Jason Ho recently joined FTI Consulting as the Leader of its Capital Solutions practice in Asia, bringing close to 20 years of experience in public and private capital financing and debt advisory to the firm. A Q&A with Ho on his move and how the practice – often in conjunction with other FTI practices – helps clients meet their capital demands.
You joined FTI Consulting following a long career on the banking side of capital financing and debt advisory. What motivated your move to the advisory side, and specifically FTI Consulting?
Throughout my career, I have set up various investment banking and capital markets advisory platforms for international and local Chinese banks, but I have never done this for a consulting firm.
I always thought only banks or securities houses could be investment banks, but I was wrong. I look forward to extending my expertise in financing and cross-border merger & acquisition (M&A) advisory to various industry players within real estate, financial technology (fintech) and environmental, social and governance (ESG).
You lead the Capital Solutions practice across Asia. What are some of the key areas the practice supports clients with?
The Capital Solutions team of FTI Consulting assists and provides solutions to corporates and investors to enable opportunities such as acquisitions, refinancing and dividend recapitalizations. We aim to provide cross-border M&A, private and public financing services adding value for companies and capital providers as they optimize their balance sheets along the corporate lifecycle.
With ever-changing client demands, we customize our expertise to deliver best-in-class services to organisations in both the traditional and new economies space. Organisations that we support range from real estate, infrastructure, to fintech, telecom, media & technology, ESG and healthcare start-ups.
We further support and complement services offered by law firms and other professional service providers (e.g. financial institutions, trustees and rating agencies), particularly in areas relating to corporate finance, M&A and capital markets financings.
How does the Capital Solutions practice work with other FTI units to provide an end-to-end offering? Some examples..?
FTI Consulting is well-positioned to offer capital solutions services to clients given how this uniquely supplements our subject-matter expertise and industry specializations, providing a one-stop shop in transaction activities.
Today’s financing markets are complex and varied. Now more than ever before, companies and creditors alike need a knowledgeable partner who understands the credit lifecycle and can actively assist in navigating capital markets. We will continue our investment in client solutions, adding value for companies and capital providers as they optimize their balance sheets along the corporate lifecycle.
Our expert-led team will complement and enhance our existing client service offerings focused on corporate restructuring and acquisitions, which include financial and commercial due diligence, valuation, merger integration and carve-outs. I’m looking forward to being able to provide clients with a range of services, such as capital and credit structure solutions.
Throughout your 20-year career you’ve raised over US$300 billion via 500+ transactions … how have the dynamics between borrowers and creditors changed over the years?
Amongst all the industry players looking for public and private financing in the capital markets, over the last ten years, I have been focused on PRC real estate and infrastructure debt financing. During that time, I have witnessed the changing dynamics between borrowers and creditors in this sector.
Over a decade ago, PRC real estate companies started financing in the overseas bond market. During the last five to six years, both the scale and volume of issuance has reached a peak and has increased in frequency. Since then, due to the occurrence of various overseas debt defaults, and the replacement of auditors by real estate companies, the market has been troubled by the current financial situation of domestic real estate companies.
In view of a company's own business conditions and capital liquidity issues, the credit market has faced uncertainty, and market investors' confidence in the sector has weakened. Although the overseas real estate bond market is sluggish, some investors still have expectations and are supporting companies to postpone the repayment date, which has led to an increase in debt exchange (Exchange Offer) projects at the end of last year and beginning of this year.
However, the debt replacement method can only relieve the pressure of short-term capital liquidity, and is not the final solution. Real estate companies still need to reduce the excessive financial burden before they can embark on a virtuous circle of corporate development and achieve Nirvana rebirth.
The main issue facing the current domestic real estate market is “distrust”, and some creditors still have reservations about a companies future repayment abilities. Whilst we have seen some domestic real estate companies express their willingness to repay on time to the market, the number of companies that actually have repaid interest on time has been infrequent. As we see a continuous delay in annual results announcements, it is natural to see market volatility.
Moving forward, I think that overseas real estate companies will become “polarised”. Companies that can continue to operate must spend more time on corporate fundamentals to restructure. Many large credit funds and bank creditors have also expressed that they do not want domestic real estate companies to face liquidation.
Therefore, to balance the interests of both parties, market professional institutions must consider the positions of both parties and discuss feasible options together. We still believe that an effective and targeted restructuring plan will still bring sustained benefits to the entire industry and the national economy.
The capital financing market is currently being impacted by the changing financial, interest/bonds and risks landscape. What are some of the steps you advise corporates to do in order to navigate these developments?
Companies will need to be agile, open-minded and adaptive to changes in order to survive in a dynamically evolving global market environment.
It is of paramount importance that a company’s internal structures are adequately set up to identify and mitigate risks that impact their bottom line. Organisations should set aside their long-term business (and financing) objectives or short-term milestones, and always be prepared for a second option.
To achieve this, not only do stakeholders need to be prepared for any regulatory changes which affect their ability to finance or refinance, they should be looking for long-term advisory partners with resources to help cope with changes.
In recent years, there has been a slew of new entrants across various industries, such as fintech and ESG. One possible way for traditional players to manage market challenges, whilst maintaining growth, is they should start picking up what the non-traditional players offer and identify mutually beneficial ways to complement each other in order to reach long-term goals.
FTI Consulting continually invests in additional value-add services to complement our strengths globally. The Capital Solutions practice enables us to extend our service scope to the ever-changing financing and cross-border M&A advisory space. This allows us to provide a more holistic approach when handling traditional client requests, assisting companies to adapt to change, and find new partners and ways to finance in global markets.
The views expressed in the article are those of Jason Ho, and are not necessarily the views of FTI Consulting.
Cap Expand Partners sharing news from: www.consultancy.asia