The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Asian private structured finance: Growth capital in a flavour other than vanilla

Asia’s nascent market in structured growth capital is hard to define and even harder to resist. Fat margins and tied clients are bringing more entrants and might engender greater risks.

In an industry saddled with high fixed costs and cut-throat competition, investment banking learned long ago to eat what it kills. As traditional markets become commoditized and overcrowded and fee margins shrink, the industry’s innovative vanguard drums up new ways to earn its lucrative crust.

So it is proving in Asia’s capital markets with the emergence of a new financing product that straddles several funding disciplines and defies accurate definition. Essentially, highly structured debt products offering attractive equity participation rights, they occupy the space between established high-yield debt and the vanilla convertible bond market and are typically issued by companies unable or unwilling to tap more traditional funding sources.

“So far, we’ve done the most business in China and Indonesia,” says Andrew Cooper, managing director and head of Pacific Rim equity-linked capital markets at Merrill Lynch. “Companies [there] have been sufficiently rehabilitated to raise private capital from a small group of investors. The further you get away from 1997 [the start of Asia’s financial crisis], the easier it has become.”

Merrill Lynch has already closed several such deals, termed for the purposes of this article, structured growth capital (see box), and claims to have a strong pipeline of new transactions.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree