Business performance Merchant Banking

Activities and focus

Through the Merchant Banking business, NIBC advises, finances, and co-invests with clients in the Benelux and Germany.

Merchant Banking provides the following services:

Coverage bankers maintain long-term relationships. Together with product specialists operating in multidisciplinary teams, client teams deliver a wide range of customised products and solutions, including M&A advisory, financing, derivative products, mezzanine and equity investments and strategic advice;
M&A provides advisory services in close cooperation with the coverage bankers. It executes M&A-related transactions, including mergers, acquisitions, disposals and buyouts;
Corporate Lending and Leveraged Finance have particular strengths in corporate acquisitions, growth financing and restructurings and arranging financing for financial sponsors and others in support of management buyouts, leveraged recapitalisations and public-to-private transactions; and
Investment Management creates and manages funds that are open to third-party investors. Funds have been developed in our areas of expertise – infrastructure, commercial real estate and private equity and mezzanine (in companies). Investment Management also manages and services the bank’s direct investments and investments in third-party funds, as well as NIBC’s CLO platform.

Behind the 2009 numbers

Merchant Banking activity revived during the course of the year. The losses in the first half of 2009 were partly offset by a strong second half, with continuing positive indicators going forward.

Fee income was weak at the beginning of the year in response to reduced client activity, but began to increase later in 2009. Gains less losses from financial assets, relating to NIBC’s Equity Investments portfolio, were affected by the financial markets turmoil, which led to negative fair value adjustments during 2009. In the fourth quarter, gains less losses from financial assets were positive, but they remain challenging and difficult to predict.

Operating income grew as the year progressed. Merchant Banking ended the year with operating income of EUR 66 million, more than double the level of 2008. In line with the economic cycle, impairments were taken of EUR 25 million on the Corporate Loan portfolio and EUR 46 million on other interest-bearing assets.

Transaction highlights

NIBC arranged important client transactions in its home markets last year. Examples include:

Advising De Persgroep on the sale of NRC Media;
Acting as financial advisor to Vattenfall in the EUR 8.5 billion acquisition of Nuon;
Our role as advisor to GreenChem for the disposal of a majority share in the company;
Plukon Royale Groep was acquired by Gilde Buy Out Partners. NIBC acted as M&A advisor and Mandated Lead Arranger to Gilde and provided leveraged financing to fund the acquisition;
Sportcity and NIBC Capital Partners completed the acquisition of Fit for Free Beheer;
NIBC European Infrastructure Partners acquired a minority share in a 46MW Spanish solar portfolio from Gruppo Aldesa;
Our M&A department advised Super de Boer in its acquisition by Jumbo; NIBC Corporate Lending acted as Mandated Lead Arranger and closed EUR 700 million senior facilities for Jumbo Groep in order to finance the acquisition;
Our Corporate Lending department acted as Sole Mandated Lead Arranger in a structured funding transaction for Porsche Financial Services; and
NIBC Leveraged Finance was Mandated Lead Arranger and Hedge Coordinator and arranged the financing of the buyout of bol.com.

Outlook

Our transaction pipeline is healthy as we enter 2010. We continue to enhance our client relationships and consolidate our position in the market, making us cautiously optimistic for the year to come. The speed and smoothness of the economic recovery are hard to predict, however, and credit demand could be depressed if the downturn proves protracted.