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In corporate financing terms. the term BRIC really 60 applies to a set of economies that 20 40 are fast-growing.6 10.850 vertical feet of skiing and the Village at Squaw Valley. KSL has hit the slopes with the acquisition of the bulk of the shares in Squaw Valley Development Company.213 1.074 2 1 81 41 15 21 % Chg y-o-y 28 61 -62 -98 -32 -42 156 -36 Deal Of The Week The Private equity Snow Forecast Winter is here! And with winter sports enthusiasts busy packing their skis and heading off to the slopes. Interest in winter sports resorts appears to be snowballing: last month Vail Resorts announced it was acquiring the Northstar-at-Tahoe ski area in a US$63mn deal. Indeed.corporatefinancingweek. They apply less to Brazil. this means that they should boast M&A across a range of sectors – which in turn requires a fairly advanced degree of economic diversification – and be engaged in cross-border deal-making that goes both ways.5-7 1 2-4 5-7 6 7-9 10 10-12 11 12 12 Market Leader Deal Of The Week Global Emerging Markets US M&A Record Asia EMEA Latin America Global Top 10 M&A Key Market Views Closing Bell When is a brIc not a brIc? Although it has become customary brazil blossoming Brazilian M&A Activity In Volume (US$) And Deal Count to bracket together Brazil.5 12.2 2. are also in the 0 0 process of decoupling themselves from the West and becoming influential economic forces in their Source: BMI own right. which includes 2. 160 70 India and China under the collective Volume (US$bn) LHS Deal Count RHS 140 60 heading of BRICs. Squaw.2 55. Market Leader 1.5 0.com december 06 2010 VOL. and arguably not at all to Russia.corporatefinancingweek.com during the week for breaking news and updates Sep-10 . which was home to the 2010 Vancouver Olympics. 48 ISSN: 1064-1912 corporate financing week A PUBLICATION OF BUSINESS MONITOR INTERNATIONAL LTD. crucially. drawing in foreign 10 20 capital and. the owner of California’s Squaw Valley USA ski resort.3 377. not all of these 120 economies display the characteristics 50 100 that give the group its perceived 40 common identity. XXXVI. IPOs and private equity www. These qualities are chiefly applicable to India and China. also becomes the second former games venue to fall into the hands of PE: Fortress Investment Group LLC-owned Intrawest ULC currently operates Whistler Blackcomb Ski Resort. Japan) Japan BRIC Value (US$bn) 455.1 Volume 1. Source: Thomson Reuters Check our website www. views and analysis on global M&A activity. Denver-based private equity (PE) fund KSL Capital Partners has skipped the lift lines and acquired a whole resort. Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Mar-10 (continued on page 5) Table of the Week Leveraged Loan Issuance Y-T-D Region/Nation Worldwide Americas Africa Middle East Europe Asia (ex.3 7. The buyout fund has committed itself to spending US$50mn over the next three to five years on the resort. Russia. NO. which played host to the Winter Olympics back in 1960.Exclusive news. 80 30 For CFW.
despite the objections of the target company’s board. Patents set to expire include Pfizer’s US$7. which can be 20-80% cheaper than the branded original. Some of these will be in EM. If big pharma is to go down the acquisition route. For the moment.000 jobs. photocopying. London EC4V 3DS Tel: +44 (0)20 7248 0468 Fax: +44 (0)20 7248 0467 Email: subs@businessmonitor. Competition from generic medicines. it may make more sense to target the fastest growth areas. Japan’s Astellas Pharma bought cancer drug manufacturer OSI Pharmaceutical for 68% more than the target’s average share price during the 30 days since the announcement of the deal.com web: www. which include the loss of its top-selling anti-psychotic Zyprexa (olanzapine). has been based on information and sources believed to be accurate and reliable at the time of publishing. Apart from Actelion and Genzyme. while Pfizer will be shedding 19. could severely dent revenue streams from lucrative product lines. Pharma companies are facing a wave of patent expirations and challenges. electronic. Johnson & Johnson paid a premium of 58% in its acquisition of Crucell earlier this year. triggering market speculation that it could be acquired by US-based Amgen. while in May. Roche acquired Genetench for US$47bn last year. This is the thinking that drove last year’s blockbuster pharma deals. but the penchant for blockbuster-on-blockbuster M&A is also likely to continue. some companies have started doing this. Gilead and Biogen left. Business Monitor International Ltd makes no representation of warranty of any kind as to the accuracy or completeness of any information provided. recording or otherwise. Acquiring new products through takeovers has been a popular stop-gap for many of the major pharmaceuticals since the late-1990s. The best way to secure growth for the long-term is of course through the development of new ground-breaking drugs. The buyer would have to keep their fingers crossed that its late-stage compounds fulfil their promise. including Merck & Co’s US$41bn takeover of Schering Plough and Pfizer’s US$68bn purchase of Wyeth. This summer. analysis and opinion. Jonathan Feroze Terry Alexander Tel: +44 (0)20 7246 5158 David Snowdon Tel: +44 (0)20 7246 5145 Richard Benson Tel: +44 (0)20 7246 5177 Email: firstname.lastname@example.org hostile takeover bid for US biotech firm Genzyme. Pfizer bought 40% of Brazil’s off-patent medicine maker Teuto. after cutting its 2010 earnings forecast in July because US regulators approved a generic version of its Lovenox (enoxaparin) blood thinner. errors.7bn Advair Diskus (fluticasone and salmeterol). if the past ten years are anything to go by. Judy Voratanitkitkul Neil Murphy to diversify or innovate the group other than expand the balance sheet. including forecasts. In 2009. while that of the UK’s GlaxoSmithKline could be 32%. there is basically only Amgen. Corporate Financing Week is a general circulation newsweekly. stored in a retrieval system or transmitted in any form or by any means.businessmonitor. Reproduction requires publisher’s prior permission.7bn. European biotech company Actelion has said that it has been in ‘regular dialogue’ with industry participants. Eli Lilly’s exposure to patent expiries. All content. No part of this publication may be reproduced. Editorial/Subscriptions Office: Mermaid House. and accepts no liability whatsoever for any loss or damage resulting from opinion. is thought to amount to 40% of its sales. dubbed the ‘patent cliff’ by industry observers. The impasse could be broken if Genzyme’s management is willing to explore settling for a