BREAKFAST DEALS: Banking on Asia

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India is working on its growth plans in Asia while the NAB keeps its eye on the UK's Northern Rock.

Commonwealth Bank of Australia, ANZ Banking Group, National Australia Bank, AXA Asia Pacific, AMP

The Asian ambitions of ANZ Banking Group are well known, but the Commonwealth Bank of Australia is said to be quietly working away on its growth plans for the region, particularly China, Indonesia and Vietnam. The bank is expected to make an announcement over the next few weeks regarding an alliance with an Asian bank, according to the Herald Sun, with an initial investment said to be worth at least $100 million. CBA – which opened branches in Vietnam in 2008, and has 20 per cent stakes in China's Qilu Bank and Bank of Hangzhou – has also undertaken some preliminary work to acquire a further banking arm in Indonesia, a source told the paper. News that CBA is looking to expand its Asian footprint will likely raise a few eyebrows over at ANZ, which has made plenty of noise regarding its ambitions to derive at least 20 per cent of its earnings from the Asia Pacific by 2012. Still, with the ACCC's Graeme Samuel seemingly taking a sterner view on consolidation in the local banking sector, international sales are expected to be of interest to the well capitalised and highly rated big four. The upcoming sale of Northern Rock, for example, has been named by UBS as a good opportunity for National Australia Bank, which has been quiet over whether it intends to expand in or exit the UK. Still, the NAB might choose to limit its takeover focus to the local and NZ assets of AXA Asia Pacific. The surprise NAB bid has had the effect of heightening speculation about the future of an independent AMP should its AXA proposal fail. Some have speculated AMP might need to launch a capital raising to increase the attractiveness of its proposal versus the NAB offer, although others note that a capital raising preceding an unsuccessful bid will only serve to weaken AMP's position. In any event, The Australian Financial Review has flagged that a capital raising might be attractive to AMP should it have another target in mind, such as Suncorp Life. Wonder how Suncorp chief Patrick "get your tanks off our lawn" Snowball would feel about that.

Tiger Airways

The Tiger Airways IPO has been dubbed overpriced and overconfident, but the budget airline remains upbeat, even flagging the creation of an additional operating airline in Asia despite tough conditions in the aviation sector and the failure of Tiger Australia to turn a profit. The Singapore Airlines-backed airline is looking to raise $S246.8 million ($192.7 million), with the bulk to be used for aircraft purchases and a substantial portion set aside for short-term loans and working capital. Tiger says it plans to start new routes, add new destinations and increase the frequency of flights on existing routes. It also intends to boost the size of its Airbus fleet to 68 from 17 by 2015. (We saw yesterday that it had brought forward the purchase of an Airbus fleet). And despite losses on its Australian operations to date – Tiger Australia reported a $50.1 million operating loss for FY09 - the airline is not shirking from our shores. The Tiger IPO, which was originally tipped to raise up to $350 million, is led by a team including Citigroup and Morgan Stanley. More than 165 million shares will be offered at up to $S1.65 each when the price is fixed – a higher price than many expected and accounting for about 30 per cent of its boosted share capital. With Japan Airlines teetering and the Qantas budget offshoot Jetstar signing an alliance with AirAsia, Tiger will no doubt hope that fortune favours the brave.

CSR

It's probably fair to say that shareholders have been flattered but not necessarily convinced by interest in CSR Sugar from China's Bright Foods. The feeling is that the demerger should be given a chance, given it is nearing the finish line and no firm proposal has been received. Head of fixed income research at NAB, Michael Bush, has said while a Bright Star deal would be positive for CSR from a credit perspective, there is still a "reasonable" amount of doubt as to whether a deal will be formalised. Analysts have weighed in to the discussion, with Citi saying it seems "unrealistic” to expect a better bid, while Credit Suisse's Rohan Gallagher adds that splitting the business will improve its takeover prospects. Deutsche Bank analyst Emily Behncke, meanwhile, says given the recent surge in sugar prices, the business could have an enterprise value of $2.1 billion, a more attractive figure than the $1.5 billion cap mentioned by Bright Foods. CSR, meanwhile, is busy with court action regarding whether it will have adequate provisions for its asbestos liabilities if the split proceeds.

GPT, Stockland

Questions are emerging over the future of Stockland's holding in the listed property trust GPT, with speculation it might partner with a strategic investor – such as the Singapore's GIC Real Estate Group – to make a bid. An equity swap with Deutsche Bank granting Stockland a 13 per cent stake in GPT is set to expire in May, reports The Age, leaving Stockland with the option of making a takeover offer with or without a strategic investor. The paper notes that although Stockland has sought to get its hands on GPT for a long time, a solo takeover bid would likely be shunned by its shareholders on dilution concerns and could face a resistant GPT board and shareholder base.

Wrapping up

As the administrator crunches the numbers on the Griffin Coal collapse, there's interest about which companies will be the first to pick at the corpse. KordaMentha partner Brian McMaster has confirmed expressions of interest from China, India, the energy sector, and finance entities. Closer to home, Wesfarmers – which has just been named Asia Pacific's fourth-largest retailer – is speculated as a likely suitor, although could be hindered by competition concerns given the breadth of its existing coal activities in WA. The conglomerate has been in deals news lately for talk it might be selling its $200 million in pub assets to Tabcorp.

Coming up on Deals TV, we'll be looking at the Australian designs of an Indian steel product maker, Transurban and much more.