Deals of The Year, Asia

4/27/24, 11:47 AM Deals of the Year, Asia | CFO
Deals of the Year, Asia

Published Jan. 22, 2002
By CFO Asia Staff
Deal volume may have been down in Asia in 2001, but the level of
daring wasn’t. In CFO Asia’s second annual ranking of corporate
finance deals, we’ve chosen ten transactions that not only braved
tough market and regulatory environments, but displayed skillful
structuring, smart pricing and sheer determination. Some of these
deals were controversial. And not all of them pleased investors. But
each, in its own way, made a little history.
1. DBS’s $5.9 billion Acquisition of Dao Heng Bank
Advisors: Goldman Sachs, Morgan Stanley, JPMorgan, Merrill

Lynch
In the beginning, the regulators said: “Let there be consolidation in

the Singapore banking sector.” And it was so. This year, DBS
moved on OUB, which was swallowed by UOB, OCBC declared for
Keppel, and so on.
But Singapore’s standout bank deal of the year took place

September 4, when the city’s biggest institution gulped the mid-
tier Hong Kong bank, Dao Heng. In one fell swoop, DBS left its
Asean comfort zone and positioned itself for China growth. Asia’s
bipolar banking market splits roughly between Southeast Asia and
greater China. DBS lacked a meaningful presence in the latter.
With Dao Heng under its belt, that changed.
So much for strategy. Criticism of the Dao Heng deal focused on

price. In past transactions in Hong Kong, smaller banks have sold
at a price-to-book ratio ranging from 1.3 to 1.5. Having bought Dao
Heng at 3.3 times its book value, did DBS pay too much? “That’s a
https://www.cfo.com/news/deals-of-the-year-asia/682325/ 1/16
popular question,” says Michael Siu, a Hong Kong-based banking

analyst for Salomon Smith Barney. “At the time [of the
transaction] the price was deemed to be quite ‘full.’ “
But Goldman Sachs banker Rajiv Ghatalia, a principal architect of

the Dao Heng deal, points to Dao Heng’s rich credit card business,
which is similar in size to Chase’s credit-card portfolio bought last
year by Standard Chartered (for 4.6 times book). “DBS buys Dao
Heng at three times book, and everyone goes, ‘Oh my god, what
have you just done?’,” Ghatalia says. But, he argues, if you value
Dao Heng’s card business at the price paid by Standard Chartered
for its acquisition of Chase’s credit card portfolio, “then you are
really buying the rump of the franchise, which is everything else,
for about 2.5 times book. That’s great,” says Ghatalia.
Still, DBS has been left to digest about $3 billion of goodwill write-
off, a fact that will be dragging on its share price for the 20-year
amortization period. Its purchases since 1998 — Bank of the
Philippines Islands (S$1.2 billion), Post Office Savings Bank and
Credit (S$1.6 billion), Kwong On Bank (S$879 million) — have
depleted DBS’s once large reserves, and the Dao Heng acquisition
sparked worries about the fitness of DBS’s capital adequacy ratio (a
concern that was eased by the bank’s S$2.2 billion share placement
in November).
For its efforts, DBS is now one of only a handful of institutions

with a regional brand. HSBC and Standard Chartered are the only
other banks that could make such a claim. And, with size comes
economies of scale. DBS will be able to better utilize its IT spend by
spreading costs over its more vast banking network. With its Dao
Heng acquisition, DBS also garnered $53 million in business
“synergies” (banker-speak for branch closures) in the first months
following the deal signing, and it expects that figure to rise
significantly.
2. Hynix’s $1.25 Billion GDR Issue
Advisor: Salomon Smith Barney
Let the record show, your honor, that the court recognizes the
following facts: that the influential Salomon Smith Barney (SSB)
analyst Jon Joseph upgraded the outlook for the semiconductor
sector on April 12, just as his corporate finance colleagues were to
market a GDR issue for Hynix, the Korean chip maker. That SSB’s
parent bank, Citigroup, was exposed to the faltering Hynix for 100
billion won ($77 million) prior to the GDR launch. That, in
marketing the deal, SSB forecast a Dram spot price of $2.7,
whereas at the time of writing 64-megabit Drams were selling for
about 50 cents. And that, three months after the issue, Hynix’s
share price fell about 80 percent as the memory-chip market
collapsed.
It was tough break for investors. Mark Mobius — the emerging

markets maven, Templeton’s president and the man who knows
the difference between Slovenia and Slovakia — publicly
questioned SSB’s due diligence in the transaction. Others were
more forthright. “No investor I speak to will admit to having
anything to do with this deal,” says one senior buy-side figure
based in Hong Kong.
What is less appreciated is that the June 15 transaction saved

