BESI targets securities takeover

Banco Espírito Santo Investment (BESI), the investment banking arm of Banco Espírito Santo (BES), has announced plans to acquire a London-based distribution platform, allowing it to operate through the financial markets of London, New York and Hong Kong


Part of a 140-year-old banking group, BESI believes that it is vital to develop and maintain long-term relationships with its clients. As such, BESI has developed a multi-product approach which includes sector, industry and geographic specialisation.

BESI’s core product areas are: M&A, Project Finance and Securitisation, Acquisition Finance, Capital Markets and Private Equity products.

BESI, over the few years, has developed a significant international franchise, building its presence in the UK, Spain, Poland, the US, Brazil and Angola. BESI, like its parent, is committed to expanding its international activities, based on selective opportunities.

The Bank’s international strategy is focused on markets with either cultural, trade or historical links with Portugal.

BESI’s feels confident of the success of its overall product and market strategy, having achieved its highest ever consolidated income of €229m in 2009, a 20 percent increase on 2008.

Capital markets
Over the past few years, the Bank has built a sizeable capital markets business, leveraging its extensive experience as Portugal’s leader in privatisations and capital market placements generally.  

In 2009, over 60 percent of BESI’s banking income was generated outside Portugal, of which 35 percent from capital markets. Given the resurgence of capital markets activity globally, the Bank believes this will be one of its key areas of growth.

The Bank recently acted as a lead manager for the Portuguese Government’s 10-year €3bn benchmark bond, which generated a total demand of €13bn. The Bank’s participation in this successful transaction helped secure confidence in the European bond market and also re-emphasised investors’ long-term belief in the strength of the Portuguese economy.

Critical to the expansion of the business was the access to an international distribution platform.  In 2010, ESIB announced the acquisition of 50.1 percent in Execution Noble Holdings Ltd (EN) to provide a Tier 1 capability distribution in equities, derivatives and expanding into fixed income in London, New York and Hong Kong.

BESI will therefore have access to an established large and mid-cap pan European secondary equities and research business. In addition, Execution Noble includes a highly rated Indian research product which will combine neatly with ESIB’s differentiated emerging market offering, built around Brazil, Poland, Angola (expanding into Africa) and now adding India and Hong-Kong.

M&A growth and development
M&A has also been a vital part of BESI’s product offering. BESI once again was nominated for Euromoney magazine’s ‘Best Bank in Portugal’ award for excellence, in addition to the ‘Best Bank for M&A Advisory in Portugal’ Real Estate Award this year.

As global economic recovery gathers pace and as cross-border activity between Iberia, the US and Latin America increases, M&A opportunities will continue to emerge and BESI is well placed to position itself competitively in this space.

Given the globalisation of the Portuguese economy, the Bank is also building an international network to ensure that capital-exporting markets can be made available to all its clients.

In the same way that BES, its parent retail bank, has adopted the South Atlantic triangle of Iberia-Brazil-Africa as a focus for its operations, BESI has followed suit, expecting this region to be a significant area of growth for the Bank.

Project and acquisition finance
BESI is a global player in project and acquisition finance in the renewable energy, infrastructure and transportation finance sectors. There are a growing number of financing opportunities, related to public-private partnerships, for key infrastructure projects that are less dependent on global growth. BESI’s powerful presence in emerging markets then gives bank full access to what they believe will be a strong deal flow.

BESI cites their successful commercial banking operation in Angola as a perfect example, as the country has experienced an economic renaissance since the end of the war in 2002.

Following BES’s success in the area, BESI is also supporting a new direct presence for its investment banking operations in Luanda, which is currently underway.

Geographic strengths
Over the last ten years, BESI has invested in international expansion, leveraging a long-standing leadership position in all key investment banking product areas in its domestic Iberian market, with its depth of knowledge of certain emerging markets.

The Bank now offers innovative financial solutions across three continents: Europe, the Americas and Africa.

The Group has had a presence in Brazil for over 30 years, and BESI now has nearly 200 professionals based in its São Paulo office, offering a full range of investment banking services, complemented by asset management, private banking and private equity activities.

