Slowing economic growth dampened activity in the Asian loan markets, but one bank distinguished itself with a focus on event-driven financings and successful distribution. For its bold calls and targeted strategy, Deutsche Bank is IFR Asia’s Loan House of the Year.
Despite distractions at head office and a slowing Asian market, Deutsche Bank stuck to its guns in Asian loans in 2015, relying on its risk judgement and distribution skills to chalk up numerous sole mandates, while maintaining healthy returns on risk-weighted assets.
Deutsche Bank did not have things all its own way in 2015, as a management reshuffle back in Germany and painful group writedowns raised plenty of questions over its risk appetite.
The German lender also faced a tough operating environment in Asia, as China’s slowing economy took its toll on the rest of the region with flagging demand for capital, volatile financial markets and ongoing distress in sectors such as commodities and steel.
With every major loan market in Asia off the boil, the lacklustre deal flow and increased competition led to significant pricing compression.
Deutsche Bank, however, distinguished itself during the review period, providing creative financing solutions to a variety of Asian borrowers and targeting event-driven situations and sole mandates.
“The Deutsche Bank Asian loans business has continued to grow its market and wallet share in 2015, building further on a model that focuses on borrowers and investor clients, while leveraging our market leading structuring and distribution capabilities to generate a strong return on capital,” said Amit Khattar, head of Asia loan trading & syndication and co-head of Asian loan capital markets.
The German lender underlined its commitment to the Asian market with a successful bid for a loan portfolio of close to US$1.1bn from Royal Bank of Scotland to to cement its relationships with top-tier Asian borrowers and generate additional interest income from loans paying higher margins than the prevailing rates.
The highlight of Deutsche Bank’s year in primary syndications was the €500m (US$556m) seven-year acquisition-related loan for Malaysia Airports Holdings in March. The bank was one of three bookrunners on a hugely successful loan, which came with a unique toggle feature that allowed MAHB to decide between a partial or full guarantee, as well as a rare reverse flex. (See Loan of the Year.)
Deutsche Bank also impressed with its leading roles on loans for Canada’s Brookfield Asset Management, which obtained A$1.9bn for its proposed purchase of Australian infrastructure firm Asciano and a further US$557m in a uniquely structured financing for its maiden property acquisition in India.
Leveraged financings also marked a key feature in Deutsche Bank’s deal list.
Among the high-profile transactions were its sole underwrite in July of the A$290m senior and mezzanine loan backing Australia’s Quadrant Private Equity’s buyout of VIP Petfoods, the NZ$310m five-year loan to fund Pacific Equity Partners’ buyout of Auckland-based Academic Colleges, the US$145m buyout loan for Blackstone’s acquisition of the Indian operations of British outsourcing firm Serco and the US$100m three-year bullet term loan backing private equity firm KKR’s purchase of a stake of nearly 40% in unlisted Indian company Gland Pharma.
Deutsche Bank also bagged a sole mandate on the cross-border €190m non-recourse loan for Thai petrochemical giant PTT Global Chemical’s loss-making French subsidiary Vencorex Holding.
The lender showed its prowess in notching sole mandates from other credits, including first-time borrowers such as China’s Dalian Wanda Commercial Properties, which raised US$500m in May, and the standby letter of credit-backed US$200m financing for Vietnam Investments Group in June in the country’s first such loan.
Deutsche thrived in bringing private-sector borrowers to the market. It led Ping An International Leasing’s US$300m dual-tranche debut offshore loan, which was tripled in syndication from US$100m. A US$150m acquisition loan for Chinese hospital operator Phoenix Healthcare Group and a US$330m loan for palm plantation company Royal Industries Indonesia were among other examples.
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