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UBS Grabs Biggest Share of Australia M&A Since 2004

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UBS Grabs Biggest Share of Australia M&A Since 2004
UBS offices in the central business district of Sydney. Photographer: Ian Waldie/Bloomberg

UBS AG is taking the biggest share of Australian mergers advisory since 2004 after working on four of this year’s five largest transactions involving local companies, as deal making rebounds from a slump.

UBS, Switzerland’s biggest bank, has been involved in deals accounting for 42 percent of the $124 billion of mergers involving Australian companies this year, according to data compiled by Bloomberg. The company overtook New York-based Goldman Sachs Group Inc.’s local affiliate and Macquarie Group Ltd. to gain the top spot in Australian M&A advisory.

UBS’s bankers in Australia outperformed their colleagues in North America, where the firm ranks eighth in M&A, Bloomberg data show. While Bank of America Corp., based in Charlotte, North Carolina, and New York-based Citigroup Inc. added staff to local investment-banking units this year, UBS kept the size of its team steady at about 160, the largest among foreign banks.

“They haven’t needed to hire because they’ve lost very few people,” said Jon Michel, founder of Sydney-based financial recruitment company Jon Michel Executive Search. “It’s been a steady ship this year.”

Managing directors at Zurich-based UBS’s investment bank in Australia have been with the company for an average of 12 years, said Guy Fowler, 42, joint head of the unit with Matthew Grounds, in a Dec. 2 interview. That’s longer than the industry average, according to Michel.

This year will likely be the biggest for Australian M&A since 2007, helped by almost $50 billion of deals in the fourth quarter alone, according to Bloomberg data. The $52 billion of Australian transactions UBS worked on is the most in at least a decade, the data show.

Mining, Property Deals

UBS is advising ASX Ltd., which on Oct. 25 agreed to sell itself to Singapore Exchange Ltd. for A$8.4 billion ($8.1 billion). The bank is also working with AMP Ltd., the Australian asset manager that last month agreed with Axa SA to buy wealth manager Axa Asia Pacific Holdings Ltd. for A$13.3 billion.

Fowler, who has worked for UBS for 18 years, attributed his unit’s position to “long-term relationships.” UBS has advised AMP and ASX for at least a decade, according to Fowler. “When people want advice from someone, they typically work with people they’ve worked with before,” he said.

More acquisitions are likely next year in mining and real estate, and private-equity firms will also buy and sell more assets, according to UBS.

“There’s generally greater confidence,” said Anthony Sweetman, 37, UBS’s head of corporate advisory in Australia. “But there’s uncertainty about what’s going on globally, so it will continue to be solid but not spectacular.”

‘Still Cautious’

Appetite for acquisitions among corporate boards has yet to return to where it was before the global financial crisis, according to Sweetman. The value of deals involving Australian companies slumped to $63 billion in 2009, the lowest in six years.

“There’s more competition than there has been for assets, but there’s very limited examples of strategic parties bidding against each other, even in mining and resources, where there has been strong levels of activity,” he said. “That suggests buyers are still cautious.”

The euro zone’s sovereign debt crisis, which has stretched to a bailout for Ireland, has threatened to engulf Spain. In Australia, the economy expanded in the third quarter at half the pace economists forecast.

UBS, Australia’s biggest arranger of local share sales since 2006, is poised to retain that position after last month underwriting the sale of A$3.3 billion of Woodside Petroleum Ltd. shares by Royal Dutch Shell Plc.

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