BESI has over time leveraged on the close relationship it has with its Iberian clients that started to expand to Brazil, among which we find several of the major Portuguese companies: Portugal Telecom, EDP, Brisa. We highlight the M&A advisory to Portugal Telecom on the sale of its Brazilian subsidiary Vivo – the largest M&A transaction in Brazil in 2010 to date. BESI has also been growing its local footprint, with an increasing involvement with Brazilian companies.

BESI’s focus on Brazilian players that have business relationships and/or are expanding into Europe and Africa, enables the bank to leverage on the BES Group’s presence in these continents, as through the latter BESI also has access to a differentiated African network including Angola, Mozambique, Libya, Morocco, Cape Verde and Algeria.

After the success of the Banco Espirito Santo Angola operation, BESI has applied and is waiting for approval to open its own branch in the country.

The North American operation have also been expanded with the opening of a representative office in Mexico, a joint project with BES, which will support business development efforts for the banks’ Advisory, Global Trade Finance, Project Finance, Corporate Finance, Treasury and Capital Markets services.

This expansion will strengthen the Bank’s ties to Latin America, enabling it to more effectively provide its clients with access to the growth prospects of the region.

The opening of this new office is integral to the development of global banking operations for both BESI and BES, serving as a hub for business development in Central America and the Caribbean Basin.

‘One stop shop’ Polish operations
The flow of Portuguese companies into Poland and BESI’s established experience in infrastructure and renewable energy project finance, led BESI to set up operations, originally through a joint venture in 2005, and from 2008 through its own branch, in Warsaw.

In 2008, BESI launched its own local brokerage activity, which has given the branch the chance to develop a local ‘one-stop shop’ strategy.

In terms of M&A, in 2010, BESI supported the purchase of a Polish construction company by a Lithuanian buyer. BESI also participated in the financing a motorway construction company, and was part of the Project Finance consortium for the production of a 120 MW Margonin windfarm, in the north west of the country, for EDP Renewables.

In terms of Acquisition Finance, BESI advised on the financing of the purchase of a school books’ company and is advising a consortium in the privatisation of a major Polish utility.

With the help and backing of a strong international investment bank, present in the major international finance centres, BESI is taking advantage of the current Polish economic momentum and offering a ‘one stop shop’ service to local businesses.

An award-winning New York branch
With New York being the gateway to the world’s financial markets, BESI felt the importance of having a branch in this city. The New York branch concentrates on wholesale banking, mainly in the US and Brazil.
Less than two years since its doors opened, the New York branch has already accumulated a number of significant achievements, including ranking as number one Bookrunner for Syndicated Loans in 2010.

Also, despite the current adverse market conditions, in 2008 the Branch achieved a 223 percent YoY in results, reinforcing its role in the development of the BES Group’s international strategy as a whole.

The launch of the New York office was in fact split into two, with the first half of the year focussing on identifying strategic clients and transactions in North America. The bank concentrated on renewable energy sector and made social infrastructures the priority in Canada.

During the latter half of the year, New York widened its focus of activity, including transport and more typically traditional energy sectors, and also expanded its geographical reach to the Spanish-speaking countries of Latin America.

BESI’s recent expansion moves
In February, BESI announced an offer to acquire 50.1 percent of Execution Noble, a London-based pan-European securities distribution platform. For BESI, Execution Noble provides a top quality international distribution platform and investment banking team, allowing it to operate through the key financial markets of London, New York and Hong Kong.

It also enables it to establish an enlarged international securities business, leverage its primary and secondary fixed income and equities presence in Iberia and its primary origination capabilities in Europe and Emerging Markets, in particular Brazil and, increasingly, Africa.

The combination of BESI’s Iberian and emerging market banking expertise and Execution Noble’s distribution capabilities should allow the Bank to become an international reference player in investment banking. With offices across the world in Lisbon, London, Madrid, Edinburgh, Dublin, Paris, New York, Mumbai, Hong Kong, Sao Paulo and Warsaw, the joint headcount will be close to 1,000.

We expect continued recovery of leading economies in 2010, albeit at different paces, and with varying risk factors. Within this context, BESI is confident of its growth strategy – developed on a mix of ambition and prudence.

For more information contact Tara Jones, Head of International Capital Markets
Tel: +351 21 21 330 2175|; E-mail: