The medical products maker said on October 3 that it will raise $ 1.8 billion via a listing on the London Stock Exchange by early November, with Evercore on hand as its IPO consultant and Bank of America Merrill Lynch, Goldman Sachs and UBS as its global co-ordinators.
Since joining the independent advisory firm in February, Renwick, senior managing director of Evercore’s equity capital markets advisory business, has advised Melrose Industries on its £1.65 billion rights issue to buy US manufacturer Nortek and added two people to his team. With his name now on a float that is expected to be the largest in the UK since Brexit, he speaks to FN about the current challenges facing the ECM market and the wider banking sector, and his hopes for the future.
ConvaTec‘s listing is your first announced IPO mandate since you joined Evercore. As a new team, how did you beat the competition to this client?
We just won the pitch, but one of the things we [say in pitches] is that we’ll work closely with management to help them prepare for life as a public company, which puts them on a different sphere in terms of public scrutiny and how they’re going to operate.
You said you’ve been working on this for a number of months. So did Brexit impact the timing of the deal?
Brexit didn’t impact the timetable. ConvaTec operates in growth markets; we’re in an ageing world and people usually live a long time after contracting chronic illnesses such as diabetes and bowel cancer. These conditions require ongoing medical help and products to manage the illness.
Investment banks have tended to get irritated by the presence of independent advisers on deals. What’s your relationship with the banks like?
People now accept that most sellers want an independent adviser, so attitudes have moved on from this irritation to an accepted part of almost every IPO. The model we’re running at Evercore is to try to be more collaborative and helpful to management and the owners, as opposed to driving a wedge between banks and issuers. The banks want IPOs to do well because it’s prestigious for them. The key is getting the very best result from the process.
Was the big syndicate or choice of banks on the ConvaTec IPO your decision?
There’s a revival going on in the European IPO market at the moment. How long do you expect it to last and how many other floats are you working on?
This year has been challenging. Whilst we saw a smattering of IPOs such as Countryside [Countryside Properties floated in London in February] in the first quarter, concerns over China and then Brexit meant it was pretty much a closed market until the end of summer. We now have a window before the US election and hopefully that will continue after that until the end of the year.
What are the challenges with cracking into this market? How have you tried to differentiate your team at Evercore from other, more established players, such as Rothschild and STJ Advisors?
I don’t see any major challenges other than executing on our plans – the biggest challenge would be if I thought we were moving into a different environment [where companies use fewer independent advisers], but actually think it’s the opposite.
Where would you like to see Evercore’s advisory business in five years’ time?
That we’d be established as one of the go-to players for equity advisory in Europe.
What do you think of the smaller firms looking to set this up on their own? Are they a threat?
It’s about scale – we have long tentacles that reach into a huge number of companies, so as a result [we] have good relationships. If you have that scale it gives you credibility. It’s a game of reach, because at the end of the day people are engaging you for your advice. Like any market, new entrants pose a threat, but this sector is much more relationship driven compared to the big investment banks that are more reliant on universal banking products and capital markets.
Who else have you added to the team since joining Evercore?
Lucy Wylde from Rothschild, and Thomas Fitzgerald, who was one of [Evercore’s] advisory bankers in our mining team. Obviously we’re looking to expand, but we don’t have a [specific target].
What’s changed a lot is the focus on holding more capital for regulatory reasons, and therefore banks today are much more focused on returns on equity – as a result they’ve had to shrink and get out of a lot of businesses. So the real challenge is making a return on equity above its cost.