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Best Independent Investment Bank: Ondra Partners |
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Also nominated: Lazard and Jefferies & Co |
Benoit d’Angelin, former co-head of European investment banking at Lehman Brothers, and Michael Tory, former head of UK investment banking at the US firm, founded Ondra Partners in the depths of the financial crisis in 2008. Michael Baldock, who ran the healthcare team at HSBC, soon joined. Ondra now has 12 partners, with a range of specializations, including capital markets as well as M&A. Malcolm Stewart recently joined from Citigroup, bringing 30 years of experience in leveraged finance and high yield.
Their business proposition is hardly unique: to offer clients truly independent advice, in contrast to the large banks, which need to sell products. But Ondra hit on an ingeniously simple business model to make this oft-touted notion a reality. It charges clients a retainer fee. If Ondra’s judgment is that it is best not to do a deal, it has no financial incentive to advise otherwise. The firm is consistently profitable.
Ondra has a small number of clients, just a handful per partner. If it has a client in banking, healthcare or energy, it will not work for another that operates in the same markets. The retainer fees cover the firm’s fixed costs entirely. Ondra asks clients to pay a discretionary fee when it does advise on a transaction, which they are typically happy to do as the deals are often transformational.
The partners are discreet. But Ondra’s name is now cropping up again and again on some intriguing transactions.
It recently advised GDF Suez on the £8 billion ($12.6 billion) buyout of the remaining shareholders of International Power, accounting for 30% of the shares – a stake that the French company did not acquire during its reverse takeover in 2011. Ondra was one of eight advisers on that first deal. That it took a key role in unlocking that situation, which had played out over many months, is evident from the fact that it was one of just two advisers on the follow-up. Such minority buyouts are invariably emotionally charged and this one required 100% approval from the independent directors of International Power, who had to hold out for the best terms they could without risking GDF Suez walking away. It’s delicate stuff that requires smart corporate financiers.
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| Ondra are very customer-focused; they take a holistic view and they bring ideas that are different to the standard ones and that create value |
Ineos, a large privately held UK chemical company, benefited from Stewart’s deal skills in a recent refinancing that enabled it to escape from worrying maintenance covenants and secure the largest covenant-lite loan since before the financial crisis. John Reece, chief executive of Ineos, says: “Malcolm’s advice is very clear, and it’s helpful to have an independent adviser who knows the markets so well because the banks understandably want debt with terms that are easy to sell. They’ll say: ‘Oh, you’ll never get those terms’ and Malcolm will say: ‘But didn’t you get that on a deal last week for such and such?’ A lot of this is about timing. We’ve done a number of deals with Malcolm, got a good result and within weeks the markets have closed and we couldn’t have done it.”
Ondra’s advice to Tele2, a Swedish mobile phone company, on financing its Russian operations, was a classic marriage of independent advice and capital markets nous. The standard advice had been to take advantage of strong demand in the US high-yield bond market. Better, Ondra ventured, to match local-currency debt against its Russian assets on a non-recourse basis. It is not unheard of for assets to be seized in Russia. In that event, it would be unfortunate still to have to service dollar bonds sold to US investors. Now liabilities and assets are packaged together.
Ondra saw that many Russian bond investors are heavily overweight natural resources and lack diversity. The European Bank for Reconstruction and Development also provided a useful lead order that led to a successful first deal and more since.
For a year, global medical technology company Smith & Nephew had faced shareholder pressure over its biological and clinical therapies division. It sees great long-term value in this but it is research intensive, subject to stringent approvals and so a near-term drag on earnings. Ondra helped devise the elegant solution of a joint venture, whereby Smith & Nephew sold 51% of the division, now called Bioventus, to Essex Woodlands, a specialist healthcare growth equity and venture capitalist investor that develops just such businesses. Smith & Nephew receives cash, reduces earnings drag but retains upside through its 49% stake. Olivier Bohuon, chief executive of Smith & Nephew, says: “A lot of banks claim to be different but Ondra really are. They are very customer-focused; they take a holistic view and they bring ideas that are different to the standard ones and that create value.”