Hynix. SSB single-handedly recapitalized the deeply troubled
company. The GDR issue was just part of that effort. Through 2001
it also rescheduled 1.9 trillion won ($1.5 billion) in Hynix debt,
raised 1 trillion won in convertible bonds, and stabilized and
extended short-term trade lines (of about 2.7 trillion won in value).
And it did all this during a global downturn in semiconductors
described routinely by insiders as “unprecedented.”
Simon Parker, a director at SSB, says this of the GDR issue: “Some
investors definitely expressed dissatisfaction (with the deal) … But
we were very, very clear [about] the investment risks. It was a
Dram bet. We took some heat for getting the Dram price wrong,
which is fair, because we launched the transaction.” Parker adds
that Salomon’s view on the pricing for Dram was actually at the
low end of the market consensus.
For all Salomon’s efforts, Hynix lives to battle in the gladiatorial

Dram arena another day. Analysts still question Hynix’s long-term
viability — its debt load continues to impair its capex abilities,
critical for any semi operator. But Hynix has scraped through an
impossibly difficult year with a degree of solvency and into a chip
market that can only go up. In the words of CEO CS Park: “We are
greatly indebted to Salomons … this company (Hynix) has much
improved strategic options because of SSB’s recapitalization. Our
debt was restructured, and now our success will depend on our
operational ability and our technology.”
And Hynix is continuing its recapitalization. As of the end of

November, the company completed stage two of its restructuring,
in which creditors are swapping $2.3 billion of debt into
convertible bonds, forgiving some $1.2 billion of debt and injecting
over $500 million, and there is a rights offering in the works. Since
the closing of the latest recapitalization, Dram prices had risen
over 50 percent from their lows and by mid-November, Hynix’s
share price was rising sharply on heavy volume.
3. Huawei Technologies’ $750 Million Sale of Avansys to

Emerson Electric
Advisors: Morgan Stanley, JPMorgan
Trailblazers make the rules. Huawei Technologies and Emerson

Electric know this better than most. When the Chinese telecom
equipment maker sold its wholly owned telecom power conversion
subsidiary, Avansys, to US-based Emerson, no rules yet governed
the sale of a private, employee-owned Chinese company to a
foreign enterprise. None still exist. But the details of the deal that
pleased China will figure in its future guidebook on foreign-led
acquisitions.
Indeed, the deal’s quick completion is a tangible indication that

China is changing for the better. Huawei decided to sell Avansys in
mid-2000. Emerson’s bid came by autumn. Not long after, both
agreed on a valuation. They soon sought the approval of Shenzhen
officials, then elevated it to the central government, which then
circulated it to various state agencies.
The thumbs-up came on October 21, three weeks before China

entered the World Trade Organization. Given that China spent
years perfecting the Sino-foreign joint venture concept, this is
lightning fast. The lack of precedence meant that Emerson and
Huawei only had their common sense to guide them – China’s
criteria in deciding whether a deal goes ahead are not the same as a
Western government’s, say advisors. “It looks at whether all parties
benefit,” says a banker involved in the deal. “The deals need to be
good for the affected employees, the business landscape and the
country as a whole.”
It helped that Emerson is a 13-year China veteran. The $15 billion-

a-year electronics giant has 66 factories in China, so it knew what
to do: pay in cash, keep all 1,400 Avansys staff, train them, and
transfer technology. “Emerson is very excited about the employees
and management of Avansys, and it will make every effort to retain
and train them,” says Danny Wai, managing director at JPMorgan,
which advised Emerson.
Emerson paid 2.4 times enterprise value (net debt over value of
equity) over Avansys’s 2000 revenues of $217 million, says Wai, a
high price at a time when comparable companies are suffering
from slumping tech demand. Emerson’s defense: Avansys’s
operating margins are higher than its own, and its 32 percent
market share in China is triple the closest competitor’s.
Emerson may in fact have acquired Huawei on the cheap. As one

banker says, price was a secondary consideration for Huawei. It
would continue to buy Avansys products, so its trust of the buyer
was of major importance. “The key for Huawei is to build a lasting
and mutually beneficial relationship with Emerson,” he says. And

