Bid for business
info exchange
Auctions are big business these days, especially in telecom. Huge prices are
demanded and paid for licences. Funding comes from financial institutions which
gained deep expertise in the structuring of these deals. But Rl is the first to see
how this expertise could become an additional service in the existing portfolio. In
a new move by a small team in Rl, that expertise has been revamped, repacked
and is now also on offer as consultancy. We ask Hessel Abbink Spaink, managing
director, ASC, to talk us through the opening bid.
Primary target
Reputationand referral
Adding value
Specific expertise
What's NewS Issue 5 August/September 2000
service station slots on freeways; airlines
are contending for landing slots. 'One
area that could prove a growth prospect is
sustainable development,' he continues.
'Since the Kyoto agreement on CO2 emis-
sions, heavy industry will be in the market
for licences. These are all areas where
ASC can add value.'
Although still in its start-up, ASC can al-
ready offer turn-key solutions for auction-
related issues. 'That's the general offering,'
Abbink Spaink explains. 'More specifi-
cally, we can provide advice on bidding
strategies, legal consultancy, valuations of
business plans, and market research and
analysis.' Add to that workshops on auc-
tion theory and strategy supported by
computer simulations and you'11 see that
the very small ASC team has covered a lot
of the options. Who will they be selling
this service to? 'Both governments (ven
dors) and operators are prospective
clients,' he says. 'However, operators are
our primary target group as they have
more requirements, both in terms of fi-
nance and consultancy. But we would take
on either type of player - although obvi-
ously not at the same time.'
ASC aims to bring in business initially
through the Rabobank organization and
through Eric van Damme's own extensive
network. 'We see the Rabobank compo
nent as one of our most important sales
channels during this start-up phase,' Ab
bink Spaink says. 'Professor van Damme
is often contacted by market players for
advice, so we'11 also be relying on his con-
tacts and networks as well as my own. Ba-
sically, that is how we see ASC taking off -
we want to build the business gradually
by reputation and referral.' The network
concept not only applies to marketing.
Abbink Spaink sees this idea as the cor-
nerstone of how ASC will work in the fu
ture. 'We have a whole lot of expertise
within Rabobank and we also have access
to outsourced knowhow. Our aim with
ASC is to bring essential expertise into
play when needed so that we always have
top teams with relevant knowhow to offer
our clients. Ir's all about professionalism -
that's how you build a reputation.'
If you'd like to know more about
Auction Strategy Consultants, please
mail ioost.jansen@utc.rabobank.com
We have quickly become used to the news
of staggering amounts generated by auc
tions as billion-bids rise by the minute.
But how does that work? Recently, British
Telecom (BT) successfully bid on German-
telecom licences, only to see its share price
fall due to concern in the market on
whether BT could come up with the ante.
'Auctions take place within the space of
hours,' confirms Abbink Spaink. 'And
prices can rise very high, very quickly. For
the financial institutions working with-
contenders on the bidding, you have to
have very specific expertise. In recent tele
com auctions we worked with Eric van
Damme, one of the world's top authorities
on the industry. We began to see that the-
expertise we had pulled together to sup
port our clients in the bidding had added
value in other areas.'
The result of this insight is Auction Strat
egy Consultants (ASC).Van Damme has
come on board through an exclusive con
tract with ASC. And the team is now
looking to recruit other top consultants
with instant name recognition in other
auction-sensitive fields. 'Telecom and me
dia are obvious areas,' says Abbink
Spaink. 'But there is a growing number of
industries which are using this instru
ment.' Oil companies are now bidding for
In the last three to four
years, the auction has be
come the most common
way of allocating licences
in areas as diverse - and as
lucrative - as telecom,
broadcasting, Utilities and
even environmental emis-
sions. This new instrument
has taken the place of the
oid-style beauty contest
which came in for criticism
in the mid-1990s. Says Ab
bink Spaink who has ad-
vised various governments,
including Russia, Hungary and the
Netherlands on auctions since 1994, 'the
trend started in the US and has since
swept through Europe in a big way. It has
become especially popular in Europe be-
cause it recognizes the fact that licences
are often related to deregulated and priva-
tized public facilities. When the beauty
contest concept was used, many of the fi
nancial benefits would ultimately end up
in the pockets of the participating compa
nies' shareholders rather than with the
general public. The auction has upped the
earnings generated by these licences by
selling to the highest bidder. Governments
are now picking up significant windfalls
and using them to cut taxes, pay off pub
lic debt and so on.' In addition, the whole
procedure has gained in transparency,
especially when the auction is carefully
designed.