lower price provided additional rewards can be made to the shareholders based on the performance of its leukaemia drug Campath (alemtuzumab). Pharma companies’ ability to develop new drugs. but for as long as these remain thin on the ground CFW expects pharmaceuticals to settle for acquisitions as the next best thing. All rights reserved. such as generics and emerging markets. Meanwhile Japanese drugmaker Takeda has asked its US subsidiary to explore M&A possibilities as part of its development strategy.com Esther Lopez Tel: +44 (0)20 7246 5151 Weronika Czekaj Tel: +44 (0)20 7246 5131 Leila Scott Tel: +44 (0)20 7246 5131 Neil Johnson.com Lucy Gill Tel: +44 (0)20 7246 5297 Email: lgill@businessmonitor. without prior permission of Business Monitor International Ltd. the pool of eligible large independent biotechs is shrinking. too. Switzerland’s Roche has announced that it is to cut costs by CHF2. Sanofi Aventis is refusing to budge from its US$69 per share offer for Genzyme. That said. while last month Sanofi Aventis acquired Chinese over-the-counter medicine maker BMP Sunstone. .5bn a year Lipitor (atorvastatin). The chief caveat of a strategy that involves blockbusters buying other blockbusters is that these deals often do little Publishers: Managing Editor: Editor: Reporter: Richard Londesborough.Corporate Financing Week www.corporatefinancingweek. 2 Puddle Dock. Indeed. BristolMyers Squibb’s US$5. No statement in this issue is to be construed as a recommendation to buy or sell securities or to provide investment advice. a hit-and-miss process at the best of times.6bn Plavix and GlaxoSmithKline’s US$4. Any acquisition of Actelion would be a leap of faith given that its top-selling Tracleer (bosentan) hypertension drug falls out of patent protection in five years. including a 6% staff reduction. inaccuracies or omissions affecting any part of the content. Subscriptions: Marketing Managers: Sub-editors: Production: 2 © Business Monitor International 2010. only for it now to be the main target of the parent company’s cost-cutting and job-shedding drive. is likely to be constrained by the slashing of health and university spending across developed markets. Deal premia for the sector can get a bit on the high side.com Corporate Financing Week © 2010 BUSINESS MONITOR INTERNATIONAL LTD. French pharma giant Sanofi Aventis launched a US$18.com December 06 2010 Global Pharma m&A: A Way down From The Patent cliff? The headwinds facing the pharmaceutical industry could lead to more leading drugs companies opting for M&A as a route of expansion in 2011.
Greenergy’s monthly sales grow 70% between June 2007 and December 2009. the Financial Times reported on November 25 2010. there has been little interest by the sector in downstream European assets to date.000 800 0 2005 2006 2007 2008 2009 600 400 200 0 2007 Source: Total Source: Murphy Oil French major Total said in September 2010 that it had appointed JPMorgan to oversee the sale of 780 retail sites in the UK. CFW identifies that while buyout funds will be revelling in 1) the renaissance of leveraged buyouts (LBOs) : November recorded the strongest month for LBO deals since the onset of the financial crisis. The firm’s failure to acquire Dynergy in November 2010 makes it easier for it to allocate acquisition cash. but does not operate any retail stations. Whereas PE investment in the US upstream segment is an old story. Impressively. It remains to be seen whether Greenergy will choose to become a retail site operator or merely improve its efficiency through the acquisition of tankage and terminals.corporatefinancingweek. The result was that the month of November recorded the largest monthly volume for leveraged buyouts since July 2007. last month saw LBO deal volume total US$21. In line with CFW ‘s long-held view that private equity (PE) will return to its LBO origins. the company’s share of the UK fuels market has grown from less than 5% in 2005 to 20% in 2010 to date. CFW has previously suggested Lukoil as a potentially interested party.15bn acquisition of Del Monte Foods by an investment group lead by PE giant Kohlberg Kravis Roberts (KKR).000 1000 5. The FT said that both companies submitted firstround bids in the auction of these assets. buyout shops are finding it easier to ink deals once again. 2008 2009 Eurozone Weakness The decision by these companies to downgrade their presence in the British downstream segment fits into the larger trend of divestment by majors of European Greenergy’s interest in boosting its portfolio of British downstream assets comes as no surprise. according to Standard and Poor’s. through the worst of the UK economic downturn. they will also be acutely concerned that 2) funds are facing a wall of refinancing: in Europe alone EUR500bn of debt is set to mature between now and 2017.000 refining and fuels retailing assets. Murphy has appointed Goldman Sachs to oversee its divestment of 430 British service stations (which trade under the ‘Murco’ brand).com . and reflecting a preference to invest in high-growth areas such as unconventional and deepwater exploration and production. LbOs and refinancing Woes: mixed Fortunes For buyout Funds Buyout funds are finding their focus being stretched in two different directions at present.corporatefinancingweek.000 20. some of its storage terminals as well as its Milford Haven refinery. blends and sells about 8bn litres of refined products annually. Given its significant real estate investments. Additionally.Corporate Financing Week www. ExxonMobil and Murphy Oil.000 Gasoline Kerosene Diesel and Heating Oil 35.com December 06 2010 blackstone & Greenergy emerge bid For UK downstream Assets Private equity giant Blackstone Group and privately-held fuels distributor Greenergy have emerged as potential buyers for British downstream assets being divested by Total. in response to poor refining margins.000 15.000 25.000 30. while continuing to supply its Esso-branded fuel to those sites. including the two largest such deals of the year: the US45. Exxon confirmed on November 21 that it intends to sell its 100 Scottish filling stations. Meanwhile. Currently. citing sources close to the matter. Greenergy sources.21bn management buyout of oil and gas producer Exco Resources and the US$5. down With downstream Murphy Oil’s UK Refined Product Sales (b/d) 40. By its own measure. in addition to tankers and terminals.3bn from 76 deals. Blackstone’s interest in the British downstream assets on offer could be driven by their real estate potential. According to Thomson Reuters data. 3 www. Total recall Total’s Global Refined Products Sales (000 b/d) 1600 France Rest of Europe US 1400 1200 10.
