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Thursday, 25th April 2024 |
| ‘Deals of the Year’ nominations for 2008 |
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| 2007 and so far in 2008 have seen a record number of deals nominated for the FINANCE Capital Markets Deals of The Year awards. The eight different categories: corporate finance, equity linked deals, capital issues, securitisations, private placements, project finance, loans and bonds all show the high level of expertise in the Irish market, evidenced by the innovation in many of the deal structures and efficiency of execution. Dislocation in credit markets could indicate a slower year ahead, yet deal volumes at 54 are significantly ahead of both quarter one 2006 and 2007, according to Ion equity’s M&A tracker in quarter 1 2008. With potential deals in the pipeline like the takeover of FBD by Eureko, deal activity this quarter has proved resilient showing that funds are available and trade buyers are completing strategic deals in current market conditions. |
The Deals of the Year for 2007/08 had a record 82 nominations. Five deals in the ‘Corporate Finance’ category disclosed considerations of over E1 billion. One of which the Depfa Hypo Public Finance Merger was the largest merger and acquisition in the history of the state. The Sale of Airtricity Holdings Limited to Scottish and Southern Energy plc (‘SSE’) which was completed in February was the largest so in 2008 at the time of publishing with a value of E1.8 billion. Throughout all categories there were many industry ‘firsts’ both nationally and internationally highlighting the ambition of Irish businesses and the innovation of the advisors with breakthroughs in every one of the categories.
The nominations are the selection of Ireland’s corporate finance industry of the best capital market deals in 2007/8. The deals are judged on the following criteria:
Key attributes
• The strategic fit of the deal
• The quality of the financing
• Skills of the advisers
• Complexity of the legal structures (including the cross border dimensions)
• The ability to employ innovative financing & instruments
• Speed of the deal & efficiency of transaction
Amongst the larger deals nominated this year are:
• Corporate Finance
The Depfa/Hypo merger was announced in late July, with closing in early October, so it was ‘in play’ during an unprecedented period of market turmoil. Depfa’s shareholding structure (a hybrid of the Irish and German models) made the scheme of arrangement approval process considerably more difficult needing to convene shareholder meetings of Depfa and obtaining the approval of the High Court of Ireland. No formal takeover regulation applied but parties voluntarily applied Irish Takeover Rules to conduct of transaction, a unique feature of the deal.
The Airtricity price of E1.8 billion represented a multiple of four times invested capital and a 100 per cent increase in value per share over the last equity fundraising, completed in June 2006 and a 720 per cent increase over the initial equity fundraising carried out in 2002. The process from signing to completion managed by NCB and Airtricity’s legal advisors was achieved in five weeks.
Aer Lingus was successfully defended from a hostile bid from Ryanair. Aspects of the defence included how to handle the approach, advice on the Listing and Irish Takeover Rules, and the preparation of shareholder circulars. Finally the number of shareholders who accepted Ryanair’s offer was negligible. As the Ryanair offer failed to get sufficient support, the offer lapsed.
The sale of Jury’s Inns by JHD Acquisitions marked the split of the biggest Irish hotel company - a consequence of the ‘scrum’ for the Jurys Doyle property portfolio in 2005/2006 that led to the company being taken private. The sale of Jury’s Inns followed a complex and demanding restructuring which separated the Jurys Inns Group from the traditional four and five star hotels owned by the group, thereby preparing the Jury’s Inns Group for sale.
Disposal by C&C of its soft drinks business to Britvic UK. One of the largest trade to trade transactions in Ireland in 2007 involving complex transitional arrangements regarding route to market; reuniting of split trade marks (which was an unusual feature); and involving significant competition issues because of the market positions of the parties.
The sale of Highland Radio, FM104 and Today FM by E-map to Communicorp Group Ltd showed that the Competition Authority is not afraid of imposing stringent remedies when approving transactions that give rise to potential competition concerns.
The acquisition of the Bewley’s Hotel Group represents a significant milestone for the Moran Hotel Group, creating one of the largest hotel chains in the Irish market and further establishing the Group as a growing player in the UK market.
Following an intensely competitive auction process, CapVest succeeded in acquiring Mater Private and the acquisition (which was subject to Irish Competition Authority approval) was announced on 24 April 2007. Following the receipt of Competition Authority approval, the completion of the acquisition occurred on 5 June 2007. Delivering value both in terms of cash proceeds to shareholders and a meaningful equity stake for management & staff going forward.
• Equity linked deal
The initial public offering of the Smurfit Kappa Group and listing on the Irish Stock Exchange and UKLA with a 144A tranche is the largest IPO in Ireland to date and also the 3rd largest IPO in EMEA in 2007. The transaction followed on from the merger of Jefferson Smurfit group and Kappa group in last 2005 / early 2006. A 100 per cent primary offering raised E1.3 billion. The transaction, being the largest ever equity fundraising in Ireland, was executed against a difficult equity market background.
In difficult markets in December 2007, Merrion Pharmaceuticals, the international specialty pharmaceuticals company, was admitted to trading on Dublin’s IEX market with a market capitalisation of approximately E67 million and raised E8 million to fund clinical trials and R&D activities.
• Private Placements
Private placement by the Quinn Group involved 15 different jurisdictions, straddling both sides of the Atlantic. The deal was closed simultaneously with a E270 million syndicated financing in the UK. This deal was one of two private placements by Quinn Group, the other was in 2006 and won FINANCE “Corporate Issuance Deal of the Year” for 2006. The total value of the two deals is US$600 million and US$1.18 billion. A&L Goodbody acted as lead counsel in the transaction and negotiated both the US and European sides of the deal.