nowhere is a relationship more coveted than in China.
4. SingTel’s $10 Billion Acquisition of C&W Optus
Advisors: Morgan Stanley, JPMorgan, Merrill Lynch
It was not an auspicious start. Investors took SingTel’s share price

down by a third in the weeks after it announced its bid for Cable &
Wireless Optus. The offer was too rich, said SingTel investors. The
deal was also too foreign, said critics. Indeed, the SingTel board
includes membership by Brigadier General Lee Hsien Yang (son of
Senior Minister Lee Kuan Yew) and Lieutenant General Lim Chuan
Poh, Singapore’s Chief of Defense Force.
At the same time, Kerry Stokes, the executive chairman of the

Sydney-based Seven Network, fretted that Australia’s number-two
telco would come under “foreign control.” Notwithstanding the
fact that Optus was previously 52 percent owned by London
headquartered Cable & Wireless, Stokes and his Seven Network
railed against the acquisition in a submission to Australia’s Foreign
Investment Review Board (FIRB). “Given the authoritarian and
arbitrary nature of the Singapore government’s regime, and its
widespread use of intrusive surveillance, there are grave concerns
about Australia’s national security interests,” said the submission.
Optus shareholders were also concerned. Their telco had

prospered in Australia’s tough mobile market, taking on dominant
carrier Telstra. How could government-controlled SingTel, whose
telecoms industry only entered full liberalization in 2001, compete
in hardscrabble Australia? In the end, shareholders were won over
by SingTel’s price and the flexibility of its offer. Fully 98 percent of
Optus investors came to support the deal, finalized September 17,
which also found approval from FIRB, Australia’s Department of
Defense (it shared a satellite project with Optus) and the US State
Department (it had to approve Singapore control of sensitive US
technology).
SingTel’s own shareholders weren’t so pleased. The company’s

share price fell about 40 percent from when its Optus intentions
became known to the time of acquisition, in September. But its $10
billion transaction, Asia’s largest M&A of the year, has turned the
company into what it has long aspired to be: a competitive,
regional player in fighting-fit financial shape. SingTel was already
invested in more than 20 countries, but the Optus acquisition
pushes its non-Singapore revenue from about 10 percent to more
than half.
Other benefits of the much-discussed deal: SingTel has found a

second listing on the Australian Stock Exchange, it has completely
drawn down its cash reserves (its previously underutilized billions
had long made investors uncomfortable) and it has expanded its
free float from 22 percent to 32 percent, diluting government
ownership of the utility. Next year will show what it can do with
Optus as a business.
5. Korea Tobacco & Ginseng’s $244 Million CB and $309

Million GDR
Advisors: UBS Warburg, Credit Suisse First Boston
Korea Tobacco & Ginseng (KT&G) and Korean finance ministry

officials were checking in to a morning flight from Seoul to
Singapore on September 12 when they received the call they
feared. The shutdown of the US financial markets in the wake of
the terrorist attacks meant they had to postpone roadshows for the
privatization of KT&G. Undaunted, they held a teleconference right
there at the airport with financial advisors UBS Warburg and
Credit Suisse First Boston and set up a new schedule for the end of
October.
The wait paid off. On October 26, KT&G successfully pulled off the
first sizable deal in Asia after 9/11 — a combined $553 million
convertible bond (CB) and global depositary receipt (GDR) issue.
The attacks sparked a preference for securities with downside
protection and upside potential. The KT&G convertibles, no

surprise, were 17 times oversubscribed. The demand created
enough buzz on the quality of KT&G that equity investors, who
normally buy GDRs at a discount to underlying shares, paid for
KT&G at parity, a first for Korea since 1997. The GDRs were four
times oversubscribed.
“We achieved our goal of creating demand tension between the two
issues, and optimized the [GDR] price,” says Nicholas Andrews,
head of equity capital markets at CSFB. “KT&G also benefited in
that it was the only deal for investors to focus on [after the
attacks].” Adds Rex Chung, his counterpart at UBS: “Equity
investors took comfort and consolation in KT&G’s strong
(BBB/Baa2) credit.”
Comfort did not come from credit alone. “What made a big
difference to investors was KT&G’s very clear articulation of what
their dividends are going to be,” says Andrews. KT&G assured
investors they would receive at least 1,400 won ($1.1) a share this
year, a slight increase from 2000; next year’s would move
alongside profits. As a result, KT&G walked off with the funds it
needs to brace its tobacco business against deregulation, from a
broader investor base, and without distorting its capital structure.
The government received a solid price for its shares and investors
added a defensive asset to their portfolio — KT&G still holds 80
percent of the market, and its operating margin continues to grow,
almost doubling from 15 percent in 1998 to 29 percent this year.
The moral: braving tough market conditions can pay off.
6. Haitai’s $321 Million Sale of Its Confectionery Business

