Adapting to change
As macroeconomic uncertainty weighed on market sentiment for most of 2022, Standard Chartered stepped up with sole and repeat mandates as well as key roles in high-profile financings. For its risk-taking and successful distribution in volatile conditions, the bank is IFR Asia’s China and India Loan House of the Year.
China’s prolonged coronavirus lockdowns and property crisis threw up challenges for arrangers of loans, but Standard Chartered’s determined pursuit to bring debut borrowers and reintroduce credits from certain industries saw it spearhead lending activity.
Despite the challenging market backdrop, the bank won 19 sole mandates on loans in China and Hong Kong during the year, more than any competitor. In India, where sole mandates are hard to come by on most borrowings, let alone event-driven financings, StanChart snared two acquisition loans on a sole basis.
“Our ability to provide time-sensitive financing and funding certainty to borrowers despite the difficult market backdrop allowed us to continue to step up and deliver for our clients in complex, event-driven situations,” said Amit Lakhwani, head of loan syndicate for Asia Pacific. “We prioritised sectors with strong tailwinds from an origination standpoint and structured transactions to tailor to investor demand and requirements.”
The loans it led as sole bookrunner in India included a US$800m borrowing for Vedanta Resources and a US$166m facility to refinance debt for Advent International-owned Manjushree Technopack that attracted seven lenders at close in March.
StanChart showed its read of liquidity with the loan for Vedanta Resources, structuring it to tap institutional investors instead of the bank market, which had shown limited appetite for the credit in previous years.
Vedanta Group required the multi-tranche loan to buy an additional 4.5% stake in India-listed Vedanta. The borrowing was structured with multiple tenors of up to two years and features such as security over Vedanta’s shares, deleveraging milestones, specific sources of repayment and a capped flex linked to the borrower’s outstanding bonds. The structural enhancements made the transaction more attractive to institutional investors than investing in Vedanta’s bonds.
StanChart sold down US$475m of the US$550m longer-term tranches within four months despite the volatility arising from Russia’s invasion of Ukraine in February and expectations of rising US dollar interest rates that pushed secondary spreads wider for high-yield Indian corporates.
Other sole mandates included a HK$5.75bn (US$734m) five-year loan for Shui On Centre with 11 lenders joining in syndication, the company’s first asset-backed syndicated sustainability-linked loan, a HK$3bn three-year loan for Hong Kong-listed information technology services company Chinasoft International and a US$250m three-year green loan for photovoltaic module and smart energy solutions provider Trina Solar.
StanChart also led debut loans for seven borrowers from China, six of which were privately owned enterprises including chemical products manufacturer LB Group, waste recycling firm GEM and Hong Kong-listed industrial park operator China Electronics Optics Valley Union Holding.
On financings with multiple bookrunners, StanChart’s roster was no less impressive. It was one of three underwriters on the biggest debt financing in India in 2022 – a US$5.25bn package for Adani Group’s purchase of a controlling stake in Swiss building materials firm Holcim’s cement businesses in India.
The borrowing was Adani Group’s largest and is split into a US$500m six-month tranche, a US$3bn 18-month loan, a US$1bn two-year mezzanine portion and a US$750m two-year share-backed financing. The MLABs managed to de-risk themselves with 11 banks joining the senior and mezzanine loans in syndication.
Other successfully syndicated leveraged loans for StanChart as joint bookrunner included a US$330m borrowing backing private equity firm CVC Capital Partners’ buyout of chemicals maker Sajjan India that closed to a strong response with 14 lenders joining in syndication, and repeat mandates from Baring Private Equity Asia for dividend recapitalisations in India – a US$120m borrowing for cash logistics company CMS Info Systems completed in May and a US$276.4m loan for IT services firm Coforge wrapped up in September.
StanChart also stepped up to deliver bespoke structuring and time-critical financing solutions. It was one of the two original leads on a US$1.5bn three-year loan for FWD Group to enable the listed entity to inherit the loan upon completion of its IPO (the pan-Asian insurer is planning to list in Hong Kong). The borrowing attracted eight other banks, including two new lenders introduced to FWD.
StanChart also played a key role in arranging and underwriting a €3bn (US$3.42bn) three-year loan for Midea Electric Netherlands, a unit of Midea Group. Given the large size, the bank helped formulate a two-stage syndication strategy to draw in market liquidity from seven other lenders despite the tight pricing.
Despite a subdued outlook for Hong Kong’s office market in the wake of travel restrictions and hybrid working, StanChart, as one of two physical bookrunners, successfully syndicated a HK$10.339bn loan for a consortium comprising private equity firm Gaw Capital Partners and Hengli Group. The loan, which drew 13 banks in general syndication, refinanced a borrowing that backed the consortium’s purchase in 2019 of two office towers in the Taikoo Shing area in Hong Kong.
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