Corporate Financing Week www. corporate issuance has slumped 29% year-on-year since November 15. in turn.000 5. The Markit iTraxx Crossover index. it is the banks that are suffering the most. The deal for J Crew is set to be financed with US$1. When borrowing was rife during the boom years. PE firms were able to make cash-heavy acquisitions. Spanish banks had US$78bn of exposure to Portugal. on average. this may no longer be possible. which follows the default risk premia of 125 investment grade European companies. when EUR100bn of leveraged loans will reach maturity according to Nomura . banks have effectively been frozen out of the credit markets.corporatefinancingweek. In Portugal. which they saw as offering a more mature and safer investment. Despite these spikes.4 from 431. has risen to 117. Over the same period of time.91 compared to EUR116.000 80 60 40 10. The price of Banco Santander’s five-year credit default swap (CDS) – in other words.9 at the start of that month.4 a month ago.6 on 1 December. financing of deals is gathering steam once more. As of June.000 20 0 Mar-09 Jul-09 Mar-10 Jan-09 May-09 Sep-09 Nov-09 Jan-10 May-10 Jul-10 Sep-10 Nov-10 Source: Thomson Reuters the rest. the cost of insuring Banco Santander paper against default – surged during November to over 240.89 from 93. european Sovereign Woes Impact On corporates Although the European corporate bond markets have been very resilient throughout much of the past year’s eurozone sovereign debt crisis. Compounding matters further for Spanish banks is the fact that there are doubts swirling around Spain’s solvency too: Spanish banks have grown increasingly reliant on using sovereign paper as collateral 4 in the repo markets to obtain short-term funding. Risk premia for non-financials risen as well.38 on the 4 November. may face some turbulence. there have recently been signs of contagion. has climbed to 421.6bn. according to the Bank of International Settlements. © Business Monitor International 2010. while phone operator Telefonica had risen to 197. for which the five-year CDS was trading at 364. That leverage-buyout model soon unraveled during the credit crunch. This suggests that either investors are concerned about French banks’ estimated US$41bn exposure to Portuguese banks or that they are distinguishing less and less between different types of European debt. according to data from Bloomberg.com December 06 2010 when LBO deal value reached US$63. similarly dated CDS for another French bank. Meanwhile.85bn in debt financing.0 on 1 December from 95.000 140 120 100 15. there is further work to be done. . We need look no further than the buyout of US fashion retailer J Crew Group by TPG Group and Leonard Green & Partners to support this view. Although the banks have already pushed back the refinancing wall. The Markit iTraxx Europe index.2 on 1 December. This. the debts of Spain’s blue chip utilities appear to be cheaper to insure than that of similarly dated sovereign issuance.000 Deal Value (US$mn) LHS Deal Volume RHS 20. On 1 December.0. If the sovereign deteriorates. with a wall of debt set to mature over the coming seven years. from 156. a number of firms which have completed a first round of refinancing and did not take enough off their balance sheets will be returning to do so for a second time. Unsurprisingly. rose to 127. However. Barclays Capital estimates that in Spanish and Italian high-grade corporate debt have. compared to 140. Despite the positive sentiment surrounding current deals. The eye of the storm looks to be 2014. focusing on mid-market deals and growth capital investments. buyout funds need not be reminded that trouble is only just around the corner. which tracks mostly high-yield corporate bonds. with PE forced to adapt.6 from 136. It appears that the slew of buyouts agreed in the run-up to the financial crisis.4 over the same period. CDS’ on core Eurozone countries have also been pulled higher. France’s Societe Generale’s five-year CDS was trading at 174. partly by re-setting a number of covenants. Data provider Dealogic is aware of only one European corporate or bank deal for the week starting November 29 and that will be coming out of Switzerland.10 on November 8. which is widely believed to be the next country to need a bailout. when debt was cheap and growth seemed assured. Reproduction requires publisher’s prior permission. safe in the knowledge that debt investors would help them finance The real deal Global LBO Deals 25. BNP Paribas. on the back of high-yield bonds soaring again this year. The uncertainty over whether further sovereign bailouts are in store has also led to European companies holding back from issuing bonds. Indeed within this. becomes a problem for foreign banks with exposure to Portuguese sovereign bonds and banks. a lower yield than their respective sovereignsm – another indication that they are perceived to be less of a credit risk.3.0 at the start of November. according to an SEC filing. Spanish energy firm Iberdrola ‘s five-year CDS was up at 212.
Unlike the other BRICs. which is more than can be said for Russia. is down 27% y-o-y at US$5.6bn from US$6. for an economy to achieve more than common-or-garden emerging market status. It is not just foreign investors who lack faith in the country’s economy. In China. and mining. the banking sector has led the way in M&A with US$13bn of deals. Russian companies have made US$27bn in foreign acquisitions so far for the current quarter. After oil and gas. In stark contrast. In other words. with US$53. according to Russia’s Federal Statistics Service. Although Russian President Dmitry Medvedev has spoken of wanting to make Moscow a global financial hub.42bn of transactions compared with US$11. a BRIC country should offer more more than just a quarry or a gas field for Western companies. that is to say foreign companies buying Russian ones. the largest M&A sector so far this year may have been oil and gas. Brazil is certainly making strides towards this kind of position. the government’s actions seem to acknowledge 5 www. Overall foreign investment. which includes inflows into the capital markets for the first nine months of the year. and was down US$22bn in the third. according to data compiled by Bloomberg. which in Brazil’s case essentially means sugar and coffee.2% and China grew by 8. reaching US$56bn. Oil and gas is by some way the biggest sector for deal-making so far this year. Brazil’s economy contracted 0. foreign direct investment (FDI) in Brazil leapt 26% year-on-year (y-o-y) to US$6. while Rosneft plans to buy Petrolos de Venezuela’s 50% stake in German refiner Ruhr Oel. In India. Russian companies cannot seem to get their money out of the country fast enough. and has been for years. Over the first nine months of the year Russian FDI plunged 17. Brazilian inbound cross-border M&A was up 301% over the same russia In The doldrums Russian M&A Activity In Volume (US$) And Deal Count 40 35 30 25 20 15 10 5 0 