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Best Emerging Markets M&A House: Credit Suisse |
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Also nominated: Goldman Sachs and Deutsche Bank |
With China, Brazil and other emerging market countries the only bright spots on an otherwise bleak mergers and acquisitions landscape, so they have become the hunting grounds for the next big deal.
Whether it is domestic champions buying locally, or snapping up prized assets in developed markets or other emerging markets, companies in China, Brazil and their peers elsewhere are leading a new buying spree.
For investment banks with strong M&A franchises in emerging markets, this latest trend of emerging market to emerging market M&A is proving to be a lucrative new chapter, and one that they need to be a part of.
Credit Suisse was not only one of the first among investment banks to see this gathering trend, but, arguably, as a result of first-mover advantage, has been front and centre of it.
“Being able to anticipate and then capitalize on some of the major trends we have seen is one of our strengths as an M&A franchise,” says Vikas Seth, co-head of Europe, Middle East and Africa, and emerging markets M&A at Credit Suisse in London.
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“Chinese and Indian companies are quite comfortable doing business in Africa and other emerging markets”
Vikas Seth, co-head of Europe, Middle East and Africa, and emerging markets M&A at Credit Suisse |
It is for this, combined with consistent strength in advising leading companies across industry sectors and geographies, as well as leadership in domestic M&A and emerging markets to developed markets and vice-versa, that Credit Suisse takes the award for the second year running.
Over a period when global emerging market M&A volumes were down compared with a year earlier, the Swiss firm still managed to complete 118 M&A transactions worth $104 billion, ranking it the top adviser by number of deals and wallet share, ahead of Goldman Sachs and Deutsche Bank.
In addition to that, Credit Suisse ranks as the top adviser in Latin America, Brazil and China by number of completed M&A deals and wallet share. For a bank that doesn’t lead with its balance sheet, that’s an impressive grip for now on the core emerging markets where much of the deal flow is coming from and going to.
Three examples of Credit Suisse’s strength this year in supporting emerging market to emerging market M&A stand out, with one in particular highlighting another trend the firm has played a central role in – sovereign wealth funds diversifying their investments.
“Chinese and Indian companies are quite comfortable doing business in Africa and other emerging markets, but the other theme we picked up on was how interested the sovereign wealth funds were in diversifying their investments away from developed markets and into emerging markets,” says Seth, who runs the global emerging market M&A business with Marcus Silberman in New York.
Indeed, Credit Suisse advised EBX Group, the third-largest corporate private group in Brazil, owned by Brazilian billionaire Eike Batista, on its 5% equity stake sale to Mubadala Development Company, Abu Dhabi’s sovereign wealth fund. The $2 billion deal was not only the largest M&A deal by a Middle Eastern company in Latin America but also the first investment by Mubadala in the region.
Seth believes we are likely to see more investments by SWFs.
“As custodians of national wealth,” says Seth, “SWFs need to continue generating attractive returns on their assets.”
Credit Suisse also advised China’s ICBC on its acquisition of an 80% stake in commercial lender Standard Bank Argentina and its two affiliates, Standard Investments and Inversora Diagnol – marking the first acquisition by a Chinese financial institution in Latin America.
In Russia, the firm advised oil major TNK-BP on its purchase of BP’s assets in Vietnam and Venezuela for about $1.8 billion, which was the first step in TNK-BP’s international expansion strategy.
Outside of the emerging markets to emerging markets flow, Credit Suisse also shone in advising on a number of high-profile domestic M&A events in Russia and China. It advised Russian stock exchange Micex on its complex $1.2 billion merger with rival RTS, and advised Shenzhen Development Bank on its $4.3 billion acquisition of Ping An Bank.
The Swiss firm also played leading roles in emerging market outbound – China Three Gorges Corporation’s purchase of a 21.35% stake in Energias de Portugal for $3.51 billion being notable – and inbound M&A transactions.
It advised Vedanta Resources on its acquisition of 58.5% of Cairn India for $8.7 billion, and Nestlé on its move to snap up 60% of Hsu Fu Chi for $1.7 billion – the largest inbound acquisition of a Chinese company. Credit Suisse also acted as exclusive financial adviser to the shareholders of Turkey’s TAV Airports and TAV Construction on the sale of stakes to France’s Aéroports de Paris for a combined value of about $923 million.
“Everyone has counted out the European corporate sector, largely because of low stock market valuations,” says Seth. “But the fact is, you still have cash-rich European corporates that have ambitions to grow and shareholders with a clear expectation that the management is still going to be focused on driving growth.”
