Awards for Excellence 2018
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While BAML and Citi are both reaping rewards from maintaining commitment and presence in the region, the winner of the best bank for advisory is probably the Wall Street firm most synonymous with retreat there. Goldman Sachs has invested and divested from the region as its fortunes waxed and waned, but this year saw a very positive return. Led by Gonzalo Garcia and Ram Sundaram, co-heads of Latin America, the bank has thrown resources and balance sheet at the region. It has paid off.
Goldman hired Facundo Vazquez (previously Itaú BBA and UBS) to co-head the ECM business in January. Last year it hired Rodolfo Perez from Morgan Stanley as co-head of its investment banking division in Mexico. Max Ritter also joined from Morgan Stanley to head Latin America M&A advisory and there have been other senior and lower level additions to the teams.
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Gonzalo Garcia |
Importantly, there has also been an impressive uptick in mandates. Goldman as a bank targets the high-value, high-fee work; deals such as the PagSeguro IPO tick all those boxes. The bank persuaded the company to list in New York rather than locally to maximize its price with investors more accustomed to applying ‘tech multiples’.
Goldman also led the largest-ever Latin American healthcare ECM offering for Hapvida and, still in the healthcare sector, was exclusive adviser to Pfizer in the sale of its stake in Teuto.
There were also many other important and complex mandates. One that particularly impressed was the CFE Fibra IPO in Mexico. The deal required complete restructuring of the organization to enable CFE to equity fund future capex for the nation’s power infrastructure. The deal took the best part of the year because it required innovation to enable investors to invest in the cash flow of CFE’s assets without transferring ownership.
The deal was the first-ever equity issuance by the Mexican state, the first-ever internationally marketed Fibra (real estate fund) equity offering and the third-largest Mexican IPO. It priced within its range, despite coming to the market in one of the most volatile times for equities (January 2018) thanks largely to the extensive roadshow that involved 130 targeted investors in Mexico, the US, Europe, Canada and South America. The fact that another state-originated Fibra failed in trying to follow this IPO to the market spoke volumes about this deal’s investor-friendly structuring.
Goldman acted as global coordinator and sole bookrunner for the R$3.2 billion ($850 million) project finance bond for Celse. The highly structured, greenfield deal was notable beyond structuring innovation. The bank took the decision to underwrite in the traditional sense, taking the whole deal onto its balance sheet upon financial close and then began allocating to third parties. This enabled Goldman to avoid FX volatility in the market at the time and smoothed execution.
Goldman also demonstrated excellence in advisory, ECM and DCM deals outside Mexico and Brazil, with highlights in Argentina, Peru, Chile and Colombia. It richly deserves this year’s award, but there will be justifiable market scepticism about the bank’s longevity of commitment – especially as the next 12 months look to be less prosperous for investment banks than the last. The bank says that this time will be different.
