Jury Notes: It’s Not A Raw Deal

Four years ago, BW Businessworld decided to honour those who stitch deals together. Unlike commercial banks and bankers who have all along been recognised for what they do, their I-banking counterparts never got the accolades they deserved. The BW I-banking awards fill this gap.

The way we went about it
We used Bloomberg’s (our data partner) league tables across i-banking verticals; PwC stepped in with its knowledge support to devise the methodology and curated the data for the period January to December 2015. We shortlisted top 10 dealmakers (by deals value) and top 10 deals (by deal volume), requested i-banks to make presentations on the key deals put through by them during calendar 2015 and presented them to a jury. The jurors were Sushil Agarwal, group CFO at A V Birla Group; Somasekhar Sundaresan, partner, J Sagar & Associates; Suhail Nathani, managing partner, Economic Law Practice; and Vikram Narayan, managing director & country manager, Paypal (India).

The BW i-banking jury process has over the years not looked at just the league table values and volumes to pick winners. The shortlisted i-bankers have been asked to provide information on valuation, pricing, structuring, complexity, and precedent for a deal in a sector; and the time taken for a transaction. The information provided was “explanatory” in nature. This time around, the jury made the process more rigorous — it decided to apply weightages to deals up for judgement. The jury also sought additional information on a few deals. And just how painful and rigorous the exercise turned out to be is worthy of elaboration.

The nature of the i-banking business is such that many are not ready to part with the kind of information that jurors may want. Reasons vary from client confidentiality to the proprietary nature of the structure in a transaction. A corporate may not want the i-banks involved to reveal what it feels is sensitive to its interests. The point is information is hard to come by, but all efforts were made to get the details given the constraints involved. It meant two meetings of four hours each, and almost a month of consultation among the jurors. The diligence on display was of such a high order that had the jurors been i-bankers, many of the deals may not have seen the light of the day!

This year, the jury decided to give out awards in four categories — mergers and acquisitions (M&A), initial public offerings (IPO), qualified institutional placements (QIP), and cross-border bonds. At the end of the process, we had eight winners across these verticals.

The M&A Deal of the Year was RIL’s sale of its 49.9 per cent stake in EFS Midstream to Enterprise Products for $1.07 billion, and the M&A Dealmaker of the Year was Citigroup. The IPO Deal of the Year was Interglobe’s Rs 3,000-crore float, and the IPO Dealmaker of the Year was Kotak Investment Banking. The QIP Deal of the Year was HDFC Bank’s Rs 9,700-crore QIP and the QIP Dealmaker of the Year was J M Financial. The Cross-border Bond Deal of the Year was RIL’s $1 billion offering; and the Cross-border Bond Dealmaker of the Year was jointly awarded to Bank of America-Merrill Lynch and Citigroup.

Congratulations to all winners!

How We Did It

There are 4X2 awards primarily covering M&A, QIP, Non-INR Bonds & INR Bonds. Data captured from Bloomberg includes number of deals, total value, average size of deal, reported detail of advisor, etc.

Data is captured for all deals announced during 1 January to 31 December 2014

The Bloomberg data was then used to shortlist Top 10 deals (by deal value) and also Top 10 Dealmakers (by total deals value) in each of the 4X2 categories

The shortlisted deals and dealmakers were then contacted to provide information along the following parameters for their respective deals:
a- Valuation/Pricing – Was the valuation/pricing (as applicable) better than the peer group?
b- Structuring – Briefly explain the transaction structure. Was anything unique about the structure?
c- Complexity – What were the complexities involved in putting it through (the state of the financial markets/sector perception at that point in time)?
d- Precedent in its sector – Can the transaction be considered the first/one of the first/precedent/unique in its own way considering the sector/market?
e- Time taken – What was the time taken for the transaction and can that be considered short? Please explain

Once the submissions were received from the nominees, the same was validated (to the extent possible from publicly available sources)

We contacted 34 investment banks, out of which we received responses from 17. Most of the key deals were covered in the received submissions.

In addition, the nominees have also submitted significant deals that may not lie in the Top 10 list from Bloomberg, but may be considered worthy of mention.

The data pack prepared was presented to jury for deliberation. They not only looked at quantitative inputs but also on subjective parameters like complexity, timing, investor’s views on the sector, etc. to arrive at the winner in each category.