to a Private Equity Consortium
Advisors: ABN Amro, JPMorgan
Haitai Confectionery has kept generations of South Korean

dentists in business since it started production in 1956. Over the
years, it has become the second-largest sweets and biscuits
producer in the country while diversifying into electronics, dairy

and construction. It even keeps its own professional baseball team.
The sprawl of businesses, however, didn’t survive the 1997
financial crisis. Haitai collapsed under $3 billion of debt and was
declared bankrupt in 1999. Since then, the company has been run
by a core group of creditors who have stalled liquidation by endless
court protections.
The breakthrough finally came in September this year. With ABN

Amro as advisor, Haitai Confectionery managed to sell its main
profit generator, the confectionery division, to Haitai Foods
Products, a company formed by a consortium of three venture
capital firms, CVC Asia Pacific, JPMorgan Partners and UBS
Capital. The price, $321 million, was accepted by a committee
representing the overwhelming 100-odd creditors.
The deal broke some interesting ground. The confectionery

division earned $33 million before interest and tax last year, on
group sales of $442 million, and was sold as a standalone
operation. The buyers assume no responsibility of the enormous
debt which the Haitai group is burdened with. Instead, the $321
million was calculated to cover the assets of the confectionery
business only.
At the same time, the buyers are not allowed to touch Haitai’s cash
reserve, which is left for the rest of the Haitai group. David Lai,
president of UBS Capital in Asia says: “There is a feeling among
the lenders and the creditors that a great Korean brand should not
be allowed to sink. After all, the confectionery business has
managed to do very well despite problems in other parts of the
group.” The consortium pulled off an impressive LBO to fund the
acquisition — a five-year revolving credit, a multi-tranche five-year
term loan and, for the first time in Korea, a seven-year term loan.
The syndication was received positively by both local banks and
insurance companies and was three times oversubscribed.
According to Martijn van de Wiel, assistant director of ABN Amro

Asia’s corporate finance, this acquisition was made easier by a new
piece of legislation in South Korea that makes it easier to approach
a large group of creditors. “In the past, the buyers either negotiated
private work-outs with individual creditors, or relied on a court-led
receivership process which can take up to nine months to arrange a
sale.”
Van de Wiel says the new option, known as the “pre-packed” plan,
makes approaching a group of creditors much quicker. It allows
the creation of a committee, led by the main creditors, to decide
the fate of the company as long as the plan is approved by at least
50 percent of creditors. The Haitai deal was the first Korean
acquisition to make use of the new law, took just over half a year to
close, and brings a glimmer of hope to Korea’s corporate reform.
7. CNOOC’s $1.43 Billion IPO
Advisors: Credit Suisse First Boston, Merrill Lynch, Bank of China

International
Rewind to October 1999: At a time of resurgent equity markets, the

China National Offshore Oil Corporation (CNOOC), or the star of
China’s privatization offerings, is seeking a listing. It should have
been a lay-up but, at an embarrassingly late stage, the deal is
pulled as bankers belatedly realize they have overpriced.
Painfully, CNOOC is pushed to the back of the privatization queue

to watch the two other members of China’s petrochemical holy
trinity, PetroChina and Sinopec, quickly come to market with a
pair of jumbo issues. It hurt because CNOOC is widely regarded as
the better company. The firm achieves about a 21 percent return on
capital employed, or about double what PetroChina and Sinopec
manage. It also has mammoth oil reserves (1.8 billion barrels),
attractive foreign partnerships and a progressive, investor-friendly
management team.
Fast forward to winter 2001: CNOOC again has clearance to issue.

