UK and Singapore alliances fight off Australian firms to win top bank work

UK and Singapore alliances fight off Australian firms to win top bank work

Consolidation among Singapore's banks has proven a field day for local and UK firms. UK firms with joint venture arrangements stole a march on US and Australian rivals, scooping instructions from the banks and their advisers.
Bid and counter bid amid the country's banks has caused a flurry of lucrative M&A activity. Freshfields Drew & Napier partner David Simpson said: “This market is the biggest thing around.”
Freehills is the only Australian firm with a formal legal joint venture in Singapore. But its relationship with Alban Tay Mahtani & De Silva did not furnish access to Singapore's biggest M&A bonanza.
In May 1999, the Monetary Authority of Singapore stated that the country would only be able to sustain two major local banks. An anticipated second phase of banking liberalisation could grant foreign banks access to the domestic retail market. Both these factors induced efforts for banks to become as big as possible.
The dust has settled and the deals are done. Five banks have become three, following United Overseas Bank (UOB) outbidding Development Bank of Singapore (DBS) to take over Overseas Union Bank (OUB). To shore up its position at the smaller end of the market, Oversea-Chinese Banking Corporation (OCBC) acquired Keppel Capital Holdings.
The successful bids were masterminded by Linklaters & Alliance joint venture partner Allen & Gledhill, Wong Partnership and Freshfields Drew & Napier. Allen & Gledhill advised OCBC as it swooped on Keppel, but had a less successful outcome from its involvement with DBS, which was beaten by UOB in its bid for OUB, a move that has seen it relinquish its position as Singapore's largest bank.
Lee & Lee, Lovells' joint venture partner, represented OUB. Keppel was advised by Herbert Smith ally Arfat Selvam & Gunasingham.
One local lawyer argued that, as these are essentially domestic takeovers, there was no reason to instruct international firms. But takeovers, particularly hostile ones, are unusual in Singapore and the banks have taken external financial advice.
Morgan Stanley advised OUB on the competing bids from DBS and UOB. Herbert Smith acted for Morgan Stanley.
Chris Parsons, Herbert Smith's head of corporate in Asia, said: “Our international expertise enabled us to provide creative and practical advice on a variety of complex issues, many of which arose because the competing bid situation was largely uncharted territory for the Singapore companies and regulatory authorities involved.”
UOB financed its acquisition of OUB through issuing a S$1.3bn (A$1.39bn/ £490.84m) subordinated note. Chase Manhattan, UOB Asia and Merrill Lynch Singapore were the underwriters. This consortium was advised by Allen & Overy Shook Lin & Bok.
In terms of size, Singapore's banks are now positioned with the merged UOB/OUB as the largest, followed by DBS and then OCBC/Keppel.