'Stars align' to put UBS in top spot

Europe's biggest bank, UBS AG, has unseated Deutsche Bank AG as the top merger adviser in Australia.

The Australian market produced a record US$544 million ($749 million) of fees this year and more transactions than Japan - an economy that is eight times bigger.

Zurich-based UBS's team of Australian merger bankers, led by Chris Mackay, 41, worked on more than half of the nation's $102 billion of announced deals, or about 6 per cent of all mergers worldwide, data compiled by Bloomberg show.

Deutsche Bank, No 1 last year, slipped to fifth this year. Macquarie Bank, the country's largest publicly traded securities firm, was second.

Woolworths, Australia's biggest grocer, and Alinta, a seller of natural gas in Perth, are among the companies taking advantage of the lowest interest rates since the 1970s and surging equity prices to make purchases.

Australia's S&P/ASX 200 stock index rose to a record 3941.90 on December 2.

The index has gained 19 per cent this year, almost tripling the advance of US benchmarks.

"The stars have aligned," said Steve Bennett, 47, UBS's head of mergers origination in Australia, who joined the bank from Bankers Trust Australia in 1999. "We've seen local companies consolidate and larger players expand offshore."

Completed deals in Australia are valued at US$66.3 billion so far this year, compared with US$50.2 billion in Japan, Bloomberg data show.

It's the first time since at least 1999 that Australia's market was busier than Japan's. Those deals generated US$544 million of fees for Australian bankers in the first nine months this year, said Freeman & Co, an industry research firm in New York.

Australia, with a gross domestic product of $509 billion at the end of September, is about one-eighth the size of Japan and ranks 14th in the world behind countries such as the Netherlands and India, data from the International Monetary Fund show.

Japan is the world's No 2 economy after the US. Australia's economy has expanded for 13 consecutive years.

"The economy is strong and we've got companies with strong cash flow looking to expand," said Matthew Williams, who helps manage US$7.4 billion of stocks at Perpetual Investments in Sydney.

Transactions involving Australian power, commodity and property companies account for about 35 per cent of this year's announced deals, with buyers attracted by rising prices for commodities such as coal and iron ore.

UBS worked on 46 announced transactions this year valued at a combined US$63.1 billion.

Macquarie Bank placed second, handling 42 assignments worth US$45.7 billion.

The record mergers pace is forcing firms, including UBS, to scour for bankers. Trevor Loewensohn, 44, former Australian head at JPMorgan Chase & Co, joined UBS a year ago.

JPMorgan then hired former UBS property banker Andrew Pridham, 38, in May to head investment banking in Australia and New Zealand.

New York-based JPMorgan, the No 2 US bank, jumped to third among merger advisers from 12th last year.

 

JPMorgan banker David Di Pilla, 34, advised US-based Duke Energy Corp on the sale of pipelines to Alinta in March. About three months later, he was recruited by UBS with four of his colleagues.

Frankfurt-based Deutsche Bank fell to fifth this year from first among merger advisers in Australia, collecting 21 assignments valued at US$31.8 billion, Bloomberg data show.

- BLOOMBERG