Down to wire, UBS tops Asia ECM pile again

By Michael Flaherty

HONG KONG (BestGrowthStock) – After a brutal first half that had rivals calling the end of UBS’s equity capital markets reign in Asia, the Swiss bank staged a late-year revival to land it on top for the sixth year running.

For the investment banking business, equity capital markets deals account for more than two-thirds of what a major foreign bank earns in Asia. The 2010 IPO boom pushed that percentage even higher, with some banks earning an estimated $500 million in 2010 fees from Asia stock deals alone, according to Thomson Reuters.

The top three Asia Pacific equity and equity-linked underwriters for 2010 were UBS AG (UBSN.VX: ), Goldman Sachs (GS.N: ), and Morgan Stanley (MS.N: ) (Read more about the money market today. ), in that order, according to Thomson Reuters. The data excludes Japan.

Preliminary data as of December 22 showed UBS on 107 deals worth $25.7 billion in proceeds credit. Goldman’s tally was 77 deals worth $23.9 billion in proceeds. League table credit is granted as a percentage of a deal, depending on the amount of book runners involved

“The key to our success in the ECM business in the region rests on three key areas. Our wealth management platform, our China JV and securities license, and our distribution capabilities which are second to none,” said Matthew Hanning, who is co-head of UBS’s Asia investment bank, excluding Japan.

While Hong Kong raked in a global high of more than $50 billion in IPO proceeds this year, the city’s red hot stock market cooled down in the final months, bringing share prices of most of this year’s listings down with it.

TOUGH START

By the middle of the year, UBS had — to borrow a phrase — a perfect storm of set backs within its Asia ECM division.

Two of its top ECM executives in the region left for other banks, as did its respected China rainmaker, Henry Cai. In addition, the bank was left off or given minor status in two of the world’s largest stock offerings this year: the $20 billion plus IPOs of Agricultural Bank of China (1288.HK: ) (601288.SS: ), and AIA Group (1299.HK: ).

The bank was able to mop up other China bank mandates, but even just for prestige stake, missing out on those deals hurt.

Those setbacks seemed certain to push UBS down the regional ECM rankings, having earned top spot in the last five years, according to Thomson Reuters. But a flurry of year end activity put UBS on top.

“It’s definitely been a challenging year in which we lost some key people,” Hanning said. “But we quickly filled those roles to ensure there was no disruption to our business.”

BIG DEALS

Goldman Sachs also had a stellar year in the ECM category, taking top roles on AgBank and AIA.

Excluding Australasia, Central Asia and Japan, Goldman earned the most ECM proceeds of any bank, with involvement in 62 deals worth $21.87 billion.

Dan Dees, Asia Head of Financing Group at Goldman, said that 2010 was an extraordinary year, given the size of the offerings.

“I doubt we’ll ever see another year like it just in terms of sheer magnitude of deals. I think we’ll see higher volumes, but to do a $22 billion IPO, and then immediately a $20.5 billion IPO and have them trade up after such strong support is unprecedented,” Dees said.

Morgan Stanley, which was the joint global coordinator for AIA and a top handler of AgBank, was third in the APAC ECM list, ex Japan league tables, and the top Hong Kong IPO underwriter, the data show.

CHINA JV, WEALTH MANAGEMENT KEY TO SUCCESS

Unlike other foreign banks in China, UBS has a full securities license through its China joint venture, allowing the bank to underwrite and settle A-share stock offerings. That’s given them an edge over competitors in China that are bound by more restrictive securities licenses.

The Asia stock syndicate team at UBS has built a steady business over the years, a distribution channel that feeds off of what is key to its success in Asia: UBS’s private wealth bank, Europe’s largest by assets.

With that base of customers hungry for Asia exposure, plus the region’s booming growth of private wealth clients, UBS has a huge base of investors lined up to scoop up stock offerings and IPOs underwritten by the bank.

That’s a good position for the bank to be in, given the run up in Asian stock markets over the last several years.

(Editing by Lincoln Feast)

Down to wire, UBS tops Asia ECM pile again