UPDATE 1-Southeast Asia boom helps UBS extend Asia-Pacific equity lead

Fri Jun 28, 2013 6:39am EDT

By Elzio Barreto

HONG KONG, June 28 (Reuters) - Swiss bank UBS extended its lead in Asia-Pacific stock underwriting during the first half of the year, as its long history of targeting Southeast Asian markets helped it capitalise on a surge in deals in the region.

UBS, which has come out on top of Asia-Pacific equity capital market league tables for seven of the past eight years, raked in $120.8 million in estimated fees, more than the combined revenue of the next two banks in the ranking.

Equity capital market deals in Southeast Asia climbed 54 percent to $22.5 billion in the first half of 2013, a quarter of all Asia-Pacific ex-Japan volumes. Stock offerings in Singapore, the Philippines and Indonesia more than doubled, preliminary data from Thomson Reuters shows.

"We had a lot of issuance and there's still a lot of deals waiting to be done in Southeast Asia," said Damien Brosnan, head of Asia equity syndicate at UBS AG.

But equity issuance in Hong Kong, which for the last few years had been a leading city for IPOs, fell 20 percent, hit by concerns about a weaker Chinese economy.

Rising volatility in global markets has taken a growing number of victims in Hong Kong's IPO market in recent weeks, with Nexteer Automotive Group Ltd postponing its up to $325 million listing on Wednesday. Hopewell Hong Kong Properties Ltd and auto parts maker Mando China Holdings Ltd , controlled by South Korea's Mando Corp, have also delayed their deals.

PRIVATE BANK STRENGTH

UBS has historically maintained a broader equities research and trading operation in Asia-Pacific thanks to its model of referring clients from its large private bank, whereas investment banking rivals like Goldman Sachs and Morgan Stanley have focused more on the big China IPOs in Hong Kong.

The Swiss bank worked on a string of deals in Thailand and the Philippines. In the Philippines, it managed to garner 62 percent of equity capital market deals, helped by star banker Lauro Baja, its head of investment banking there, according to Thomson Reuters publication IFR.

In estimated fees, Goldman Sachs ranked second, earning $61.9 million, while Credit Suisse came third with $56.9 million, according to Thomson Reuters/Freeman Consulting Co, which is based on actual and projected revenue data.

Overall stock offerings in Asia Pacific climbed 5 percent to $86.8 billion, but IPOs in the region tumbled 38 percent to $12.7 billion.

UBS handled $11.5 billion worth of deals, up 60 percent from the same period a year earlier while Goldman Sachs was second with $8.5 billion, a 30 percent rise. Deutsche Bank was third, managing $4.03 billion in offerings and leaping from its 8th position a year earlier.

Three of the top five IPOs in Asia Pacific came from Southeast Asia. They included the $2.1 billion listing of BTS Rail Mass Transit Growth Infrastructure Fund in Thailand and Mapletree Greater China Commercial Trust, Singapore's largest ever REIT listing at $2.06 billion.

Convertible bond issuance soared 71.4 percent to $12.6 billion but concerns over U.S. interest rates and wild swings in U.S. Treasuries were expected to slow issuance in the next few months.

"The market is going to be adjusting to a new normal in certain ways," UBS's Brosnan said. "That product (CBs), much like the debt capital markets, will take a pause until the interest rate environment is figured out."

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