'We are No 4 in M&A space'

Frank Hancock, managing director, ABN Amro Asia Corporate Finance, is based in New Delhi. But he travels very often to Mumbai. The financial capital of the country offers more opportunities to his company. During a recent visit to Mumbai, he spoke to Kausik Datta on where ABN Amro is placed among investment banks and also its future plans. Excerpts:

This has been a fascinating year for you.

It certainly has. The Indian merger and acquisition (M&A) scene has exploded and we have been involved either as bankers or advisers in four of the top-five M&A transactions this year so far. In March, we advised and funded Tata Steel's $12 billion acquisition of Anglo-Dutch steelmaker Corus, the country's largest international acquisition so far. The third-largest deal was the $6 billion Novelis acquisition in April by Hindalco, where we were one of the funding banks of Hindalco, though we did not advise it. The fourth-largest happened in mid-July "" the $2.7 billion privatisation of Istanbul's second airport in which GMR Infrastructure holds a 40 per cent ownership interest. We advised GMR. The fifth-largest deal was Suzlon's $1.6 billion acquisition of REpower, which we both advised and funded in May. In short, we were associated with all the top-five deals except the second-largest transaction, Vodafone's acquisition of a majority stake in Hutchison Essar.

What does the increase in M&A activities mean to Indian companies?

The M&A scene in India is becoming interesting day by day. The total size of deals in the first six months were $45 billion, more than the last year's $40 billion. In order to put the numbers in perspective, please remember that the total M&A deal size was $25 billion in 2005. A chunk of the deals is going to Europe, where we have a very strong franchise. We are giving more importance to this market.

How are you doing it?

We are investing the time and energy of our top M&A professionals drawn from specific geographies and tapping into the deep knowledge of their markets. For instance, Remco van der Pol, a senior banker in our Dutch business, was recently in India. We are the number-one financial adviser in Holland and are confident that we will see some ¤ 500 million-plus transactions coming out of that market. We have similar initiatives in place with our M&A teams from Belgium, France, Germany and the Nordics.

Are these deals in the pipeline?

Indeed they are. In fact, we see not just Holland, but the entire Benelux region as one, where we will complete deals for Indian acquirers in the next few months. In this region, labour laws are not too onerous, the English language is widely spoken and the region can serve as a base for continental European expansion.

Where are you in the M&A league?

We are number four till date this year.

Where were you two years ago?

We were nowhere in 2005. We are now at the number-four slot.

How do you explain this rise?

The increased importance of cross-border M&As, especially in our home base Europe as a proportion of the total M&As, explains our rise. We had been scoping the market in advance and were better prepared than our competitors to service our Indian clientele with ideas, structuring capability, and balance sheet support "" the three things that they all look for. We see this trend leading to a structural change in the M&A advisory market and it is no surprise that it is the so-called universal banks like us who have benefited.

What is the fate of domestic investment bankers?

The globalisation of M&As has raised the competitive bar for those investment bankers who are domestically focused. Although they can still dominate their domestic market, the domestic arena is no longer where the bulk of the action is in the M&A game. So they will need to respond by tying up with banks like us who can provide the services and ideas that clients are looking for.

Is there any geography where you are very strong?

We regard all of Europe as our home market. We are also particularly strong in the so-called Bric economies, especially Russia, China and Brazil, in addition to India.

Will you be affected by the new banks coming to India?

Not really. I think the margins will come down. But Indian customers are very sophisticated and relation-oriented. Our core relationship with our customers is intact despite increasing competition.

What is your plan in the private equity space?

ABN Amro has built a significant merchant banking business globally "" investing our own capital on deals "" which is now run out of London by a colleague called Matthew Kirkby. But we have not deployed this capability in India as yet. Going forward, one of the ways we are planning to sharpen up our product offering in India is that we will be looking to build scale in India and make PE investments in unlisted Indian corporates, where in addition to the standalone investment case, there is the opportunity for us to deploy the rest of our product suite. The strength of our product offering in India is one of the factors that makes us stand out against the competition and we trust that this capability will enhance what we already have on hand to offer our clients.