In an increasingly volatile equity market – when it seems that the time of easy pickings among stocks is behind us, with markets falling, previously blue-chip companies struggling to raise capital, and carnage among TMT newcomers – the qualities needed to meet the needs of issuers and investors are changing.
UBS Warburg is one that seems to have the attributes – strong research, balance sheet capacity, combined institutional and retail distribution – that suit it to the new conditions. As joint global heads of equity capital markets for UBS Lucinda Riches and James Garvin put it: “The past 12 months have seen substantial changes in equity markets. Difficult market conditions have persisted throughout the period.” It is against this background that UBS Warburg has made great strides, making gains in primary and equity-linked markets and receiving many plaudits for the quality of its research.
UBS Warburg’s success has been based on strong performance in several areas. First, the bank has achieved the feat of becoming a major equity player throughout the world, in Asia, the Americas and Europe. UBS has lead-managed equity offerings in all three regions, with impressive success. Groundbreaking deals included Hong Kong’s first ever privatization – the initial public offering for the Hong Kong metro system, MTRC. The deal was worth some US$1.4 billion and cemented UBS Warburg’s claim to be one of the top lead managers in Asia.
It also ran the privatization of Singapore’s metro system and made an impact in Japan through the IPO of Fuji Television Networks.
More high-profile Asian deals are in the pipeline, with UBS Warburg due to act as global coordinator on a number of upcoming deals, including issues for the Bank of China, Chungwha Telecom of Taiwan and the Port of Singapore Authority, to name just three.
UBS Warburg achieved a solid year in Europe, lead-managing many of the past year’s biggest deals, for Swedish telecommunications firm Telia – the largest European privatization IPO in 2000 – Deutsche Post and Vodafone. The Vodafone offering, worth $5.1 billion, was the largest one-day share placing ever. In the US, it has managed 13 deals so far in 2001, including sole management of a $725 million convertible for healthcare company Ivax in May – another first for the firm, being the largest convertible ever placed in the US healthcare sector. UBS Warburg has also recently completed a $1 billion convertible for EchoStar Communications.
In difficult markets, versatility is also crucial. UBS Warburg has acknowledged expertise across the old economy, as evidenced by such issues as easyJet and Deutsche Post, and the new economy, as shown by its deals for Vodafone, Telia, and STMicroelectronics.
The Ivax deal bears testimony to UBS Warburg’s position as a trusted and valued manager in healthcare, and deals run for the likes of Old Mutual, Erste Bank, Allianz and Fortis are evidence of the firm’s expertise in the financial institutions sector. Over-reliance on one sector can be fatal in a tough market, as those who got burnt in the fiasco over TMTs will testify.
UBS Warburg’s reputation for excellence in equity research has received recognition from competitors and fund managers alike. The firm was placed first in a recent survey looking into the most highly rated houses for equity – evidence of the esteem in which the firm is now held. The firm sees top-class research capabilities as a prerequisite for success in the current hostile market, coupled with an exceptional distribution network. UBS provides sector-specific research to clients, along with cross-sector and cross-border analysis. The bank’s team of over 600 analysts contains specialists in the analysis of investment trusts, derivatives and smaller companies, while bespoke research products are also offered.
Aftermarket performance of deals is also an area where UBS Warburg scores highly. In technology, its European deals traded up 28% on average in 2000 and 37% in 2001 to date. UBS Warburg has also been very strong in equity-linked issues, running more of these world-wide than any other house. The bank ran such high-profile deals as a e2 billion equity-linked issue for Allianz and a e490 million pre-IPO bond for Germany’s EnBW. This deal also demonstrated UBS Warburg’s innovative streak, being from straight debt to convertible as opposed to from straight debt to straight equity – the first such deal to take place in Germany.