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Mar-10 Sep-10 300 Volume (US$bn) LHS Deal Count RHS 250 200 150 100 50 0 Source: BMI Russia: A BRIC Too Far? At least Brazil is moving in the right direction.1% stake in Club Med this summer.Corporate Financing Week www.9bn so far this quarter.com December 06 2010 emerging markets When is a brIc not a brIc? (Continued from front page) Brazil: The Benefit Of The Doubt Brazil is undoubtedly a magnet for foreign investment. Inbound cross-border M&A. We are seeing the emergence of multinationals that can make large strategic acquisitions overseas. pharma and electrical goods. whereas India’s expanded 7.2% y-o-y in 2009.6bn acquisition of Brazilian mobile operator Brasilcel.07bn for telecoms. wooden spoon.7bn.5bn. Domestic deal-making has fallen to US$1. the TNK-BP joint venture bought BP’s Vietnamese and Venezuelan assets for US$1. China also has a growing armada of corporate powerhouses venturing into overseas acquisitions. Russia’s FDI situation is dire. In October. was down 13% on the same period in 2009. which teamed up with Europe’s Interbrew to buy Anheuser-Busch. from Cnooc’s acquisition of Angolan oil blocks to Shanghai-based conglomerate Fosun International’s purchase of a 7. but the leading deal involved Indian company Vedanta buying 60% of Cairn India from its Edinburgh-based parent. Bank Rossii has raised its capital outflow forecast for 2010 to US$22bn from US$8. This month. triple the amount in the previous quarter. which was largely the result of one blockbuster deal: Spanish telecom Telefonica’s US$9.corporatefinancingweek.com . raw materials remain the main driver of the economy.7%. while year-to-date inbound M&A activity has increased an astonishing 301% to hit US$56bn. The third and fifth largest sectors for M&A in Brazil were food.8bn. However.2bn.corporatefinancingweek. The tell-tale sign that Brazil’s economy has not diversified to the same extent as India’s or China’s is that it displays a far greater vulnerability to downturns in the Western markets for its raw materials. holder of the BRIC period.5bn. Mobile operator Vimpelcom is looking to merge with Egyptian entrepreneur Naguib Sawiri’s phone assets in a transaction thought to be worth US$6. Foreign investors have even less of an appetite for Russian companies than they do for Russian securities. dealmaking activity should involve a healthy mix of domestic and foreign companies across a diverse range of industries. the busiest sectors have been telecoms. The Russian domestic M&A scene is threadbare compared with overseas activity.7bn. such as miner Vale. which acquired Canada’s Inco and Ambev.8% to US$8. Although it has bounced back this year. However.
(Financial Advisor). (95%) Creative Services and Media Services Businesses Pangea3 LLC 106. Inc. Davidson & Co. A combination of political and economic factors account for this flight from Russia. 350.C. Inc. Reproduction requires publisher’s prior permission.C.5 1.02 - UBS Investment Bank (Financial Advisor) - Citigroup.0 5. (Financial Advisor). Concern that Russia cannot be relied on to honour treaties and contractual obligations has also had a chilling effect on foreign investment. Transaction Size (US$mn) 329. LLC William Blair & Company. China Huaneng Group TransDigm Group Incorporated Kohlberg Kravis Roberts & Co. L.4bn privatisation programme could take place on foreign stock exchanges. (Financial Advisor) - For a complete Mergers and Acquisitions Record. and invested in countries on the eastern rim of Europe. which helps skewer deal-making towards outbound M&A: ‘A lot of money is taken out of Russia by energy firms that are owned by or are close to the state.0 94. One political factor.0 Sequoia Capital India. Vestar Capital Partners. is that the Russian government itself uses foreign acquisitions as a tool of diplomacy. Thomson Reuters Corporation Columbia Ventures Corporation Ascent Media Group. Inc.142.318. Russian companies and wealthy individuals are concerned about the power of the Russian state to expropriate assets without legal redress.. UCI International. (Financial Advisor) - 11/24/2010 11/24/2010 YoCream International.. Erixon says.0 57. LLC Chesapeake Energy Corporation Fleetwood Homes. Morgan Stanley (Financial Advisor). Inc.L. financial markets and property. (Financial Advisor) BofA Merrill Lynch (Financial Advisor). (24.33 News-Press & Gazette Company Antares Energy Ltd.L. such as Royal Dutch Shell and TNK-BP.0 - - 11/29/2010 11/29/2010 3. (Financial Advisor).94 1. a division of S&P Buyer Advisor - US mergers and Acquisitions record (November 18–November 30) Announced Date 11/30/2010 Company Name Gulfstream Natural Gas System.Corporate Financing Week www. Actuation Business Del Monte Foods Co. Moelis & Company LLC (Financial Advisor) D. Centerview Partners LLC (Financial Advisor) - 11/29/2010 11/29/2010 11/29/2010 11/28/2010 11/28/2010 11/24/2010 NPG Cable. Inc. L.. where Source: Capital IQ.com December 06 2010 that this is a distant prospect.33 70. Rank Group Investments Limited Cequel Communications. The GlenRock Group. - 11/18/2010 95.V. LP.0 Danone Deluxe Entertainment Services Group.5%) " Ink & Adhesive Resins Business " Baldor Electric Co. Target Advisor - 11/30/2010 120.P. LLC Harima Chemicals Inc. Inc.0 200. J.83 Veritas Capital The Cypress Group J.’ A second political factor is the instability of Russia’s business environment. Perella Weinberg Partners LP (Fairness Opinion Provider) 11/24/2010 CPI International.97 Buyer Spectra Energy Partners.C. have found themselves either having to renegotiate deals or walk away altogether. (Financial Advisor) Barclays Capital Inc. L. Foreign companies. foreign investment is mainly confined to sectors such as energy. (50%) Telair International Inc. citing the example of Mikhail Khordorkovsky. ‘There is no due process in Russia and this drives Russians to take their money abroad where it won’t get expropriated’. Mitsubishi Corporation ABB Ltd. Morgan Securities Inc.A.P. such as Gazprom.. Palm Harbor Homes Inc. Interests in Bluebonnet project and Yellow Rose Substantially All Assets InterGen N. (Financial Advisor) Nomura Holding America. according to Frederik Erixon of the Brussels-based European Centre for International Political Economy.232.P. He was imprisoned on what were widely perceived to have been politically motivated charges of fraud and tax evasion. the previous owner of the former Russian oil giant Yukos.003. Inc. 523. Inc. Inc. Centerview Partners Management LLC Seller Spectra Energy Southeast Pipeline Corporation Momentive Specialty Chemicals Inc.corporatefinancingweek.corporatefinancingweek. which resulted in the asset-stripping and dismantling of Yukos. please visit www.com 6 © Business Monitor International 2010. As a result. GMR Energy Limited Telair International Incorporated - RBC Daniels L. Spectra Energy Partners GP. Morgan Securities Inc. San Isidro Development Company. Economy Minister Elvira Nabiullina recently indicated that some of the IPOs in the government’s US$57. .
