Driving Asian investment for EMEA corporates
Head of EMEA ECM origination
Mizuho International plc
As the No. 1 Asian investment bank in equity capital markets in Europe, Middle East and Africa ("EMEA"), Mizuho Financial Group plays a crucial role in connecting the region's corporates with Asian investors, by leveraging its network across European corporates together with its unique distribution capabilities across Asia.
The Asian asset management industry is the fastest growing globally in terms of Assets Under Management where a significant amount of this capital is allocated according to investment strategies and across geographies. This has led to the EMEA region currently being targeted by a growing number of Asian funds, supported by its relative attractiveness versus the US, and the diversity of sectors and countries.
For European firms looking to conduct an initial public offering (IPO), the market is challenging – 25 IPOs failed in 2018 and so the opportunity to access new capital via Asia is extremely appealing. Asian investors are active in listed equities but can also support EMEA corporates during their listing process via:
- Pre-IPO investments: for instance, in July 2018 Temasek and RRJ Capital of Singapore invested in Gategroup Holding by subscribing to a five-year, mandatory exchangeable bond that will give them a 49% stake in the company upon conversion into shares.
- IPO cornerstones: in March 2018, Nippon Life of Japan acquired a 5% stake in DWS Group at IPO. This transaction was announced at the start of the bookbuilding and notified in the offering memorandum.
Asian investors have a natural leaning towards assets with an "Asian angle" – Asian-focused growth or industries with which local investors are familiar such as consumer, automotive and technology. Last year's successful IPO of French retailer SMCP attracted significant interest from Asian investors who were well aware of its increase in quarterly sales driven by Asian consumers.
Forward thinking European companies, particularly in these sectors, are well aware of this opportunity and are finding ways to engage with these investors more actively by creating dedicated local investor relations teams and by working with banks like Mizuho that can give them unique insight into the Asian investment space. Moncler took it a step further with a specifically structured tranche in its IPO targeted at Japanese retail investors exclusively.
In November, Mizuho was one of five bookrunners on uranium producer, Kazatomprom’s UK and Astana listings, along with JP Morgan, Credit Suisse, China International Capital Corporation and Halyk Finance. With Asia the largest buyer of uranium globally, the company’s decision to incorporate Asian expertise was unsurprising, ensuring genuine global interest.
This shift can be seen across the investment bank's 2017 European mandates, most of which have included a role as bookrunner as clients see the benefit of an Asian bank in the deal, with the corresponding access to Asian capital. Clients benefit further as a result of Mizuho's unique approach to leveraging Hong Kong-based research analysts for EMEA IPOs, which complements European and US efforts by engaging with investors located in Singapore, Hong Kong and Tokyo. Active marketing also includes non-deal roadshows and conferences. For South African mining firm Sibanye-Stillwater, launching its inaugural convertible bond in September 2017, Mizuho was able to source three immediate orders for a total of 45% of the deal, providing significant momentum for the book.
While European corporates have historically not been very focused on Asian investors, this is rapidly shifting. Investment banks such as Mizuho, with a firm foothold in both Asia and Europe, can be key to fast-tracking this process and unlocking attractive relationships and investments emerging from the Asian region.