But by this time global markets have absorbed about $16 billion in
China equity, investor sentiment has turned as sour as old milk, oil
prices are falling and Sinopec and PetroChina are both
underwater.
CNOOC and its banking troika press on and — following a pair of

exhaustive three-week roadshows; two teams fanned out to market
the deal — pluck victory from the jaws of investor malaise: They
release a shade under $1.5 billion into the New York and Hong
Kong exchanges on February 22. The firm sees its institutional
offering 5.7 times oversubscribed, finds sufficient demand to
exercise its greenshoe — an optional share placement banks can
make if the offer goes smoothly — and prices at the high end of the
indicative range.
CNOOC CFO Mark Qiu praises his investment bankers, describing

their efforts as “fabulous.” The kudos is all the more credible given
that Qiu was part of Salomon’s team that flubbed the 1999 offering
(Qiu, however, was impressive enough to be recruited into the
firm). “Typically failed deals are tainted in the market, but it didn’t
happen to CNOOC,” says Qiu. “The results show that CSFB, Merrill
Lynch and Bank of China were successful in separating market
conditions from the company’s investment thesis. Investors didn’t
say, ‘I don’t want to apply this time because the first time failed.’ “
CSFB bankers Douglas Reynolds and Nicholas Andrews, who were

both deeply involved in the CNOOC IPO, say the company turned
weakness to strength in its market reprisal. “Investors compared
what the company told them in terms of predictions for earnings
growth, production growth, investments, strategy, with what the
company told them the second time, and they found that the
numbers were consistent. CNOOC was meeting all its
benchmarks,” says Reynolds.
CNOOC has not disappointed. Oil prices have fallen by about a

third since CNOOC’s IPO, but its ADS remains well above issue
level and has handily outperformed PetroChina and Sinopec.
8. Hutchison Global Crossing’s $564 Million Financing

Package
Advisors: Citigroup, ABN Amro, Commerzbank
Hutchison Global Crossing (HGC) was set up in 1999 as a joint

venture between Hong Kong-based conglomerate Hutchison
Whampoa and Los Angeles-based telecom company Asia Global
Crossing. Its purpose: to build the first building-to-building fiber-
optic broadband network in Hong Kong. Looking for greenfield
financing for its capital and operating expenditure at the beginning
of this year, HGC was faced with more than the lack of investment
interest in the telecom sector in general, but also the challenge of
convincing investors that there will be good returns from what is
essentially a new technology from the market’s point of view.
Extra work was put into designing the structure of the offer to
garner confidence. It paid off in September, with the deal
becoming 40 percent oversubscribed. The lenders are promised
full security over assets and shares in HGC, including its valuable
licenses. In addition, they are guaranteed a part of the proceeds of
a future IPO as well as a 50 percent share of excess cashflows. “It is
often difficult to forecast revenue of a new telecom service. Lenders
to HGC will receive half of what is made in excess of original
expectations,” explains Saadia Khairi, regional head of project and
structure trade finance at Citigroup.
HGC may have sweetened the deal for lenders, but it retains full
operating flexibility and has the right to change business plans to
adapt to changing market conditions. The $564 million loan comes
in two tranches: a $282 million five-year facility at 145 pasis points
above the Hong Kong interbank rate and a $282 million seven-
year tranche at 180 basis points over HIBOR.
The bankers had a scare, however, when it became clear that the
HGC financing would be syndicated around the same time
Hutchison Whampoa was arranging a $2.65 billion loan for its 3G

activities in the UK. Worse, the 3G financing was syndicated
globally rather than in London, as was originally planned, and a lot
of coordination took place in Hong Kong, adds Khairi.
Fortunately, Hutchison Whampoa’s credit was enough for both. In

fact, the deal received such a good response in the sub-
underwriting stage that HGC could do without a costly and time-
consuming general syndication. The deal marks the first time a
non-incumbent carrier in Asia approached the project finance
market for major financing and its success is an important
indication of investors’ interest in opportunities available in the
non-traditional realm of the telecom sector.
9. Indosat and Telkom’s Resolution of $1.5 Billion of