Despite the aggressively low yield. we expect to see a growing number of overseas corporates following a similar strategy. Beijing had amended the rules and opened the dim sum bond market up to allow foreign firms to issue yuan-denominated bonds through Hong Kong. both the Caterpillar and McDonalds bond issues are significant as they shows that China’s ‘yuan plan’ is beginning to bear fruit. non-Chinese issuers of yuan-denominated debt in Hong Kong have so far taken advantage of this relaxation in policy include the Asian Development Bank and the World Bank’s financing arm. The speculative nature of inward investment. There are some glimmers of hope that Russia may be taking steps to open up its economy and uphold its legal obligations. paving the way for Yukos shareholders to seek compensation.’ said Erixon. Despite being small on a nominal level. Caterpillar set the coupon rate at 2%. Until this happens. will this steady trickle of deals herald the age of a new global debt market? It seems so. Deal Value (US$bn) 160 Corporate Volume Other Volume 140 120 100 80 60 40 20 0 2006 Source: Dealogic 2007 2008 2009 2010 So. Given that more broadly speaking. Away from the US. he said. ‘As a result. while India and China kept going despite their main export markets going through a very tough time. August 30 2010). Indeed.corporatefinancingweek. Hungry for capital and greater exposure in the Chinese market. because that category implies high-growth economies that are independent of the West. the city is pitching itself as the centre of offshore financing in the Chinese currency. Caterpillar Financial Services.com . Last year. and bankers are confident that the market will continue to grow as Beijing edges its currency towards internationalisation. CFW noted back in Q110 that after three years limited only to issuance by Chinese banks. The privatisation programme is also a sign of a loosening of the state’s grip on the economy. which Russia signed but did not ratify. with Hong Kong playing the host to this story. undercutting the 3% yield on McDonalds’ issue. a tribunal at The Hague ruled that the Energy Charter Treaty. Russia clearly is not there yet’. Asia caterpillar’s ‘dim Sum’ Issue Feeds Hong Kong debt demand China’s nascent offshore yuan bond market is deepening. from both the US and beyond. International Finance Corporation. Although Caterpillar is still testing the waters as only the second US corporate to issue a yuan-denominated bond. the subsidiary of construction and mining equipment maker Caterpillar has become the second US blue chip to offer a yuandenominated ‘dim sum’ bond. ‘I’m not sure that Russia should in the “BRICS” group. Erixon says a major bellweather for any meaningful change in the government’s attitude will be its response should an international arbitration court find against the Russian government in an action brought against it by Yukos pension funds and other investors. Chinese yuan-denominated debt volume stands at 7 www. which should help pave the way towards World Trade Organisation membership. it is probably best to reserve judgement about whether Russia is about to integrate itself more fully into the international business mainstream or whether this is just another false dawn.Corporate Financing Week www. while dual Hong Kong and Paris-listed Russian aluminum giant Rusal has also indicated its intention to sell yuan bonds in the offshore resort. CFW expects interest in Caterpillar’s note to be strong among investors due to pent-up demand for yuan debt due to the limited supply of yuan-related investment options and Hong Kong’s large pool of yuan deposits. Erixon explains.com December 06 2010 potential returns are so high that investors are prepared to take the risk. Foreign corporates Welcome Chinese Yuan Debt Issuance. Russia and the EU reached agreement on a range of issues including export taxes. although this is so far only limited as the government is expected to retain 50% control of the major companies coming up for flotation. Last month.corporatefinancingweek. has impaired efforts to rebalance the Russian economy towards manufacturing along the lines of what has been achieved in India and China. is nevertheless binding in Russia. Russia has not decoupled from the Western export markets. which is why its economy contracted nearly 8% last year. Caterpillar has issued a two-year CNY1bn (US$151mn) note to institutional investors in Hong Kong. following in the footsteps of fast food giant McDonalds Corporation’s issue in August (see ‘Deal of the Week’. CFW.
com December 06 2010 US$157. or 2) those seeking to have exposure in China. compared with as 197 in 2007. we expect listings ‘down under’ to continuing enduring a torrid time going forward. Australian IPO value remains well below peaks seen in 2007 (US$6. After all. After all. the growing interest of foreign corporates in this strategy will no doubt be welcomed by Beijing. CFW expects to see those overseas corporates issuing yuan notes to fall into two categories: 1) those with an existing footprint in China. even following the completion of the QR listing. with the company now placing even greater emphasis on emerging market growth. Still Lagging regional Peers Australian IPOs.9% in the one-day aftermarket. marine and power sectors. November also saw the company bolster its presence in China via organic means.53bn).54bn) and 2005 (US$7. however. Reproduction requires publisher’s prior permission.6bn issued in 2009 – according to Dealogic data. Indeed. Moreover. The value of Australian new share issues may well be up 145% year-on-year at US%. The deal also ranks as the seventh largest IPO seen globally in 2010. Despite QR’s IPO being Australia’s largest public listing since Telstra Corporation raised US$10bn back in 1997. Y-T-D 8 7 6 5 4 3 2 Value (US$bn) LHS Volume RHS 250 200 150 100 50 1 0 2010 2009 2008 2007 2006 2005 0 Source: BMI It seems Australia is the exception to the rule with regards to our key market view that Asia will continue to lead the way with IPOs. firms waiting in the wings to go public may well see QR’s deal as a ringing endorsement of investor sentiment for bigticker listings. accounting for half of the growth this year in Asia (the company’s fastest-growing market).3bn – the highest year-to-date level in five years.corporatefinancingweek. On the positive side. © Business Monitor International 2010. Asia has been a more stable market for the firm over recent years.Corporate Financing Week www. representing a non-organic sector-based expansion. CFW’s view is that one successful high-profile listing certainly does not signal the ‘all clear’ for an IPO market which has been frozen over for the best 8 part of a year. down 22% compared to the US$201. China is a key market for Caterpillar. as BMI’s infrastructure team has recently been highlighting. the Kuala Lumpa stock exchange. This alone makes QR’s listing unique.6bn. Is Qr’s Listing Giving False Hope To Australian IPOs? Rail road operator QR National ‘s US$4. according to Bloomberg data – is both good and bad news for potential listing candidates in the pipeline. splashing out on mining equipment engineering firm Bucyrus International for US$7. we would argue that the strong interest in the privatisation of the firm is a pure play to the ongoing Chinese growth story and the need to feed China’s growing demand for coal. Furthermore. Caterpillar has since completed its largest acquisition to-date. Caterpillar falls under the first of these two categories. seven potential listings have been withdrawn or postponed. and we expect strong demand from the region to ensure consistently high revenue growth over the next two years. but in CFW ‘s view it is not a game changer for the Australian IPO pipeline. . CFW notes that the firm has been busy of late and has adopted a more aggressive attitude towards expansion since appointing Doug Oberhelman as CEO in July. While we may well see a string of smaller mining industry companies successfully go public in Australia over the coming quarters. The volume of listings sits significantly lower too: there have been just 61 firms go public so far in 2010.4bn in the year-to-date. but subtract the value of the QR listing (US$4. Furthermore.41bn of activity remains – equivalent to an 81% drop y-o-y. so far this year. Taking a more sceptical view of QR’s listing.2bn issue earlier this month on Bursa Malaysia. QR plays a vital role in the supply chain: it is the world’s largest transporter of coal from mine to port for export. Caterpillar announced plans to add to the eleven manufacturing facilities already operating in the country with a US$300mn plant in Tianjin that will produce its 3500 series engines – used in the oil and gas.8% in the year-to-date. and to back the local operations of multinational mining companies active in the country.9bn) and just US$0. The firm’s performance following its debut also bodes well for future listings: QR’s shares jumped 3. one place behind Petronas Chemicals Group ‘s US$4. compared with just 61 successful issues. according to Bloomberg. however we note that the bulk of these loses were made earlier this year.31bn.9bn listing in Sydney is a big deal. the climate for new issues is hardly appealing: the benchmark S&P/ASX 200 index is down 5. QR’s listing is the only deal ranked over US$1bn so far this year. The fact that QR’s mammoth listing has helped push overall Australian IPO activity to US$5. with the proceeds from the issue expected to be used to finance sales of its trademark heavy construction machinery.
