Developments in equity operations
corporate finance
Last month, in a further step to realign our operations to address changing
market needs, our equity businesses which operated in Amsterdam and London
were fused into a new entity, Rabobank International equities (RIE), which is
now operating under Rl corporate finance. The aim is to further our strategie
objective to become a highly-rated equity house more closely associated with
our acknowledged fields of specialization.
Home front
Core focus
Proceeding efficiently
Reinforcing capabilities
What'sNewS Issue 3-Maren 1999 9
According to Andries Mak van Waay,
global product manager equities, 'our
corporate clients increasingly want
integrated strategie advice and we find that
when corporations talk about mergers and
acquisitions (M&A), disposals and so
forth, it almost always involves some
capital markets and some equity
transactions. By bringing the two together
- the equity origination and the corporate
finance/structured finance activities - we
can present a single face to the market and
provide corporate clients with the entire
spectrum of available
products and services. As
a result, we will be more
accurately tuned to their
needs in origination or
M&A, and will start to
cultivate better
relationships with their
top management.'
In fact, the merger of the
international and Dutch
equities operations is
the expression of a clear
two-pronged strategy.
The first prong will see us continue to
build up our regional and geographic
strength in the home market, the Benelux.
We will focus more broadly on lead
management for mid-cap companies in all
business sectors as well as playing
important roles in larger transactions
(including all deals for our core clients):
this is one geographic niche where our
rating, size of our balance sheet, and
quality of our research should all prove
strong advantages. One recent example of
how we can leverage the capabilities of
RIE with the strong retail distrihution base
of the local banks was our lead-
management in the flotation of Detron
NV, a growing telecoms group which was
heavily oversubscribed in the run-up to its
listing on the Amsterdam stock exchange
Andries Mak van Waay
in late February. However, Mak van Waay
cautions against complacency: 'we
shouldn't forget that we still have a lot of
work to do as we try to broaden our hold
on the mid-cap market.'
The second prong in the RIE strategy is to
focus more intensively on our three core
sectors - food and agribusiness (F&A),
pharma/health care, and first-class
financial institutions. 'Our aim is to play a
senior position in primary equity issues for
companies in these fields
throughout Europe, offering
top-quality advice and
distrihution,' says Mak van
Waay. 'We will also commit
capital to facilitate cliënt
transactions. In those three
core sectors, we should also be
able to provide the highest
quality research available on
the market. After all, research
is almost the biggest value-
added product that we have.
The processes that lie behind
any primary deal are fairly
easy to learn, while it's
significantly harder to copy the kind of
top-quality research that gives us a
competitive edge.'
Geographically, London (and in the future
New York) will provide sales teams
specializing in the target sectors;
Amsterdam, London and ultimately New
York will house the Benelux sales force;
for trading and all syndication,
Amsterdam will act as the hub. Another
important development goes to the heart
of the issue of operating efficiency.
Discussions are underway to see whether
and specifically how RIE's back and
middle-office operations can be integrated
into those of Rabobank Nederland
securities services (RNSS). While a
Ftoris Henning
decision has not yet been finalized. Mak
van Waay is positive about the prospects
and says 'this is potentially the most
efficiënt and sensible way to proceed. We
really need to huild the strongest possible
platform for further growth.'
Floris Henning, head of RNSS, places this
possible 'outsourcing' from RIE to
Rabobank Nederland in a group-wide
context. 'For a long time, we've all been
under enormous pressure to keep pace
with new
business. At
member
banks, for
instance,
volume has
doubled over
each of the
last three
years. There
have also
been the
issues of euro
compliance
and the
millennium bug to deal with. Until now,
therefore, it's been hard to find time to sit
down and exchange conceptual views on
strategie synergy: the more immediate
priority was simply to maintain business
continuity. Now, there's a realization that
our higher market profile requires that we
work to higher standards. We all recognize
the importance of figuring out how we can
best fit our capabilities together.
Irrespective of whether we come from
RNSS, global financial markets, RIE or
wherever, the key is that we all reinforce
each other to ride through the ongoing
market turbulence. What RNSS brings to
the table is infrastructure, processing
facilities and expertise on all aspects of
securities processing from custodianship to
execution; we don't want to take over any
commercial business responsibilities, only
facilitate them in cooperation with our
colleagues.' Thus, ties between RIE and
RNSS should provide maximum
economies of scale, allow for further
development in the qualitative aspects of
our two-pronged equities strategy, and
open possibilities for expanded
cooperation with other parts of the
organization and particularly with
member banks.
