Investment bank of the Week: UBS
Two high-profile mandates on deals worth more than $30bn combined are set to keep UBS’s capital markets and M&A bankers busy while they await news of further restructuring at the Swiss bank.
Thames Water this week appointed UBS to source financing for the construction of its controversial Thames Tideway Tunnel, which is intended to replace London’s creaking Victorian sewerage system.
The project, for which the UK government will act as backstop should it overrun or cost more than current estimates of £4.1bn ($6.6bn), is likely to involve both debt and equity financing and is expected to take seven years to complete.
UBS would not comment on its appointment but confirmed that utility and infrastructure bankers from its investment banking division will work on the project. Bankers on the deal have not been disclosed.
A spokesman for Thames Water declined to comment on the other banks that had been considered for the project, for which planning permission is yet to be obtained and which he said was not due to enter the construction phase until 2015.
Local campaigners have mounted protests against the project on grounds of nuisance and potential environmental damage.
Also this week, UBS announced that its corporate broking client BP has mandated it to act as financial adviser on the sale of its interest in the Russian oil company TNK-BP to Rosneft. Morgan Stanley is to act as principal financial adviser on the transaction. Credit Suisse, Goldman Sachs, Lambert Energy Advisory and Renaissance Capital are also advising BP.
The Russian giant is expected to pay $17.1bn in cash and shares representing 12.84% of its own market capitalisation, worth an additional $9.4bn, in return for BP’s 50% stake in TNK-BP. The total value of the BP sale is $26.5bn, according to Dealogic.
BP is planning to use $4.8bn of the cash amount to buy an additional 5.66% stake in Rosneft from the Russian government, which, in addition to its existing stake and the stake acquired via the sale, will take BP’s interest in Rosneft to 19.75%.
Hew Glyn Davies, vice-chairman of UBS UK, and Anna Richardson Brown, an executive director at the bank’s investment banking division, are involved in the deal.
The mandates are a fillip to the bank against the backdrop of impending job cuts, with The Wall Street Journal reporting yesterday that 400 jobs are expected to go in the investment banking division as well as in fixed income and equities.
UBS is ranked ninth in data provider Dealogic’s European debt capital markets bookrunner league tables for the year-to-date, seventh in equity capital markets and 11th in M&A.