Cross-Shareholdings
Advisors: Salomon Smith Barney, Credit Suisse First Boston,

Danareksa, Booz-Allen & Hamilton, NM Rothschild & Sons
The combined value of the equity and cash swap agreement

between PT Telekomunikasi Indonesia (Telkom) and Indonesian
Satellite Corporation (Indosat) came to $1.5 billion, making it the
largest M&A transaction in Indonesia to date. Yet, numbers aside,
the significance of the May deal is that it has changed the face of
Indonesia’s telecom industry for good.
The two telcos used to be the archetypal state-run behemoths of a

restricted sector, and their privatization in the 1990s did not alter
their dominance in the market. Telkom, 66 percent government-
owned, enjoyed a monopoly over the local fixed-line service while
Indosat, now 65 percent state-owned, held the satellite and IDD
networks. Indonesia has lagged behind the wave of telecom
liberalization in Asia these last few years.
The result has been slow growth, high prices and very little
innovation. Shareholders were especially miffed about how both
companies failed to cash in on the young and vibrant mobile
sector. The reason wasn’t hard to find. The two telcos enjoyed
monopolies over the country’s backbone networks, while the
mobile space as well as the numerous regional phone companies
were often run by foreign or smaller players. They were granted
licenses to do so by forming joint ventures with both Telkom and
Indosat concurrently, giving them the right to offer both local and
IDD services. The pressure to resolve the cross-shareholding came
from high places. The International Monetary Fund held back a $5
billion loan to the Indonesian government last year because,
among other things, it was not pleased with the speed of
Indonesia’s corporate reforms.
As a result, the two telcos are going to have their monopolies taken
away in 2003, thus forcing them to transform into integrated
telecom service providers in order to compete with new local
competitors and foreign players. The main contention was who
would get the crown in the jewel, Telkomsel. The largest mobile
network in Indonesia made $140 million in profit last year, while
Satelindo, its closest rival, lost $92 million. Both Telkom and
Indosat had stakes in both. “After almost six months of fighting
over who should get Telkomsel, we had to acknowledge that if we
didn’t change our stance, the cross-ownership would never get
untangled,” said Budi Prasetyo, Indosat’s executive vice president.
The agreement, hammered out with the aid of a staggeringly long

list of advisors, ended up pleasing both sides. Indosat didn’t just
get Satelindo as compensation. Telkom also handed over its stakes
in a data center called Lintasarta plus $364 million from its own
coffers. Since the sales, the two companies have been competing
head to head in virtually every segment of the market and injecting
life into the trouble-plagued Indonesian economy.
10a. UOB’s $5.7 Billion Acquisition of OUB
Advisors: Morgan Stanley, Merrill Lynch

10b. UOB’s $3.6 Billion Subordinated Debt
Advisor: JPMorgan
United Overseas Bank and its financial advisors appear to know

the art of war. When DBS Bank made an unsolicited bid to acquire
Overseas Union Bank, which followed Keppel Capital’s bid for
OCBC Bank, UOB was threatened with being left alone in a
consolidating sector. UOB had the option to fight an easy battle
with financially weaker OCBC over a cheap asset, or to fight with
the biggest bank in Singapore over an expensive bank.
UOB went for number one and scored a hands-down victory. Its
strategy was classic in its simplicity — understanding its
opponent’s strength. DBS had just acquired Dao Heng Bank of
Hong Kong for a widely criticized valuation of 3.3 times book
value. UOB knew this dented DBS’s financial strength, which
showed in its low-on-cash, high-on-shares offer for OUB. UOB
dwarfed it by offering four times as much cash. This was strong
enough for UOB keep the total value of its offer, S$10 per share, at
the low end of the range it was prepared to pay. “It was clear that
many institutional investors were focused on getting cash out,”
says Kalpana Desai, head of Asia Pacific mergers and acquisitions
for Merrill Lynch, which advised UOB. She explains: “In domestic
bank mergers, the share price of the offer almost always falls, so
it’s always good to have a hard cash underpinning. DBS could
always increase the share element, but we were reasonably
comfortable that they would struggle to increase the cash element.”
It was just what OUB investors wanted. In the afternoon of June
24, a day after DBS bid for OUB, UOB chairman Wee Cho Yaw
presented his offer to OUB chairman Lee Hee Seng.
The result was an irrevocable acceptance of the UOB offer by

shareholders representing 26.5 percent of OUB. This, coupled with
UOB’s cash-strong offer, deterred DBS from moving further. But
DBS added insult to its own injury by criticizing the potential
UOB-OUB combination as a design “to keep family control intact,
without regard to shareholder value.”
DBS lost not just face in apologizing for the conduct, but also the
sympathies of OUB investors, many of them individuals. UOB and
Merrill Lynch, OUB and advisor Morgan Stanley then educated

shareholders about the UOB offer, with the first “plain English”
offer document to come out of Asia — a prospectus that simplifies
the legalese with bullet points and color graphics — setting a
standard for transparency.
Not long after the victory, JPMorgan underwrote UOB’s

subordinated debt to strengthen its capital in a first-of-its-kind
deal in Asia. The result was a cheaper fundraising exercise even as
the market had been saturated with earlier DBS and OCBC issues.
“UOB was the last to do an acquisition and raise capital, but it
adopted a creative structure which was very capital-efficient,” says
Marc Jones, head of Asia Pacific debt capital markets at JPMorgan.
ADR
For more on deals and capital-raisings in Asia, see CFO Asia

(www.cfoasia.com).

