DealZone

If you see Sid, tell him. Tell him his help will be needed to swallow more UK equity than at any time since the flood of privatisations in the 1980s.

That’s the clear message from UK Financial Investments, the body that holds stakes in Royal Bank of Scotland, Lloyds Banking Group and nationalised banks. Those stakes are likely to be worth about 80 billion pounds.

“We will need to innovate, be imaginative in our approach and use the full range of sales methods available to us,” John Crompton, head of market investments at UKFI, says in a speech at Reuters offices in London.

Crompton says nothing has been decided on timing, price and how long the sell-down will take. But UKFI is expected to test investor appetite some time next year with an institution placing of several billion pounds. That could include structured transactions, including exchangeable debt issues.

Once markets stabilise, shares are likely to be offered to retail investors. That’s due to the scale of the disposal, but also to allow the public to share in any profit from the taxpayer led bail-out.

The explosion of interest in high-frequency trading has started to drag new faces to sometimes staid industry conferences. Traders who for years worked on algorithms and computer codes behind the scenes are stepping into the spotlight. They’re appearing on more and more panel discussions, feeling the need to defend their practice against the slings and arrows of politicians and regulators.

So far, they’ve managed to mix exasperation with good humor. The head of one high-frequency trading shop, speaking on a panel this week, said that if you believe everything you read in newspapers you might think the practice is “an unfair, highly profitable and socially useless trading strategy implemented by highly secretive and unregulated traders using superfast computers to compete with retail investors, manipulate markets and front run flash orders causing volatility in the financial markets and creating systemic risk.”

He argued that a more accurate definition of high-frequency trading would be, “a wide variety of highly competitive, low margin trading strategies implemented by professional market intermediaries who have invested heavily in technology that have the effect of making the markets more efficient by enhancing liquidity and transparent price discovery to the benefit of investors.”

Highlights from this week’s Thomson Reuters Investment Banking Scorecard:

“Islamic Financing Reaches $10.9 billion

“Malaysia state oil company Petronas lifted the volume of Islamic financing for year-to-date 2009 with a $1.5 billion sukuk offering that was part of a $4.5 billion global financing package via CIMB Securities, Citi and Morgan Stanley. Year-to-date, Islamic financing volume has reached $10.9 billion, a 30% decline from last year at this time when new offerings totaled $15.7 billion.

“Issuers from Malaysia, Saudi Arabia and Pakistan have accounted for over 80% of this year’s Islamic financing activity, while Energy & Power companies have raised just over 40% of the overall proceeds in the market this year.

“Infineon Offering Marks Biggest EMEA Tech Deal

“A $1.0 billion secondary offering from Germany’s Infineon Technologies marked the biggest high technology equity offering in Europe, Middle East and Africa this year, bringing activity in the sector to $2.4 billion, a 52% increase from last year at this time.  Excluding financials, EMEA follow-on activity totals $78.5 billion for year-to-date 2009, an increase of 72% over 2008.

Highlights and low points — syndicated loans, for example, at their lowest since 1993 — from the July Thomson Reuters Investment Banking Snapshots:

DEBT CAPITAL MARKETS

Asia Pacific & Chinese Issuers Reached New Corporate Bonds High in July – Asia Pacific issuers raised a record US$41bn in July, up 11% from June 2009 (US$43.3bn) and double the level of July 2008 (US$24.1bn). Chinese issuers accounted for 49% of the regions’ activity with a record US$23.4bn raised, up 3% from June 2009 (US$22.7bn) and up 218% from July 2008 (7.4bn). Financials (US$16.2bn, 70%) and Materials (US$4.7bn, 20%) were the main sectors driving the surge in China.

European High Yield Bonds Hit 2 Year High – Global issuance of high yield bonds reached US$12.3bn in July 2009, down 27% from June 2009 (US$16.7bn) but up 270% from July 2008 (US$3.3bn). This marked the third highest level of activity for a month of July on record and the best since 2003 (US$18.6bn). European issuers accounted for 44% of total with US$5.4bn raised, the highest monthly volume since June 2007. European activity consisted of two issues, Wind Acquisition Finance (US$3.7bn), the second largest HY bond of the year globally and the second largest European bond ever issued after NXP Semiconductor (US$5.95bn, 2006) and Fiat Finance & Trade ($US$1.8bn).