Concerns about energy security mean that China would like to have as much of this overseas production as possible in the hands of its own companies. That does not appear to have been the case with the PAE deal itself.1mn b/d.corporatefinancingweek.06bn cash for BP’s 60% stake in PanAmerican Energy. which Pattenden says could include its Alaskan assets. cannot be met by domestic production alone. Even though they may not have the same pressing clean-up needs as BP. the PAE deal also marks another step in the overseas expansion of Chinese oil company China National Offshore Oil Corporation (Cnooc). The Chinese-Argentine JV Bridas agrees to pay US$7. In February. Nov-28 Source: BMI As well as being in line with our view that strong cross-border M&A activity is helping to fuel the overall rebound in deal-making. The combination of acute need for oil with state-backed Chinese oil companies’ relatively easy access to finance could also create a risk of overpayment for acquisition targets. and/or possibly its stake in Russia’s state oil producer Rosneft .1bn to its partner in the venture. Cnooc jointly agreed with Sinopec to develop the 2. worth around US$1bn.22mn b/d in 2010 to 11. Bridas. For example. Cnooc has spent US$5. which owns 50% of Bridas. So far. Other overseas acquisitions by Cnooc include a third of Tullow Oil’s assets in Uganda as well as a 33% stake in Chesapeake Energy’s Eagle Ford shale acreage in the US.5bn barrel Missan oil field complex in Iraq with fellow Chinese oil producer Sinopec.9bn for BP’s Colombian assets.1bn for its 50% of Bridas back in March. Petronas acquires BP’s Malaysian petrochemicals business for US$363mn. the second highest total for a Chinese oil company behind Sinopec’s US$13. Saudi Arabia reported for the first time that it was exporting more oil to China than to the US. however.corporatefinancingweek. however.27mn b/d by 2015. bringing BP’s total divestment programm to over US$21bn. As this demand More buying opportunities for Chinese companies could be in store. Puma Energy acquires BP’s fuel retail network in Namibia. earlier this year. Marubeni agrees to buy BP’s stakes in four producing deepwater fields in the US GoM. Holly Pattenden.Corporate Financing Week www. expects Chinese oil demand to rise at a 4-5% annual growth rate from a likely 9. Cnooc is. Permian Basin and Egyptian exploration assets.com December 06 2010 cnooc expands Latam Foothold Through bP Asset Purchase British oil giant BP has just come a step closer to its target of raising US$30bn in asset sales to help cover the cost of cleaning up after the Gulf of Mexico oil spill earlier this year. making Amends BP Share Price (GBp) 700 650 600 550 500 450 400 350 300 250 Mar-10 Jan-10 Apr-10 Jun-10 Jul-10 May-10 Aug-10 Sep-10 Oct-10 Nov-10 Feb-10 Source: Bloomberg Power Needy Underpinning this wave of overseas expansion has been the burgeoning energy demand stemming from its growing economy. considered to have paid above the odds for its initial foothold in Argentina. according to research by the Financial Times. It paid US$3.com . taking Chinese companies to some rather insecure places. By 2020 demand will be 13. China is having to rely more and more imports. BMI’s head of oil and gas research.8bn.1bn. Talisman and Ecopetrol agree to pay US$1. which energy consultants Woods McKenzie valued at around US$2. BP still has another US$9bn to raise. CFW.1bn. it has brought the total raised so far to US$21bn. prompting ratings agency Standard & Poor’s to note that many of Cnooc’s acquisitions are in places with fairly high levels of sovereign and political risk. the same factor that is driving the country’s coal majors to go hunting abroad (See ‘China Coal Quest Heats UP Coal M&A’. TNK-BP agrees to buy BP’s Venezuelan and Vietnamese assets for US$1. divestment Schedule BP Asset Sale Timeline Date Jul-10 Aug-04 Sep-02 Oct-18 Oct-25 Nov-15 Details Apache agrees to pay US$7bn for Canadian gas. The search for energy security is. as BP relinquished the stake for less than the US$10bn or so anticipated by analysts. that are worth around US$12bn. other Western majors may decide to follow BP in shedding far-flung non-core assets to emerging market rising stars that are willing to pay good money for them.8bn on overseas targets in 2010. Botswana and Zambia and agrees to buy a 50% stake in BP Malawi and BP Tanzania. The total figure for all Chinese oil and gas overseas acquisitions for the year to November was US$24. By selling its 60% stake in Argentinian oil producer Pan American Energy (PAE) for US$7. 9 www. November 29 2010).6bn.
although state control remains assured. the African beer industry has thoroughly outperformed the global industry as volumes for the most part have continued to grow strongly. Kenyan investment into the listing is actively being encouraged as the ongoing liberalisation of East African capital markets kicks into gear. in order to achieve its production goal of 1.9% stake in Ecopetrol as early as H111. This would value the company at more than US$120mn. Ecopetrol has announced an ambitious US$80. making it an attractive proposition as the Rwandan government looks to sell off its stake. Colombia’s congress authorised the divestment of up to 20% of Ecopetrol’s equity in 2006. Source: Rwanda Statistics Office. Bogotá earned US$2. As incomes rise. Santos said that the cash raised would be used to fund national infrastructure projects.8bn through the sale of a 10.Corporate Financing Week www. Over the past two years. A monopolistic dominance in both beer and soft drinks (it is a Coca-Cola franchise bottler) means its longterm earnings prospects look bright. However. In order to capitalise on these gains and boost Colombian oil output. so too will absolute consumption (as per capita consumption) and at the top of the scale. based on Ecopetrol’s current share price. Investor interest has risen markedly in Colombia’s oil and gas sector. as Colombia’s fiscal deficit limits its financing options as it looks to capitalise on its oil boom.3bn investment programme for 2011-2020. The shares were sold to retail investors through Colombian supermarkets. especially as beer consumption in particular in both value and volume terms is expected to grow considerably over the next few years. The move was widely expected. This will certainly feed through to both the beer and soft drinks industries and given Braliwra’s total dominance. A successful sale of the 10 remaining 9. The IPO is being managed chiefly by Kenyan investment banks and interest from the EAC’s biggest economy is expected to be quite strong.3mn barrels of oil equivalent per day (boe/d) by 2020.1% stake in the company. Policy continuity was cemented by Juan Manuel Santos’ victory in the June 2010 presidential run-off election.corporatefinancingweek. executing © Business Monitor International 2010. Ecopetrol’s CEO. . BMI Heineken. In a speech on November 25 2010. raising about RWF22. spurred by an improved security situation. The government looks set to sell a 30% stake in the dominant Heineken-owned beer and soft drinks producer Brasseries et Limonaderies du Rwanda (Braliwra). Although Braliwra is not among the ten largest African beer companies by annual sales. specifically citing Colombia’s road network. Javier Gutiérrez. One Of The region’s Fastest Growing economies Rwanda Real GDP & Private Consumption 16 14 12 10 8 6 4 2 0 2006 2007 2008 2009f 2010f 2011f 2012f 2013f 2014f 2015f f = BMI forecast. The following year.9% stake would complete the part-privatisation envisaged in 2006. Santos said that Colombia would sell a 9. the 2010 Macondo oil leak in the US Gulf of Mexico (GoM) increased the attractiveness of Colombia’s relatively safe onshore assets. a greater proportion of Rwandans will be able to afford premium beers. is actively strengthening in Africa.1bn (US$37mn). Days later.com December 06 2010 emeA Heineken Unit To IPO And Kenyan Investors Invited Rwanda is all set for its first initial public offering (IPO) since the onset of the East African Community (EAC) common market in July 2010. Reproduction requires publisher’s prior permission. whose majority stake in Braliwra will rise to 75% (it is buying 5% of the 30% being sold by the government). has said that the stake sale could raise up to US$8bn. Latin America Santos Approval Heralds completion Of ecopetrol’s Part-Privatisation Colombia’s President Juan Manuel Santos has approved state-run Ecopetrol’s plans to reduce the government’s stake in the company further. Colombia successfully auctioned more than 100 blocks in its 2010 licensing round.7% to 2015. Rwanda’s economic outlook continues to look strong with real private consumption forecast to grow at an average annual rate of 6. its growth prospects look particularly strong. should bode well for margins. Furthermore. which is hardly surprising given that Rwanda has a population of just 10mn (low by regional standards). favourable contractual terms and a reliable legal system.
Corporate Financing Week www. consumption could be affected by the unwinding of the imbalances that continue to plague the Argentine economy. As oil output continues to rise and the country’s road-building programme accelerates.3% of GDP in 2010.corporatefinancingweek. Such cash is essential for the infrastructure required to boost output. Santos’ initial target of achieving a balanced budget by 2014 is also looking unlikely. The move widens the scope of SABMiller’s Latin American business. like Russia. launching the company into the dynamic 40mn-strong Argentine market.500 1.000 hectolitres (hl). Casa Isenbeck. as with our other food and drink indicators. in the medium term we think that.500 2. Financial details of the transaction have not been released. Although the economy registered an impressive recovery Source: Bloomberg Seller Name BP PLC Announced Total Value (US$mn) 7.473. but with the firm reporting gross assets of US$24. which has fuelled a move wine to beer. In fact. but in 2009 and early 2010 it retreated in line with a reduction in consumer sentiment. Consequently.6 1.146. BMI has recently revised down its medium-term fiscal outlook for Colombia.060 5. however.corporatefinancingweek. such as the Oleoducto Bicentenario pipeline. 4.com 11 . Co Ltd Intergen NV UCI International Inc Oil & Natural Gas Properties/Canada Acquirer Name Bridas Corp Multiple acquirers ABB Ltd Hana Financial Group Inc Capital Shopping Centres Group PLC Henan Shuanghui Investment & Dev. Argentina’s beer sector was growing healthily. the firm will have to invest significant extra funds in order to gain sufficient scale to compete with the current Argentine market leaders. About 20% of Ecopetrol’s 2011 budget is to be spent on pipeline infrastructure.000 1.521. while independent Pacific Rubiales Energy has announced plans to broaden its investments in Colombia’s infrastructure-related sectors. Colombia is choosing to sell a stake in its state-run oil producer to be able to raise cash without issuing further debt. including the highly competitive Brazilian market.080 Peel Group/The Rotary Vortex Ltd GMR Infrastructure Ltd Exxon Mobil Corp 2.2mn hl.5% in 2012. as it expects the government’s nominal deficit to come in at 4.1% in 2011 and 3.com December 06 2010 this investment programme requires the company to raise US$23bn in debt. However.000 Oil Exports (000 b/d) Oil Reserves (mn bbl) 2008 2009 2010f 2011f 2012f 2013f 2014f 2015f 2016f 2017f 2018f 2019f 2020f 500 0 f=forecast.31 2. in order to execute its US$6. bullish expectations Colombian Oil Export And Reserve Forecasts 3. A young population. However. such as terminals.000 2. we see more investment flowing into Colombia’s energy and transport sectors. Casa