If 2007 was a difficult year for the leveraged loan market, then 2008 was a nightmare. After the sub-prime crisis in the summer of 2007 cut short what was until then a stellar year for those in the lending business, the banking crisis of September 2008 ensured that the year ended in an even bleaker fashion than it started.
Since that fateful fortnight in September when global capitalism seemed to be on its knees and every morning we were greeted by news of another bank collapsing, the leveraged market has been effectively dead.
However, it would be misleading to label 2008 a total write-off, as the winner of EVCJ’s LBO Debt Provider of the Year, RBS, demonstrates. The bank has been the most active underwriter and distributor of 2008, acting as bookrunner on 25 deals, worth over US$9bn, according to Thomson Reuters figures. Whilst this is a significant fall compared to 2007, RBS was still comfortably ahead of the rest of the pack in terms of deals done by transaction size.
Deal highlights include the €700m debt backing EQT’s buyout of SAG, a German power plant builder and operator; arranging the £906m package supporting First Reserve’s purchase of Abbot Group; syndicating Charterhouse Capital Partners’ £514m buyout of Tunstall Group from Bridgepoint; being part of the syndication group behind the £1.14bn financing of Montagu Private Equity’s Biffa acquisition; working on the £1.73bn Expro buyout by Candover, Goldman Sachs Capital Partners and AlpInvest Partners; the €900m buyout of French engineering group Converteam by LBO France; and the £1.1bn FoodVest deal.
RBS has also seen a strong market share growth in 2008. From January to October 2007, the bank had a 14% share of the European leveraged loan market. For the same period in 2008, this had grown to 17%, and as well as being a dominant force in the primary market has also been a top three player in the secondary loans market, trading £12bn in loans over the last 12 months.
In a challenging environment to say the least, RBS has been able to offer innovation and creativity in their LBO structures to bridge the gap between sponsor and investor expectations. For example, the Tunstall deal used an equity bridge, the first of its kind seen in Europe. The equity was provided by RBS Financial Sponsors Group and then refinanced with term debt, comprising both senior and mezzanine facilities.