Deals of the Year Main Rainmakers Article

Goldman South If the IPO market was in the doldrums this year, nobody told Andre Esteves. The 43-year-old mathematician made a $3.5 billion paper fortune when BTG Pactual, the firm he co-founded, raised $1.9 billion in an April 24 initial public offering. The flotation of São Paulo–based BTG (short for Banking and Trading Group) was Brazil's first investment bank IPO, and investors bet on one of the world's fastest-growing economies.

Esteves started his career as a computer technician at Banco Pactual when he was 21. He went on to take charge of the firm and sold it to UBS for $3.1 billion in 2006, when the Swiss bank's CEO, Huw Jenkins, was chasing global growth. In 2009, after Jenkins stepped down, UBS sold Pactual back to Esteves for $2.5 billion. Esteves has returned the favor: Jenkins, who joined BTG as a partner in 2011, could make more than $100 million from the IPO.

But the shop's punitive lock-ins prevent the principals from cashing out. If a partner resigns or is dismissed, his or her stock must be sold back at book value. Wags call BTG “Better Than Goldman,” a reference to its partnership structure and ambition. The Brazilian firm's financials — it earns a 30 percent return on equity while big investment banks are struggling to get out of single digits — and average 17 percent annual growth bear comparison with Goldman's pre-IPO days. — David Rothnie

crude terms In October state-owned Russian oil giant Rosneft struck a gusher, agreeing in principle to acquire TNK-BP, BP's long-tangled Russia joint venture, for $55 billion. The deal would create the world's biggest listed oil company.

As part of a $36 billion asset disposal to cover claims stemming from the 2010 explosion of its Deepwater Horizon oil platform, BP had been looking to exit its partnership with TNK. The other half of the venture is owned by Russia's AAR Consortium, whose principals are oligarchs Leonard Blavatnik, Mikhail Fridman and Viktor Vekselberg. BP agreed to sell its 50 percent stake to Moscow-based Rosneft for $27 billion in cash and stock, then increase its 1.25 percent stake in the oil company to almost 7 percent. Rosneft, led by president Igor Sechin, agreed in principle to buy out AAR for $28 billion.

The deal would give BP 19.5 percent of Rosneft — making it the biggest shareholder after the Kremlin — and access to nearly half of Russia's oil production. Wall Street also won big: Bank of America Merrill Lynch and Citigroup advised Rosneft, participating in a financing package that could total $28 billion; Morgan Stanley was lead adviser to BP. — D.R.

Dim Sum, Anyone? More than just a delicious Chinese snack, dim sum could spawn a new industry for the beleaguered British banking sector. With the historic London Stock Exchange launch of a 2 billion yuan ($317 million) senior unsecured bond issue on April 18, HSBC Bank helped China take its renminbi one step closer to global currency status. The offering, priced with a yield of 3 percent, was the first time a renminbi-denominated debt instrument had been sold outside mainland China and Hong Kong. Sales of the so-called dim sum bonds closed at more than double the issue size, with strong appetite from European and Asian investors and half of the allocation going to the former.

Spencer Lake, co-head of global markets at HSBC, predicted that this development would open the market to international bond issuers funding their offerings in the Chinese currency. His London-based firm, founded in Hong Kong and Shanghai in 1865, expects the renminbi bond market to reach 1 trillion yuan worldwide in the next three years. On the same day as the issue, the U.K. and London governments and five banks, including HSBC, launched an initiative to make the British capital a global renminbi hub. — Allen T. Cheng

Face Plant Countless investors have unfriended Facebook and co-founder Mark Zuckerberg since the year's biggest IPO did a colossal belly flop. On May 18 the $16 billion Nasdaq OMX Group flotation of the social networking phenomenon quickly descended into farce. First, brokers lost as much as $500 million after a problem with the exchange platform delayed the IPO for 30 minutes.

Speculation soon followed that before the listing global coordinator Morgan Stanley had tipped off some clients to its analysts' bearish revenue forecasts for Menlo Park, California–­based Facebook. From an opening $38, the stock had fallen below $18 by early September. Then, in December, Raleigh-based North Carolina Retirement Systems and several other institutional investors were named lead plaintiffs in a proposed class-action lawsuit against Facebook and its underwriters. The group claims to have lost $7.1 million because it was misled about the company's financial health.

Deals of the Year Main Rainmakers Article

It was a far cry from the buildup to the event, which was meant to boost the sagging IPO market but did the opposite. Facebook's founders can't complain; they got an opening share price that pushed the value of their business to $100 billion. Morgan Stanley liked the deal too, claiming $52.8 million of the $176 million in fees. But with Facebook trading at $28 as of November 30, investors remain underwater. — D.R.

Italian Job By launching a €7.5 billion ($9.9 billion) rights issue on January 4, Italy's biggest bank flung itself into the eye of the euro zone storm. Rome- and Milan-based UniCredit made this cash call to meet the European Banking Authority's demand that southern European banks find €115 billion to boost their capital ratios. But the market reacted violently when €969 billion UniCredit and CEO Federico Ghizzoni announced the terms of the company's third such deal in as many years. The bank offered existing shareholders two new shares for each one they owned at €1.94 apiece, a steep 43 percent discount on the previous day's price. UniCredit stock hit a 19-year low of €2.29 when just 24 percent of investors initially signed up.

Ultimately, the bank got the cash it needed, and as of November 30 its stock had climbed 56 percent, to €3.58. UniCredit succeeded by using more than two dozen banks, which shared total fees of €225 million, to ensure that the offering was fully subscribed. The lion's share of fees went to Bank of America Merrill Lynch, global coordinator on the deal, which was one of the last for top rainmaker Andrea Orcel before he left to head UBS's investment bank. — D.R.

Out of Left Field It took a while — 90 years, more or less — but Bolivia returned to international bond markets with an oversubscribed $500 million issue in October. The last time the Andean nation of 10 million raised money abroad, in the early 1920s, J.P. Morgan himself underwrote bonds to build its railways. This time the government turned to two newer titans of El Norte finance: Bank of America Merrill Lynch and Goldman Sachs Group.

The bankers worked a yield-hungry market for a skimpy 4.875 percent interest rate on ten-year Bolivian paper, not far above the emerging-markets sovereign average of 4.59 percent, according to JPMorgan Chase & Co.'s Emerging Markets Bond Index. Bolivia's return looks all the more remarkable because it was overseen by President Evo Morales, who's better known for expropriating investors than pitching them with PowerPoint. Morales nationalized Bolivia's vital gas industry soon after taking power in 2006 and has since seized assets ranging from mines to utilities.

But his Economy minister, Luis Arce, has run a tight macroeconomic ship. Bolivia's foreign reserves have grown sevenfold during the Morales era, even as per capita GDP has doubled. National debt stands at a lean 31 percent of GDP. No one on Wall Street would ever say that Latin American leftism works, but apparently it can sell once in a while. — Craig Mellow