Here are some highlights from this week’s Thomson Reuters Investment Banking Scorecard.

Medarex boosts biotechnology M&A to $5.3 billion

Bristol-Myers Squibb’s $1.9 billion acquisition of Medarex lifted the volume of biotechnology M&A to $5.3 billion for year-to-date 2009, a 90% decrease from 2008 levels. Last year’s total was bolstered by the $46.7 billion acquisition of Genentech by Roche Holding. Excluding the Genentech transaction, biotechnology M&A volume is down 22% over 2008 levels. By number of deals, mergers in the sector are up 15% over last year.

With their advisory roles on the Medarex transaction, JP Morgan and Goldman Sachs top the ranking of biotechnology advisors for year-to-date 2009.

If it’s Friday it must be Thomson Reuters Investment Banking Scorecard day. There’s a slogan for you. Anyway, here are the highlights:

“Industrial Sector ECM Shows Increase Over Last Year

Bolstered by this week’s follow-on offering from Japanese airline services provider All Nippon Airways for $1.5 billion, total equity capital markets activity across the industrials sector reached  $26.5 billion, a 2% increase from the same period last year when volume was $25.9 billion.

Other large equity offerings this week came from Asian issuers including $5.5 billion from Japan’s Mizuho Financial and $1.5 billion from India’s Sterlite Industries, bringing weekly volume for the region to $9.8 billion, the second biggest week this year.

*This post was updated after the bond priced*

British Airways unveiled a $1 billion fundraising aimed at securing its future earlier on Friday, including $540 million in bank loans that had been earmarked for its pension funds as a safety net against the airline going bust.

The fundraising also included a 350 million pound ($570.5 million) convertible bond, which was over 7 times covered, pointing to healthy investor appetite.

Convertible bonds have become an increasingly important source of finance for firms in Europe. The instrument allows companies to raise capital paying less interest than standard bonds, while avoiding an immediate dilution of earnings per share because investors look to gains in share prices over a medium term.

Its half-year review time in investment banking, when London’s top firms gather up their heavyweights and engage with the press.

Each year a different business line takes the spotlight. In the pre-crisis boom times of 2007, M&A bankers held centre stage. Everybody wanted to talk to them. They were the most popular kids in school.

This year it was the turn of capital markets bankers to shine.

As my colleagues Douwe Miedema and Jessica Hall wrote earlier, mammoth bond sales and massive rights issues kept investment banking revenue rolling in in the second quarter.

This week’s Thomson Reuters “Investment Banking Scorecard” is out. Here are the highlights:

“BHP/Rio Tinto Deal Changes Global M&A Landscape

“The announcement of a joint venture between Australia’s BHP Billiton and domestic rival Rio Tinto last Friday ranks as the second largest worldwide deal this year and may prove fruitful for some investment banks.  Advisors Gresham Partners, Lazard, Morgan Stanley, and Goldman Sachs will advise on the deal, translating to valuable deal activity in a year where M&A volume is down 43%.  Earlier this year, Chinalco announced a multi-continent $19 billion investment in Rio Tinto, which was withdrawn as a result of the new mega-deal.  Of the seven banks on the initial Chinalco deal, only Morgan Stanley, ranked first for worldwide M&A year-to-date, secured a role on the BHP deal.

“Real Estate Equity Capital Markets Activity up 85%

“Equity capital markets offerings from real estate issuers have soared so far in 2009, while activity in the M&A, DCM, and loans segments remains down from 2008.  Real estate ECM volume is up 85% over last year at $36.5 billion.  Activity in the Americas accounts for 44.7% of the total volume across the sector, followed by Asia (including Japan) with 36.6% and Europe with 18.4% share of the market.