The Australian unit of Swiss bank UBS AG thriving, even as its parent struggles in the global financial crisis, and has earned a reputation for snatching deals from rivals and making a success of them.
Its latest coup was to clinch an advisory role in a new move by China's state-owned Yanzhou Coal Mining Co to buy Australian coal miner Felix Resources Ltd.
The Royal Bank of Scotland (RBS) had advised Yanzhou when it previously sought to buy Felix but the deal fell through earlier this year on valuation concerns.
Fresh from the success of navigating another state-owned Chinese firm, Minmetals, in its controversial takeover of distressed miner OZ Minerals Ltd, UBS pitched the idea of a Felix bid to Yanzhou.
Sources say Yanzhou's decision to change the advisor could have been influenced by UBS's success in dealing with the Australian Foreign Investment Review Board and in eventually securing a $1.2 billion deal for Minmetals.
There is no doubt that OZ Minerals shows how willing vendors and willing buyers can get together. And the success of OZ Minerals played a key role in UBS getting the Yanzhou mandate, a person familiar with the situation told Reuters. The source declined to be identified due to the sensitivity of the matter.
RBS and UBS declined to comment. A Yanzhou spokesman said the company was focused on the transaction and declined to comment further.
Yanzhou's bid for Felix is expected to face intense scrutiny, at a time ties between Australia and China are strained after China arrested four Rio Tinto Ltd employees. And Yanzhou needs a safe pair of hands to guide it.
When the Australian government blocked the bid for OZ Minerals, UBS quickly responded with a revised bid and eventually won government approval and sealed the deal.
Sources say staff turnover at RBS could also have contributed to the U.K. bank losing out on the mandate. Over the past year, RBS has lost several bankers after it bought Dutch bank ABN AMRO.
'IGNORED MARKET FEEDBACK'
In other deals, UBS is advising packaging group Amcor Ltd in its pursuit of Rio Tinto Ltd's packaging assets for about $2 billion.
The bank also won the mandate late last year to underwrite Commonwealth Bank of Australia Ltd's A$2 billion capital-raising.
UBS moved in swiftly and helped the bank raise the amount after a disclosure debacle led to a scrapping of an initial deal managed by Merrill Lynch.
Every other bank in the market phoned up investors asking for an opinion. But we backed our own equity research analysis and we ignored a lot of market feedback, one UBS banker said.
And earlier this year, UBS scooped the A$2 billion capital-raising of debt-laden rail and ports operator Asciano Ltd after a long-drawn asset sale process by Asciano led to takeover proposals from several private equity funds. Asciano worked with RBS for about nine months to find a solution to its debt problems. Falling asset prices made it difficult to find buyers, but as markets improved, UBS spotted an opportunity to make a rights offer.
It's our willingness to take hard cash risks that makes us successful, the UBS banker added.
(Editing by Muralikumar Anantharaman)