BHP ensures Goldman Sachs is No.1 in Australian M&A

Bragging rights as 2014’s top M&A advisor in Australia has, it seems, been all but settled.

Goldman Sachs’s role as BHP Billiton’s sole advisor on the demerger of selected coal, nickel, aluminum, silver, lead, zinc and manganese assets has relegated its rivals to also-rans in the Down Under M&A league table.

The BHP demerger, estimated at between $14 billion and $20 billion, means Goldman Sachs’ fiercest rivals in Australia and New Zealand face a second consecutive year ranked behind their Wall Street rival.

Moreover, Goldman Sachs is now the prime advisor to both BHP and the new company for counsel on M&A as well as capital markets work. Goldman Sachs’ traders and sales personnel also know the glory of advising on the BHP demerger will also reflect on them as they will help place and trade the securities of the new company.

The trading and advisory sides of Goldman Sachs, at least in the antipodes, are one big happy family, for now.

Goldman Sachs has been a magnet for its rivals to recruit from that has sometimes justified the compensation offered to the former “Goldies” with mandates secured at the expense of their former firm.

But Christian Johnston, head of Australia and New Zealand investment banking at Goldman Sachs and Richard Phillips, co head of natural resources Asia Pacific ex Japan, have managed with his colleagues to beat off rivals by offering service and advice when it was not certain a payday would result.

BHP is the prime example for this long-term greedy approach. For more than a year Goldman Sachs has had a team working with the mining company’s business development unit listening and mapping out the strategic direction of BHP following management priorities led by chief executive Andrew Mackenzie.

Since assuming the CEO role last year, Mr Mackenzie has hinted his strategic priorities for BHP are iron ore, copper, potash, select coal assets and petroleum. Mr Phillips and Mr Johnston have benefitted from working just down the road on Melbourne’s Collins Street from Mr Mackenzie.

But other bankers also work out of Collins Street. The difference is that while rivals are reluctant to give up staff for more than a year, Goldman Sachs’ willingness to devote resources without an obvious payday has set it apart.