European banks have started 2016 with a bang, taking back three of the top five spots in the region’s M&A advisory league tables from their US rivals shortly before the end of the first quarter – thanks to their places on the biggest deal so far in 2016.
After European banks ended 2015 with no representation in the top five for European-targeted M&A – their worst performance since 2006 – UBS, HSBC and Lakeside Capital Advisers, a Switzerland-based firm established in 2015 by former JP Morgan vice-chairman Pascal Ravery, ranked third, fourth and joint fifth as of March 11, behind JP Morgan and Goldman Sachs, according to Dealogic.
The three European firms are working on the largest announced deal so far in 2016, the $ 48 billion bid from China National Chemical Corporation, or ChemChina, for Swiss agrochemicals company Syngenta. HSBC is working on its largest advisory mandate in a decade by advising ChemChina, while Syngenta’s advisers include UBS and Lakeside.
Bosses at various European banks – including Deutsche Bank and Credit Suisse – have said in recent strategy updates that they intend to invest in their M&A franchises. One investment banking head at a European firm described it as “an attractive but expensive business” on which his team would focus their efforts.
James Simpson, co-head of Emea M&A at HSBC, which ranked 14th in Europe in 2015, said: “The US banks have been in a privileged position, where perhaps they’ve gone through their turmoil and are relatively stable. When you’re engaged in M&A, it’s not like a DCM trade where you can set up a desk and start trading within a matter of days. It requires a prolonged investment, a build-up of trust with a client over a sustained period of time. I think they are reaping the benefits of that.”
At Barclays, which on March 7 announced that it had hired former Merrill Lynch rainmaker Carlo Calabria as chairman of M&A for Emea, regional M&A head Pier Luigi Colizzi said there was “a lot of focus on getting the M&A effort more and more successful within Emea”. Colizzi added that the hiring of Calabria, who brings with him eight bankers from CMC Capital, an advisory firm he helped to set up, would “strengthen our senior access, execution expertise and overall M&A franchise”.
Despite the rankings rise, Severin Brizay, head of Emea M&A at UBS, said banks were largely dependent on which companies decided to do deals. He said: “How active we are is, to a certain extent, a function of how active our clients are. Most clients do not do a deal every year. Sometimes things look quiet because few of our clients actually do a deal, and sometimes many of our clients are transacting at the same time. That has been the case for us this year so far, with the likes of [deals involving] Vodafone, Syngenta, Sainsbury, Darty and others.”
As of March 11, announced European M&A in 2016 was up in value from the same period of 2015 – to $ 177 billion from $ 151 billion – but down by the number of deals, to 2,152 from 2,770.