Best global leveraged finance house:
Goldman Sachs
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Also shortlisted: Credit Suisse Deutsche Bank |
| View more 2014 awards |
It has been an extraordinary year in leveraged finance. The high-yield bond markets have attracted unprecedented interest and allocation from investors worldwide and have been the focus of the chase for yield that has so dominated the debt markets. Management of issuer and investor expectations, together with the ability to best exploit the opportunities that market conditions afford, are the prerequisite for Euromoney’s leveraged finance house for 2014. Goldman Sachs has more than met these challenges.
One deal dominates any discussion of leveraged finance in the last 12 months: the $30 billion acquisition of SFR by Altice/Numericable Group and the story it tells about the development of the European high-yield market. “The coming of age and maturation of the European capital markets this year is quite impressive,” says Denis Coleman, head of European leveraged finance at Goldman Sachs in London. “Now we have another capital market out there in addition to the US, which makes for a more mature asset class globally. The Altice deal supports this thesis.”
The deal involved raising $21.9 billion in debt across nine different tranches and was the largest-ever European sub-investment grade capital raise. Goldman was joint global coordinator and joint bookrunner on all debt tranches and left lead bookrunner on the holdco debt raise by Altice. “We watched this transaction from the inside – we were as in the middle of it as we could be,” says Coleman. “The way that this transaction came together had the broadest appeal to investors globally that we had seen. Investors were attracted by diversification, and the holdco piece offered them more yield.” The deal redefined what was possible in European leveraged finance and was a graphic illustration of how far the market in Europe has come.
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| We are happy to lead plain vanilla deals, but the place where we differentiate ourselves and win business is when we engage in strategic financing. These are the things that excite our team Denis Coleman |
“As Europe is maturing there is an awareness among the corporate and sponsor client base that there are banks equipped to lead and banks equipped to support,” says Coleman. “You have to have a very broad reach and have a lot of touch points with the market. You need to understand what investors are doing and more importantly what they might be prepared to do.”
In conditions such as the high-yield bond market has enjoyed over the last year the parameters of what investors might be prepared to do change rapidly and it is the ability to translate that into corporate financing solutions for clients that sets Goldman apart. “In the leveraged finance cycle there has been a lot of focus on the return of strategic activity,” says Coleman. “This means more than just M&A – it means, for example debt IPOs, mid-market financings, cross-border jumbo acquisition financings and holdco PIK dividend transactions executed in lieu of an IPO. In each case the decision is broader than balance sheet optimization. We tend to outperform the competition in these types of deals. We are happy to lead plain vanilla deals, but the place where we differentiate ourselves and win business is when we engage in strategic financing. These are the things that excite our team.”
Goldman tops the league table for European first-time high-yield issuers, or debt IPOs, this year with 15.4% of the market but has also made its mark in product innovation. It was lead left bookrunner on the €590 million dual FRN for French fast food retailer Quick, which was the largest FRN for a first-time issuer since 2007 and the first unsecured FRN since 2007. It was also the first portable (leveraged-based) FRN on record. “This is a structure that all of our competitors told the client was not achievable,” Coleman claims. “But we put in place a structure that the market has accepted.”
High-yield sponsor deals
Goldman was also joint mandated lead arranger for the €668 million first all-European covenant-lite term loan transaction since 2007 for veterinary drug producer Ceva Santé Animale. “We were the only international bank on this transaction,” Coleman points out. “We fully appreciated where covenant lite was and had a view that it was applicable to the European investor base. This was a high-quality, defensive, credit investor-friendly company and we ended up eliminating the dollar tranche and doing it all in euros.”
In the US Goldman tops the league table for high-yield sponsor deals and is ranked number four for US high-yield left lead. It tops the ranking for US PIK Toggle notes, having led the $900 million largest-ever US dollar holdco PIK dividend transaction for ConvaTec and been sole bookrunner on First Data’s $1.4 billion deal. It has also committed balance sheet to transformational acquisitions such as the $9.275 billion acquisition of Bausch & Lomb by Valeant and a $905 million bridge commitment for Entegris’s acquisition of ATMI.
Goldman’s global credentials are underscored by deals such as ContourGlobal, Puma Energy and the debut deal from Dubai-based Topaz Marine. “A few years ago being global meant being based in New York with a London add-on. Today it is much more than that,” says Coleman. “Success in doing these deals is predicated on the ability to expand the frontiers of the market. You will burn your franchise very quickly if you run a business on the basis of throwing spaghetti against the wall and seeing what sticks. We are drawing on local geographic expertise, industry expertise and an understanding of the geopolitical and legal implications of the deal. Our story is about globalization and connectivity. This is not just about connecting the global landscape – it is about positioning a firm where it should be.”