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4/27/24, 11:47 AM Deals of the Year, Asia | CFO

By CFO Asia Staff

1. DBS’s $5.9 billion Acquisition of Dao Heng Bank

Advisors: Goldman Sachs, Morgan Stanley, JPMorgan, Merrill

In the beginning, the regulators said: “Let there be consolidation in

But Singapore’s standout bank deal of the year took place

So much for strategy. Criticism of the Dao Heng deal focused on

popular question,” says Michael Siu, a Hong Kong-based banking

But Goldman Sachs banker Rajiv Ghatalia, a principal architect of

For its efforts, DBS is now one of only a handful of institutions

2. Hynix’s $1.25 Billion GDR Issue

Advisor: Salomon Smith Barney

It was tough break for investors. Mark Mobius — the emerging

What is less appreciated is that the June 15 transaction saved

For all Salomon’s efforts, Hynix lives to battle in the gladiatorial

And Hynix is continuing its recapitalization. As of the end of

3. Huawei Technologies’ $750 Million Sale of Avansys to

Advisors: Morgan Stanley, JPMorgan

Trailblazers make the rules. Huawei Technologies and Emerson

Indeed, the deal’s quick completion is a tangible indication that

The thumbs-up came on October 21, three weeks before China

It helped that Emerson is a 13-year China veteran. The $15 billion-

Emerson may in fact have acquired Huawei on the cheap. As one

and mutually beneficial relationship with Emerson,” he says. And

4. SingTel’s $10 Billion Acquisition of C&W Optus

Advisors: Morgan Stanley, JPMorgan, Merrill Lynch

It was not an auspicious start. Investors took SingTel’s share price

At the same time, Kerry Stokes, the executive chairman of the

Optus shareholders were also concerned. Their telco had

SingTel’s own shareholders weren’t so pleased. The company’s

Other benefits of the much-discussed deal: SingTel has found a

5. Korea Tobacco & Ginseng’s $244 Million CB and $309

Advisors: UBS Warburg, Credit Suisse First Boston

Korea Tobacco & Ginseng (KT&G) and Korean finance ministry

protection and upside potential. The KT&G convertibles, no

6. Haitai’s $321 Million Sale of Its Confectionery Business

Advisors: ABN Amro, JPMorgan

Haitai Confectionery has kept generations of South Korean

producer in the country while diversifying into electronics, dairy

The breakthrough finally came in September this year. With ABN

The deal broke some interesting ground. The confectionery

According to Martijn van de Wiel, assistant director of ABN Amro

7. CNOOC’s $1.43 Billion IPO

Advisors: Credit Suisse First Boston, Merrill Lynch, Bank of China

Rewind to October 1999: At a time of resurgent equity markets, the

Painfully, CNOOC is pushed to the back of the privatization queue

Fast forward to winter 2001: CNOOC again has clearance to issue.

CNOOC and its banking troika press on and — following a pair of

CNOOC CFO Mark Qiu praises his investment bankers, describing

CSFB bankers Douglas Reynolds and Nicholas Andrews, who were

CNOOC has not disappointed. Oil prices have fallen by about a

level and has handily outperformed PetroChina and Sinopec.

8. Hutchison Global Crossing’s $564 Million Financing

Advisors: Citigroup, ABN Amro, Commerzbank

Hutchison Global Crossing (HGC) was set up in 1999 as a joint

Hutchison Whampoa was arranging a $2.65 billion loan for its 3G

Fortunately, Hutchison Whampoa’s credit was enough for both. In

9. Indosat and Telkom’s Resolution of $1.5 Billion of

Advisors: Salomon Smith Barney, Credit Suisse First Boston,

The combined value of the equity and cash swap agreement

The two telcos used to be the archetypal state-run behemoths of a

The agreement, hammered out with the aid of a staggeringly long