Data Analyst Katrin Kostadinova highlights the most significant financial and corporate legal deals from the past year
Welcome to 2018! The financial world never sleeps and 2017 has once again proven it.
While fewer investments were made by private equity firms compared to 2016 and deal values were smaller – no private equity deal reached $15 billion, the same can not be said of funds. They have grown drastically – even taking into account the Apollo Global Management largest buyout ever – a notable growth in the size of funds is obvious.
Emerging technologies like artificial intelligence have spurred totally new ways of doing business worldwide and acquisitions in this sector have proven to be more extensive than ever.
The IFLR1000 team has selected highlights from the past year, divided into five sectors from all over the world. Here are the deals that really stood out.
Banking and finance
The rapidly changing world led to two major financial restructurings this past year. Firstly, Metinvest, the largest Ukrainian steel and mining company, undertook a $2.3 billion debt restructuring. This is the first scheme of arrangement to impose a standstill agreement on creditors, allowing it time to draft a detailed pre-insolvency restructuring plan without defaulting on payments. Debt restructurings have become common in Ukraine as the economy has struggled in the wake of civil unrest and Russia's annexation of Crimea.
Secondly, Premier Oil, an oil and gas exploration and production company in the United Kingdom, undertook a $3.8 billion financial restructuring. The deal included multiple financial instruments, such asthe restructuring of a revolving credit facility, term loans and a US private placement of notes, schuldschein, bilateral letter of credit facilities, a retail bond, a convertible bond and various hedging instruments.
Moving to the banking sector in Turkey – Akbank secured $1.2 billion in multicurrency dual tranche syndicated term loan facilities. This was the bank’s second significant capital raising in quick succession, following its $500 million Tier 2 notes issue just a week prior to this.
There were also two other major matters that did not make the final highlights cut – Olam Holdings and its $1 billion revolving credit facility and Korean Air securing $140 million to finance the purchase of a Boeing 787-9 Dreamliner.
Capital markets: Debt
Overall, debt capital markets activity showed a decrease compared to 2016 and proved to have the slowest third quarter opening since 2015. The most active industries in the debt sectors were technology and telecommunications, healthcare, and government and public policy. Emerging markets corporate debt, in contrast to global levels, was up with major issues from India, Brazil, Mexico and Russia.
The State of Kuwait undertook an $8 billion two tranche sovereign bond issue. It has recently become common for fossil fuel-reliant Gulf states like Kuwait to use the debt markets to cover gaps in budgets caused by low energy prices. Other Middle East sovereign international debt issues include Saudi Arabia's record $17.5 billion debut in 2016 and Oman's $5 billion bond.
The Republic of Argentina issued $2.75 billion in 7.125% sovereign bonds. The 100-year notes follow a $95 billion sovereign debt dispute from 2016, when the country issued $16.5 billion in bonds compensating for a 14-year debt markets absence.
In the fast-developing technology sector, Microsoft holds the first place for bond issues in 2017 with a $17 billion notes issue. The offering comes about seven months after a $19.75 million one that the company made in relation to its acquisition of LinkedIn.
And from the same industry sector, Apple completed a couple of debt offerings this year. The first one, a $10 billion notes issue, came just a couple of weeks after Microsoft’s bond issue and was followed by a $5 billion note issue and a C$2.5 billion maple bond offering. Apple undertook more than seven offerings in 2017.
Other major issues for 2017 included:
Ireda $300 million 7.125% green masala bond issue.
Greenko Energy Holdings $1 billion 4.875% and 5.25% green bonds issue.
PRC $2 billion sovereign bond issue.
UBS $6.88 billion 0%, 0.371%, 3.491% and 4.253% notes issues.
Capital markets: Equity
Asia-Pacific was clearly the leader in new stock listings this year, followed by parts of Europe and other regions of Asia. The region surpassed US for IPOs this year, as the United States had not many deals going public. More than 1,450 IPOs were undertaken this year and around two-thirds took place in the Asia-Pacific region leading to 2017 being one of the busiest ever.
UniCredit launched a €13 billion capital increase. The deal is believed to be the biggest share issue in Italian history and will almost double the bank's capitilisation.
Guotai Junan Securities — one of the largest investment banks in the PRC — raised HK$16.47 billion in an IPO on the HKSE in the largest listing in Asia-Pacific this year. The deal is the biggest stock sale in Hong Kong since Postal Savings Bank of China’s IPO.
