RBS Leveraged Finance

The Royal Bank of Scotland (RBS) Leveraged Finance is one of the leading providers of senior and mezzanine debt finance for European leveraged transactions. In the current year RBS expects to lend in excess of GBP4 billion on over 200 leveraged transactions across Europe.

The success of RBS Leveraged Finance lies in its ability to offer its customers a genuine “one stop debt solution package”. Leith Robertson, head of RBS Leveraged Finance, elaborates: “We are aiming at offering to our customers a global debt solution driven by an efficient and proven internal delivery process.”

The Royal Bank’s acquisition of the NatWest Group earlier this year led to the immediate integration of the RBS Leveraged Finance and NatWest Acquisition Finance teams. The enlarged Leveraged Finance business is now a part of Corporate Banking and Financial Markets (CBFM), the newly created corporate banking and capital markets business of The Royal Bank of Scotland. CBFM is already the largest UK corporate bank, and with a market capitalisation of over GBP35 billion, the RBS Group is now one of the largest banks in Europe.

“Our enlarged business gives you a tremendous sense of scale,” enthuses Leith Robertson. “Working with a such a big balance sheet you really do feel you can do anything in the market that your customers require of you.” This increase in balance sheet scale is complemented by a complete product range. Leith continues: “We’ve got huge credit capability now. We’re big in securitisation, private placements and eurobonds, and we also have an emerging high yield capability.”

One hundred and thirty deal professionals now operate out of nine Leveraged Finance offices: six UK offices, and three continental European offices Paris, Frankfurt and Milan while a Spanish office will be opened within the next three months.

Eric Mallaroni, who is responsible for the Leveraged Finance businesses across continental Europe, points to this network of offices as a partial explanation for the continued success of RBS in Europe. “The strategy of having local people on the ground in Paris, Frankfurt has been very successful for us,” explains Eric. “And with the opening of an office in Madrid and the expansion of our existing Milan operation, we are very excited about replicating this success in the Southern European markets.”

2000 has been a record year for completions for RBS Leveraged Finance and the French and German franchises have contributed extensively to this.

The French team, headed by Michel Chabanel, has completed 13 deals in the first nine months of this year, underwriting more than e595 million of debt. Three deals particularly worth highlighting are: Bongard, Laho Equipement, Pollyconcept Group, Chemson Group, Elit Foenster, and WeruFor Bongard RBS arranged and underwrote the senior and mezzanine facilities for the acquisition of Bongard Industries. Bongard is the leading manufacturer of discontinuous bread-making equipment with 1999 sales of Ff555 million. RBS supported 3i, which provided equity funding.

For Laho Equipement, RBS arranged and underwrote the senior and mezzanine facilities for the acquisition of Laho Equipement, one of the French market leaders in the rental, sale and servicing of construction equipment. RBS acted in support of Nordic fund Industri Kapital.

For Pollyconcept Group (see page 16) RBS lead-arranged e160 million senior debt and co-arranged e50 million subordinated acquisition financing for the management buyout of Pollyconcept Group, a division of listed Dutch group Hagemeyer. Pollyconcept Group is the European market leader in the development and distribution of promotional and lifestyle products.

The German team, headed by Michael Foecking, has also had a successful year. In the first nine months 11 deals have been completed with more than e340 million debt underwritten. Three deals worth highlighting in detail are:

For Chemson Group (see page 16), RBS arranged the senior term loan and working capital facilities for the acquisition of Chemson Group Austria. RBS also advised on interest rate hedging and currency rate hedging and also acted as security and facility agent and has partly syndicated the debt facilities to a local bank. Chemson is a specialised chemicals company.

For Elit Foenster, RBS jointly arranged the senior term loan and working capital facility in the acquisition of Elit Foenster Group, Sweden. The cross border management buyout was led by Triton Advisers out of its Stockholm and Frankfurt offices. Elit Foenster is a producer of wooden and wooden/ aluminium windows that has a market share in excess of 30 per cent in the Swedish market.

For Weru, RBS jointly arranged the senior loan, working capital facility, and bridge loan in the DM240 million acquisition of the 95 per cent stake in Weru and in support of the tender offer for the minority shareholders to take Weru private. The transaction was led by Triton Advisers and the share package was sold from the UK-based Caradon. Interest rate hedging was also done by RBS. Weru is the leading German manufacturer of PVC windows as well as PVC/aluminium front doors.

In such a successful year, the acquisition of NatWest has quickly become old news. RBS Leveraged Finance is looking to continued success as it expands further into Europe.