Hong Kong: Morgan Stanley is being credited with the most audacious “deal steal” seen in years by Hong Kong bankers after its last-minute snaffling of a $4.7 billion (Dh17.26 billion) placement Goldman Sachs and Credit Suisse thought they had sewn up.
The snatched mandate catapulted Morgan Stanley to the top of Asian league tables this week, giving it sole credit for the private placement of shares in Ping An, China’s second-biggest insurer, while demoting Goldman and Credit Suisse to mere financial advisers.
By late Sunday morning Goldman and Credit Suisse bankers thought the deal was in the bag. Ping An had provisionally approved their selection of investors, a stage in the process one source described as “being at the altar and taking the ring out of your pocket”.
But by early afternoon they were told a rival list compiled by Morgan Stanley had won the deal. That list reportedly includes Jack Ma and Pony Ma, founders of China’s tech giants Alibaba and Tencent, and the deal was priced more keenly than Goldman and Credit Suisse’s original proposal.
Morgan Stanley, Goldman Sachs and Credit Suisse all declined to comment.
Competition for equity market business, fierce the world over, is especially acute in Asia, where it typically makes up about 40 per cent of the industry’s total revenue, compared with about a quarter in the US or Europe.
Banks said Ping An had already opened the deal to other banks after early efforts by Goldman Sachs and Credit Suisse to build a suitable “book” of investors took longer than had been expected.
The insurer was pushed into announcing its capital raising plans almost a month ago after the China Securities Regulatory Commission unusually published its approval for the deal on its website. That move caught the company and its bankers unawares.
One complication in arranging the deal arose from its sheer size and Ping An’s desire to limit the investor list. The latter is because private placements by Chinese companies entailing 10 or fewer investors avoid a “tax” handing 10 per cent of the offering to China’s National Social Security Fund.
Other banks were also racing to complete suitable investor lists, but by the weekend all thought Goldman and Credit Suisse had the mandate sewn up.
“I’ve seen plenty of trades where for one reason or another you fall out with a bookrunner or you block a bank from part of a deal. But I can’t think of one like this, in this size, where this has happened,” said one senior equity markets banker not involved in the transaction.
The deal catapulted Morgan Stanley from third to first in the equity capital markets league tables compiled by Dealogic, with credit for $16.2 billion of transactions in Asia excluding Japan this year. Goldman, JPMorgan and Credit Suisse follow with $14.1 billion, $11.8 billion and $11.5 billion respectively.
— Financial Times News Service