Porsche Holding Finance Plc’s private placement of hybrid bonds. Porsche successfully placed a volume of E1bn hybrid capital via a private placement with a club of large institutional investors in Europe, Asia and the Middle East. Despite the market deterioration caused by the subprime crisis, investors are still willing to put cash to work for the right investment case. Proceeds of the placement were used for the refinancing of the VW-investment and to bolster Porsche’s liquidity reserve.
• Loans
Spencer Dock Convention Centre Ltd (trading as The Convention Centre Dublin) task to finance the design, build and operation of an international class conference and convention centre in Dublin city centre procured under a 28.5 year PPP concession contract awarded by the Office of Public Works and to finance the construction of a car park beneath the conference centre and an adjacent hotel basement. The issues created by the nature of the project required innovative solutions.
In March 2007, Ulster Bank was appointed sole Mandated Lead Arranger of a E350m syndicated facility to finance the IPO of Origin Enterprises, formerly the Agri Business and non-lifestyle food division of IAWS Group plc. Origin is a mature and cash flow generative business, which also owns a number of sites with development potential. The 5-Bank syndicated facility was secured by a full debenture over the company’s assets, including the development property portfolio.
The provision of acquisition facilities to Quinlan Private for the purposes of acquiring leading hotel chain, Jurys Inns Group Limited. Apart from the obvious scale of the transaction (over twenty hotels initially with a number of hotels in the pipeline, making Jurys Inns one of the fasting growing hotel brands in Europe), the speed in which the commercial terms had to be agreed and the commercial and legal terms documented was one of the more remarkable features of this transaction.
• Securitisation
Bank of Ireland Value in Force/Tier 1 Securitisation. This was a highly innovative transaction and a first of its kind in both the Irish and European markets (being both a synthetic securitisation and a regulatory capital transaction).
SVG Diamond Private Equity III plc was innovative in that it combined the new Irish qualifying investor fund regime (which is cost and time efficient due to the self -certification by legal advisors) and the Irish section 110 regime(which is tax neutral and provides treaty access) by interposing a securitisation vehicle in a fund structure. This innovative structure together with the investment strategies ensures maximum flexibility on the underlying asset purchases and disposals creating a leveraged onshore private equity fund which is the first such fund to be launched as an onshore European fund.
• Capital Issues
Ulster Bank Ireland Ltd Mortgage Backed Promissory Notes Scheme Under new liquidity rules introduced by FR, it is now possible to treat residential mortgages as liquid assets if pledged under CBFSAI Mortgages Backed Promissory Note Scheme - Ulster Bank entered into this CBFSAI scheme whereby floating security was created over a pool of Ulster Bank residential mortgages in favour of the CBFSAI.
Irish Life Assurance PLC Step-Up Perpetual Capital Notes was an issue of subordinated perpetual capital notes, structured so as to comply with the conditions for treatment as regulatory capital (analogous to Upper Tier II) under the Irish regulatory capital regime for life assurance companies. Key features of the deal include deep subordination of the noteholders, provisions for deferral of interest without triggering default, any redemption being subject to the approval of the Irish Financial Regulator and, from 2017, a coupon step up from 5.25 per cent fixed to 203 bps over 3 month Euribor.
• Project Finance
Criminal Courts Complex The procurement by way of PPP of a purpose built complex of 22 criminal courts, custody facilities, Bar Council accommodation, judicial chambers and ancillary facilities. This project represents the pilot PPP Project for the justice sector in Ireland and as such is the first time that the construction of courts buildings has been procured in Ireland by way of PPP. This is also the first time that a procuring authority in Ireland has contracted with a PPP company incorporated by way of a limited partnership structure.
Procuring by way of PPP of a c600,000 tonne waste to energy plant at the Poolbeg peninsula, on the edge of Dublin Bay. This is the first publicly procured waste-to-energy plant in Ireland and sets the benchmark for similar plants being procured by other local authorities throughout Ireland.
National Conference Centre (now known as The Conference Centre, Dublin), procurement of a landmark National Conference Centre in the Dublin Docklands by way of PPP. This is the first PPP project for the OPW, acting on behalf of the Department of Arts Sport and Tourism. Expected generation of E25m and E50m in foreign revenue earnings for Ireland annually, this is a landmark infrastructural project for the State. The project structure had a number of innovative features including, in particular, a mechanism to ensure that the facility delivered on its promise of attracting international visitors to Dublin, and a sharing of third party revenue risk.
The M50 PPP project was to design, build, finance and operation of upgrade of 24km of motorway and 35 year maintenance contract for entire M50 road. Only availability based toll road in Ireland. Involved taking over significant existing infrastructure as well as new build and taking availability risk on such infrastructure.
• Bonds
Launch of EMTN programme by Westfield Group, the world’s largest shopping centre owner operator. The deal sees Westfield Group utilise its Irish finance subsidiary Westfield Europe Finance plc as a major source of funding for Westfield’s global business.
Ireland, acting through the National Treasury Management Agency as its agent, issued E6 billion of 4.5% Bonds due 2018. This deal was the biggest ever Bond issue by Ireland and was heavily over-subscribed despite similar bond issues by the Italian government and the European Investment Bank on the same day. This Bond issue was the largest by any European government in 2007. It was also the first issue by Ireland since 2005. |
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| Article appeared in the April 2008 issue.
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