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Financial Expertise at Work: Inside Investor Article on Primeiro Partners

Primeiro Finance News
Primeiro Partners is a financial advisory firm based in Manila which provides independent strategic advisory services to leading companies, financial institutions and professional investors in the Philippines and the Asia-Pacific Region. Inside Investor wanted to hear more about the strategy from Stephen Sieh, managing partner of Primeiro Partners.

Q: Could you give a brief overview on the history of Primeiro Partners and its regional focus?

A: Primeiro Partners was founded in May 2012. It is an advisory investment bank focused on the Philippines and Asia Pacific region. Primeiro provides advisory services on capital raising, mergers and acquisitions, restructuring and other special business situations. I worked as a senior banker at Evercore and Lazard in New York, leading some of the biggest and most complex deals in history for the past 15 years, and was ready to start my own firm. I was very attracted by the opportunity to bring my global experience to Asia, especially the ASEAN region, and had a number of colleagues who were encouraging me to come here to do what I can do best, which is to advise leading corporations and sophisticated investors to reach their goals through independent, thoughtful customised advice and solutions.

Q: How is the company structured and who are the owners?

A: Primeiro Partners is incorporated in the Philippines, it is a privately held company. We are completely independent and unbiased. We are not trying to sell financial products to our clients, and we don’t trade securities of companies we advise, or their competitors. We believe that this independence allows us to have clarity of thought and integrity in the advice we provide to clients. If a transaction does not make sense to us and does not create sufficient value for our clients, or is overpriced, we will not recommend the deal, and look for a better solution.

Q: How do you find the companies?

A: Relationship, research and analysis. Often times, existing clients refer us to other companies as well.

Q: What have been your largest advisory projects lately?

A: We have just advised Century Properties on its first syndicated loan facility for up to 4.2 billion pesos, almost $100 million. The deal – which was closed this June – is innovative. It is the first multi-asset-backed, multi-draw, dual-currency syndicated facility for a Philippine real estate development company. More importantly, it was a well-timed and structured transaction that capitalised on a favourable interest rate environment and provided Century Properties committed long-term financing for several of its projects at once. We are currently also active in Thailand where one of our assignments entails strategic and financial advisory on a renewable energy project for over 160 megawatts of power generation.

Q: What has been the largest projects ever?

A: The largest project I was involved in the US was the sale of General Motors in 2008 and 2009. Outside of the US it was an exchange offer for Daewoo in South Korea back in 2000. General Motors ranks as one of the largest successful corporate reorganisations in the US history. The transaction avoided the liquidation of General Motors and saved over 1 million jobs directly or indirectly. I remember, in late 2008, when General Motors was running out of sale options and liquidity, wondering if it would just go dark and stop operating. That was certainly a very possible scenario that would have had a significant negative global impact. As part of this very complex transaction, the US government committed investing up to $50 billion in loans, and ended owning over 60 per cent of the New General Motors. Outside of the US, I was involved with Daewoo, one of the largest chaebols in Korea. Back in 2000, we structured, negotiated and executed the exchange of Daewoo’s foreign debt of over $5 billion for cash. At the time, it was the largest international bank debt exchange transaction ever and was a huge success given that it involved over 300 foreign banks all over the world.

Q: What role does the mergers and acquisitions business play in the Philippines?

A: Significant mergers and acquisition activity is a key benchmark for a growing and robust economy. A positive M&A environment encourages entrepreneurship by providing stakeholders another avenue for exits. M&A also allows corporates to realign their businesses to focus on their core-competencies, and/or accelerate their own growth plans. Finally, it allows financial players to invest their know-how and capital to fulfill a company’s full value potential. There are a number of industries where local M&A and cross-border M&A should take place. The Philippine banking industry, for example, is highly fragmented, there are too many local and regional banks that could be better managed and capitalised. I also believe it would benefit the Philippines to have larger, more competitive banks that are better positioned to compete in the ASEAN region. Another industry that shows significant promise is mining. The Philippines is considered to be the 5th most mineral-rich country in the world for gold, nickel, copper and chromite worth over $840 billion. But to encourage foreign investment and partnership with global industry leaders, the government needs to amend certain foreign ownership restriction measures and mining reform laws.

Q: What is the demand for financial advice in the Philippines?

A: There are a lot of great companies and businesses here. Fortunately, today we have an increasing number of capital alternatives brought by international and local investment and commercial banks, private equity firms, hedge funds and strategics. Companies here and in ASEAN countries, are no different then the best companies in the US and Europe, they need conflict-free financial advice on how to seek and select their best alternative, and ensure first-rate execution. Primeiro is unique, we have worked on the most complex global transactions sponsored by some of the world’s most sophisticated institutions, and have significant experience helping our clients navigate through the various options, always as an independent advisor where the clients’ interest is above everything else.

Q: How will the ASEAN Economic Community affect your business?

A: Positively: The more open the market, the more the region and its businesses develop. There are more companies looking for opportunities and partnerships, to do that they need capital, know-how and advice.

Q: What major IPOs do you expect for the rest of the year and for 2014 in the Philippines?

A: There are a few major IPOs that are planned for the next 12 to 18 months. Two of the larger ones are Travellers International Group and Robinsons Retail Group.

Q: The capital markets of some ASEAN economies, including the Philippines, seem to have hit a road bump lately. What is your forecast for the regional markets in the mid-term?

A: ASEAN economies and capital markets are not immune to the impact of US monetary policies and the impact of China’s economic slowdown. However, some of the ASEAN countries are better positioned to weather this global rebalancing than others. The Philippines is one of them, it has over $90 billion of reserves and a current account surplus. In addition, the vast majority of the revenues of listed companies here are derived locally. So I am fairly optimistic that on a relative basis the Philippines capital markets should outperform several of its Asian counterparts – particularly those that are exporters of natural resources to China.

Q: What are your international partnerships? Are you planning any expansion within the region after the ASEAN Economic Community eventually comes into effect?

A: We have a number of international groups that have reached out to us for partnerships, but we have not yet formalised an alliance. There are two areas where we would like to expand. One is broadening our advisory business platform with senior independent advisors who share our vision and integrity, but seek to better serve clients with broadened know-how and relationships. The second is developing a pool of alternative capital providers to pursue opportunities that traditional bank lenders and capital markets cannot fulfill due to regulatory, collateral, size, risk tolerance and various other factors.

Date: 5 Sep 2013
Source: Investvine - A News Portal of Inside Investor

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