Isenbeck controls 7% of the local market and in 2009 generated sales volumes of around 600.61 4. which is currently owned by Germany’s Warsteiner. and could be a prelude to further expansion in Latin America.23 Payment Type Cash Cash Cash Cash Stock Stock Cash Undisclosed Cash Cash Deal Status Pending Pending Pending Pending Pending Pending Pending Pending Pending Pending Global Top 10 m&A record (November 24 – December 01) Deal Type DIV ACQ ACQ ACQ DIV DIV ACQ DIV ACQ DIV Announce Date 28/11/2010 25/11/2010 30/11/2010 24/11/2010 25/11/2010 29/11/2010 29/11/2010 29/11/2010 29/11/2010 29/11/2010 Target Name Pan American Energy LLC Del Monte Foods Co Baldor Electric Co Korea Exchange Bank Trafford Centre Group/The Multiple Targets Henan Shuanghui Investment & Dev. Forecasts: BMI bunker fuels and asphalt. is an undesirable option for Bogotá. Issuing larger amounts of debt. with a capacity of 1. Historical data from BP Statistical Review of World Energy. the state-run company authorised the issuance of corporate bonds worth COP1trn (US$530mn) to the local market on November 11.232 980 842. Prior to the economic downturn. means the sector has undoubted long-term potential.584. SAbmiller buys Argentine brewer.7mn and operating just one brewery.33 2. cFW cautious On country Outlook Beer giant SABMiller has announced the purchase of Argentina’s third largest brewer. CFW would be surprised if SABMiller’s valuation of the business surpassed US$50mn. Co Ltd Rotary Vortex Ltd China Huaneng Group Corp Rank Group Ltd Husky Energy Inc www.06bn 2011 investment programme alone. and implies that a sovereign debt rating upgrade to ‘investment’ status could be held back until the late-2011 or early-2012.098.4 4.
CFW believes the Isenbeck deal. However.com December 06 2010 in the second half of 2010. however. we expect to see fund managers focusing on M&A once more. Isenbeck is one of the few brewers in Latin America not controlled by a giant multinational. Argentina will fail to achieve sustainable growth. but it is also likely to wave goodbye to its PE desks in the UK. HSBC is following in the footsteps of Barclays. in all four SABMiller has faced a rise in competition and has begun to lose its monopolistic grip on prices. and 2) with investment deadlines fast approaching. we will see a rise in M&A across emerging regions.Corporate Financing Week www. Tailwinds Strengthening Behind PE Dealmakers: Buoyed by the expunged threat of protectionist regulation in Europe. SABMiller has a virtual monopoly in four Latin American markets – Colombia. Within this. HSBC announces that it is to sell off its Asia PE arm. Yet regulators should also be mindful that by jumping the gun. In the Barclays deal. These two banks are acting now because they anticipate that tough regulations are to come for deposit-taking banks that engage in risky deal-making with their own money. This is likely to feed significant M&A opportunities amongst restructured companies. 1) we expect PE to return to its LBO origins. Key market Views • A Continued Rise In Cross-Region Acquisitions Within M&A Rebound: Fuelled by a bounty of idle corporate cash on balance sheet. when debt was cheap and growth seemed assured. Canada and the Middle East. funds will be looking to make deals instead of returning the cash to investors. for example. but with its resources and existing Latin American experience it should be able to expand its market share and eventually challenge the current market leaders. and bolt on acquisitions in both Argentina and Brazil are likely to be the firm’s favoured route for building a presence in these two important Latin American markets. The deal also gives SABMiller a platform to expand into neighbouring Brazil. We therefore believe that until the current policy mix comes to an end. More broadly speaking we see the IPO market. Investors To Continue Flocking To Junk Bonds In Short Term: With credit markets offering an attractive alternative to equities. which is primed to see very robust activity in Q410 and 2011. it is likely to want build its position in the major markets where it does not currently operate. and as a result will lag behind more politically and economically stable regional peers. Shanghai and the US at a greater rate than US-based issuers over the coming months. CFW believes necessary reforms are just around the corner – likely following the Presidential election in October 2011 – and we think that robust private consumption will not last into 2012. Ecuador and Panama. Not only that. As Refinancing Needs To Be Addressed: With a wall of leveraged loans set to meet maturity over the coming 5-7 years we expect to see a slew of the buyouts inked before the financial crisis. It will therefore retain some exposure the group’s high risk activities. The acquisition puts SABMiller a distant third place in beer sales volumes in the country. Adair Turner. and with high-yield gathering steam. could make sense for SABMiller over the longer term. • • • • 12 © Business Monitor International 2010. losing out to Heineken. which is spinning off its PE operations via a management buyout. Further Deleveraging Up Ahead. Peru. Reproduction requires publisher’s prior permission. and therefore represents one of the few remaining opportunities for expansion. facing problems refinancing their debt. RBS is also selling its European project finance desk to Japan’s Mitsubishi UFJ Financial Group and Lloyds Banking Group is shedding its LDC PE arm. the parent bank will be paid by a share of the PE company’s profits in the coming years. has in the past suggested that the prospect of higher capital and liquidity rules would bring about a de facto separation of retail from risky banking far more effectively than crude legislation to break up the banks. Having failed to land the brewing assets of Mexico-based FEMSA. Chile-based CCU and brewing giant Anheuser-Busch InBev. being characterised by strong pipelines but mixed receptions. Closing Bell No sooner than CFW adds to its key market views that it expects to see a wave of banking sector restructuring in the coming quarters. Hong Kong And Asia To Lead The Way With IPOs: We expect to see China-based firms debuting in Hong Kong. . Perhaps regulators should cheer the fact that banks are taking the initiative. the chair of City watchdog the FSA. HSBC and Barclays. along with further expansion into Argentina. Within this. Even with this subdued outlook for consumption. an opportunity has presented itself for risk-hungry investors seeking a higher yield from their investments. the fallout from the ongoing Eurozone debt crisis is likely to trigger a wave of restructuring in the European banking sector via cross-border asset sales and industry consolidation. That Lloyds and RBS are being cut down to size is not particularly surprising given that they both required bail-outs during the crisis. did not (although it has just emerged that Barclays did draw heavily on emergency funding from the US Fed). banks are able to carry out the spin offs on their own terms.corporatefinancingweek.
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