SEBASTIAN Grigg looked even more ebullient than usual when I bumpedinto him at the weekend. The Credit Suisse investment banker was as pleased as could be about the manner in which Nat Rothschild’s new acquisition vehicle Vallares had managed to raise £1.3bn in funds, with Grigg’s bank as the lead adviser.
Grigg is not the man leading the deal. That is George Maddison. But the bank, which was also one of the many involved in the Glencore flotation, has now raised funds for three so-called acquisition companies; Vallares, Vallar (also Rothschild) and Hugh Osmond’s Horizon, and there is a lot of collective kudos being shared out as a consequence of its involvement in such deals.
But why, when the market for new companies is so nervy amidst talk that the IPO market is effectively closed, has Vallares managed to raise £1.35bn, 35 per cent more than it intended, so quickly and so easily?
Obviously the personalities involved play a large part. Rothschild himself is fast gaining a fan club, with shares in Vallar more than 20 per cent ahead of their flotation price. He is also supported in this venture by former BP chief Tony Hayward and ex-Goldmanite Julian Metherell.
The board is full of heavy-hitters too, such as Jim Leng, the man who is widely credited with scuppering Rio’s planned shareholder exchange with Chinalco, which he thought gave too much power to the Chinese.
Paradoxically, the very problems affecting the IPO market in Europe are perhaps playing a larger part in making acquisition vehicles attractive.
“We know that when we want to make an acquisition, we are in a good position to buy companies because they will find it very tough to IPO,” said one source close to the deal. “We can offer a readymade structure.”
Meanwhile, Goldman Sachs had something to celebrate yesterday after the bank won the joint brokership to Balfour Beatty.
The win is the latest sign that Goldman, who poached top corporate broker Phil Shelley from UBS in December, is taking even the mid cap broking market in London seriously.
Joint brokers to the company, which was previously advised by Bob Pringle at RBS and JP Morgan Cazenove, are Bank of America Merrill Lynch.
Corporate broking in itself is not the most profitable activity for investment banks but it creates a relationship and can lead to other business. Goldman’s intent is clear. Expect more brokership wins shortly.