Exclusive: UBS was mystery lender for Thai group's Ping An buy from HSBC - sources

Thu Apr 4, 2013 2:08pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Michael Flaherty, Elzio Barreto and Denny Thomas

HONG KONG (Reuters) - The mystery lender behind a Thai billionaire's $9.4 billion purchase of a stake in China's No.2 insurer was UBS, people with direct knowledge of the matter told Reuters, revealing how the bank stepped in at the last minute to offer a complex financing package known only to a few involved.

The Swiss bank's financial backing for China's largest ever foreign stock purchase explains how a Thai conglomerate scraped together $7.4 billion in cash for the deal's final payment, after its main lender backed out at the 11th hour.

The white knight role played by UBS AG in the deal - CP Group's purchase from HSBC Holdings Plc of a 15.6 percent stake in Ping An Insurance Group Co of China - has gone unreported until now.

People with direct knowledge say that UBS backed the deal with two financing facilities. The major piece of that package is a five year, roughly $5.5 billion loan, one of the largest loans of its kind ever extended in Asia, according to Thomson Reuters data.

For the help it provided, UBS is set to earn another milestone. People familiar with the matter say the bank is expected to reap, over time, about $100 million for its effort, which would make it one of the largest fees ever earned by one bank for a single transaction in Asia, Thomson Reuters data shows.

Such an extraordinary arrangement with a prized client, Thai billionaire Dhanin Chearavanont, is both a rare move for UBS and signals a key shift in strategy - both for the bank and the industry.

The Dhanin deal shows that the investment bank is focusing more on high margin transactions rather than standard deal flow. The aim is to cater more to faithful, fee-paying clients and constructing deals for them that may be higher in risk, but also higher in reward.

That strategy, taken on by rivals as well, comes at a time when investment banking revenues are under pressure, in part from a drop in the high-fee business of equity capital markets banking across Asia and other parts of the world.   Continued...

The logo of Swiss bank UBS is seen on a building in Zurich, February 13, 2013. REUTERS/Michael Buholzer