Blackstone, Nomura lose out in Rio Tinto’s maneuver

09 June 2009 | 04:53 Code : 19257 Geoscience events
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Rio Tinto’s decision to scrap a $19.5 billion deal with Chinalco is bad news for...

Rio Tinto’s decision to scrap a $19.5 billion deal with Chinalco is bad news for Blackstone Group and Nomura Holdings, which had been advising the Chinese industrial giant, though Goldman Sachs has found a way to get in on the action. Rio’s new plan, which includes a $15.2 billion rights issue and a joint venture with mining rival BHP Billiton /quotes/comstock/23s!a:blt (UK:BLT 1,555, +99.00, +6.80%) /quotes/comstock/13*!bhp/quotes/nls/bhp (BHP 60.29, +3.25, +5.70%) /quotes/comstock/22x!e:bhp (AU:BHP 38.18, +3.07, +8.74%) , will shake up the investment-banking league tables at a time when firms are fighting over scraps compared to a couple of years ago. Blackstone /quotes/comstock/13*!bx/quotes/nls/bx (BX 10.92, +0.15, +1.39%) , China International Capital Corp. and Nomura /quotes/comstock/13*!nmr/quotes/nls/nmr (NMR 7.98, -0.14, -1.72%) look set to lose out. They had been advising Chinalco but don’t have any role in the new plans. While they drop down the league tables, the advisers will still get some reward for their effort from a share of a $195 million break-up fee Rio Tinto /quotes/comstock/23s!a:rio (UK:RIO 3,001, +281.00, +10.33%) /quotes/comstock/13*!rtp/quotes/nls/rtp (RTP 193.76, +11.08, +6.07%) /quotes/comstock/22x!e:rio (AU:RIO 72.49, +5.91, +8.88%) will have to pay to Chinalco. J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 34.81, -0.80, -2.25%) was the other adviser to lose business from Chinalco, but it found a new role as part of the group advising on and underwriting Rio’s rights issue. Without the Chinalco deal, Blackstone will drop nine places on the global M&A advisory rankings to 29th spot, according to data from Dealogic. Nomura will also lose ground, dropping to 18th place from 13th, and CICC stands to tumble all the way to 65th position from 24th previously. J.P. Morgan’s No. 1 position in the league table won’t be affected, Dealogic said. Credit Suisse /quotes/comstock/!csgn (CH:CSGN 50.00, +0.24, +0.48%) /quotes/comstock/13*!cs/quotes/nls/cs (CS 45.67, -1.01, -2.16%) and Morgan Stanley /quotes/comstock/13*!ms/quotes/nls/ms (MS 30.97, -0.23, -0.74%) , Rio’s original advisers, have both been given new jobs, with the former helping lead the rights issue and the latter providing advice on the BHP Billiton deal. Shareholders in both Rio and BHP welcomed the new plan Friday, bidding both stocks up by more than 7%. The mining giants will each contribute assets to the iron-ore joint venture, while Rio will also get $5.8 billion from its rival to help reduce its huge debts. See full story. Among the winners from the reshuffled deal, Goldman Sachs /quotes/comstock/13*!gs/quotes/nls/gs (GS 149.01, -0.46, -0.31%) has found a role advising BHP, alongside Australian investment and advisory group Gresham Partners. Australia’s Macquarie Group /quotes/comstock/22x!e:mqg (AU:MQG 36.88, +0.68, +1.88%) has also joined the list of firms advising Rio as joint global coordinator of the rights issue and one of the underwriting team.


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