So the stakes were high on March 21 when Nick Hanbury-Williams, UBS Warburg’s 45-year-old block-trading chief, won a rapid-fire 15-minute underwriting auction to sell shares of Royal KPN. Aided by the firm’s analysts and salespeople, he was able to sell 234.7 million shares of the Dutch telecom for a total of E1.2 billion.
The shares, representing the 9.4 percent piece of KPN owned by the U.S.'s BellSouth, were placed within 45 minutes to more than 100 U.K. and Continental fund managers. The price: E5.25 a share, a razor-thin discount of 0.6 percent to KPN’s market price.
How did UBS Warburg pull off Europe’s biggest block trade in two years , not only so fast but on such favorable terms? “Such deals usually take several hours to close and are sold at discounts of at least 3 percent or 4 percent,” says Hanbury-Williams, who ran emerging-markets debt syndication at ABN Amro before joining UBS Warburg. “We,ve obviously got the distribution muscle and the kind of balance sheet needed to underwrite a deal like this.” Still, as he readily concedes, UBS Warburg benefited from “particularly favorable circumstances.”
Fund managers had been expecting a sale of KPN shares since late January, when BellSouth exercised an option to swap a 22.5 percent stake in the telecom,s German mobile phone network, E-Plus, for shares in the parent. The stake didn,t fit with BellSouth’s strategy. Many managers stayed underweight KPN, figuring they,d soon be able to snap up shares at a discount. UBS Warburg and rival bidders, meanwhile, had plenty of time to sound out demand. The much bigger, E3 billion Vivendi Universal sale, in contrast, came as a virtual surprise.
“It’s rare,” says a pleased Hanbury-Williams, “that a deal gets telegraphed as well as KPN.”