Social media parent company Snap has completed its long-anticipated IPO on the NYSE, raising $3.4 billion. The unicorn offering comes amid an exceptionally slow period for IPOs in the US. This was the largest social media IPO since Twitter's three years ago.
Other notable issues in 2017 included:
Allied Irish Banks ISE/LSE IPO.
Lotte Chemical Titan Holding MYX IPO.
Lonza Group SFr2.25 billion rights issue.
M&A
The last serious M&A boom was in 2015 – when competitors were trying to gain scale and cut costs through direct deals. Many suspect 2018 is will be much more different to that as the big technology companies are trying to compete as new players. The urge to adapt to the new markets has become clear through some of this year’s deals some of which are either under discussion or awaiting approval. For example, CVS Health Corp’s roughly $69 billion acquisition of Aetna, Walt Disney’s interest in 21st Century Fox’s assets, Broadcom’s $105 billion bid for Qualcomm and AT&T’s planned purchase of Time Warner. Governments will be watched closely for their response to the boom of these megadeals especially seeing as AT&T is planning to go to court afterthe US Justice Department blocked its $85 billion bid for Time Warner.
CVS Health acquired health insurer Aetna for $69 billion. Aetna will continue operating through its existing leadership. Further investments and development projects are expected from CVS Health.
State-owned ChemChina acquired Swiss agribusiness company Syngenta for $43 billion. The deal is set to become largest ever overseas acquisition by a Chinese company, more than double the previous largest acquisition – CNOOC's $17.7 billion purchase of Canada's Nexen in 2012. The transaction is a setback for US seed company Monsanto, which unsuccessfully bid $45 billion for Syngenta last year.
And a major merger that took place this year in the United Arab Emirates. Abu Dhabi’s two largest banks, National Bank of Abu Dhabi (Nbad) and First Gulf Bank (FGB) merged, creating the second biggest lender in the Middle East. The Abu Dhabi government’s decision to consolidate its two main banks was a reaction to the impact of sustained low oil prices, with the merger expected to save the two lenders around $135 million a year in operating costs. Lower than usual energy revenue in the Middle East has reduced liquidity in the regions' banks as government deposits have decreased and countries have had to eat into their cash reserves to fill budget deficits.
Some other deals that influenced the financial world this year include:
Vantiv £9.1 billion acquisition of Worldpay Group.
Atlantia €16.3 billion acquisition of Abertis Infraestructuras.
Alstom/Siemens railway business merger.
Total $7.45 billion acquisition of Maersk Oil & Gas.
Ternium $1.3 billion acquisition of CSA.
Bass Pro Shops $5 billion acquisition of Cabela's.
Johnson & Johnson $30 billion acquisition of Actelion.
Project finance and development
Political and economic ups and downs in the past year have led to uncertainties in the world of project finance. On the other hand, though, costs are falling and risk mitigation innovations are spurring some positive activity in the sector. Spread through different industries, here are some of the most interesting highlights from the project sector this year.
Nordsee One, a project company owned by Northland Power and Innogy, is developing a 332MW wind farm in German waters in the North Sea. Northland acquired 85% of the project from Innogy, which retained 15% in the project, in 2014.
The Sydney Metro Project is an A$11 billion automated rapid transit system under construction in Sydney, New South Wales. It is Australia's largest-ever public transport project and has two core components: Sydney Metro Northwest – formerly the 36km North West Rail Link under construction that will open in the first half of 2019 – and Sydney Metro City & Southwest , a new 30km metro line linking with Metro Northwest at Chatswood, under Sydney Harbour, through the CBD and south west to Bankstown. It is due to open in 2024.
In Turkey, the İkitelli Integrated Health Campus PPP has reached a close. When completed, this will be the largest health campus in the world that is built on seismic isolators. The unit will have special neurology, orthopedics, maternity and children, cardiovascular, oncology and physical therapy and rehabilitation sections. The deal is part of the €12 billion hospital programme that is being developed in Turkey.
Some other energy and transport project developments that also took place this year include:
Kype Muir/Middle Muir/Moor House 151MW Onshore Wind Farms.
Kuala Lumpur-Singapore High-Speed Railway.
Saudi Aramco $7 billion acquisition of stake in RAPID project.