since upped to 50%), as well as a 75% stake in Berau Coal Energy. Credit Suisse acted as sole financial adviser on the deals to the Bakrie family, which owns both companies. Vallar is an investment vehicle founded by Sethaniel Rothschild and James Campbell to invest in the natural resources sector in emerging markets. Rothschild recently set up a similar vehicle, Vallares, to invest in the oil sector.
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“It is important to be nimble. The market is constantly changing” |
As for emerging markets-to-emerging markets transactions, Credit Suisse was involved in one of the biggest ever – Russian telecom operator VimpelCom’s acquisition of Egypt-based Orascom Telecom and Wind, part of Naguib Sawiris’s empire. The deal created the fifth-biggest mobile telecommunications carrier by subscribers. Under the deal VimpelCom paid $1.8 billion in cash to the shareholders of holding company Weather Investments in exchange for 51.7% ownership of Orascom and 100% of Wind. VimpelCom shares were also issued to Weather shareholders representing a 20% economic interest and an 18.5% voting interest in the enlarged VimpelCom group.
As an adviser to Weather Investments, Credit Suisse played a critical role in getting such a good deal for shareholders. In another emerging markets-to-emerging markets transaction Credit Suisse was exclusive adviser to state-owned power company China Huaneng Group on its $1.2 billion acquisition of a 50% stake in InterGen, whose parent was GMR Infrastructure of India. It is the largest China-India corporate M&A transaction to date.
Credit Suisse was also involved in some of the most important domestic M&A transactions over the past year. In Mexico, for example, the firm acted as sole financial adviser to wireless operator América Móvil in its $34 billion merger with parent Carso Global Telecom, which controls the fixed-line Telmex business, as well as Telmex International. The deal enabled Carlos Slim, in whose empire they are, to integrate his fixed-line, mobile and internet operations. The deal delisted both Carso Global, 82.7% owned by Slim, and Telmex International, 60.7% owned by Carso Global.
The Swiss bank was adviser to Bank of Moscow in the biggest acquisition by a lender in Russia: VTB’s purchase of the Moscow government’s shares in Bank of Moscow for $3.5 billion. VTB paid R103 billion ($3.7 billion) for 46.5% of Bank of Moscow and 25% plus a share of Stolichnaya Strakhovaya Gruppa, which holds 17.3% of the lender.
In deals out of emerging markets and into the industrialized world, Credit Suisse’s standout transaction was Qatar Holding’s acquisition of luxury store Harrods. The deal was valued at $2.3 billion. Credit Suisse acted as sole adviser to Qatar Holding. Qatar Investment Authority, an affiliate of Qatar Holding, has a 6.17% stake in Credit Suisse.
These deals helped the Swiss bank achieve the number one position for completed deals as well as share of wallet over the year.
Seth says M&A opportunities remain plentiful. “We will continue to see big inbound investments in geographies that are open or are opening, especially in consumer, pharmaceuticals and infrastructure. We will also continue to see consolidation in the financial sector in many countries, though that will be more domestic.”
