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PrintJ.P. Morgan’s Australian Business Launches Escrow Services and Seals Historic USD1.4BN Cross-Border M&A Deal
Aug 20, 2009
J.P. Morgan today announced that it has continued the global expansion of its Treasury Services offerings by launching Australia's first full service Escrow solution.
Sydney, August 17 2009 – J.P. Morgan today announced that it has continued the global expansion of its Treasury Services offerings by launching Australia's first full service Escrow solution. The launch of the business has been cemented by providing Escrow services to OZ Minerals for the settlement of its USD1.4billion sale of mining assets to China Minmetals. The deal is believed to be the single largest overseas mining investment by a Chinese corporation to date.
The deal has introduced a new benchmark locally by providing the first truly independent, full service Escrow operation capable of supporting both simple and large, complex, cross border M&A transactions in a range of currencies.
“This deal required J. P. Morgan to hold the funds as well as key transaction documents in Escrow. These were then released to various parties as the transfer of assets was completed,” said Tony O’Neill, Managing Director and Head of J. P. Morgan Treasury Services, Australia and New Zealand.
J.P. Morgan’s end to end Escrow service, coupled with its broader US dollar and local clearing capability allowed settlement of the transaction to be completed within the local time zone even though it was largely settled in US dollars.
“From our perspective the settlement process went very smoothly despite the complexity of the deal,” said Ms Bronwyn Wellings, Group Treasurer for OZ Minerals. “J. P. Morgan’s Escrow service helped us to manage the efficient exchange of funds and documents amongst the many different parties to the transaction including the various banks financing the underlying assets.”
J. P. Morgan’s Escrow service enables parties to a variety of different financial transactions to deposit, safe keep and disburse monies through an independent, third party rather than relying on their law firms to perform this function. Funds are usually held in Escrow until a trigger event results in them being released. Typical applications include good faith deposits, break fees, earn-outs, contingent liabilities, project disbursements, revenue collections and equity subscriptions.
In Australia, this safekeeping function has often been provided by the local law firms due the lack of an independent Escrow provider. This contrasts with other leading markets around the world such as New York, London and Hong Kong where Escrow services are common.
“As well as providing security and peace of mind to the counterparties, an Escrow agent enables law firms to step back from transacting the exchange of funds and documentation, avoiding any potential conflict of interest by being a direct party to the transaction itself,” said Mr O’Neill. “J.P. Morgan is ideally placed to offer this service given our market position in M&A Advisory, our investment management expertise and proprietary systems and controls already in place to manage and settle transactions."
The market has recently seen many of the major firms withdraw the use of their solicitors trust accounts to settle major transactions due to ongoing concerns raised by their insurers and the law societies. Introduction of US style anti-money laundering laws has also increased the compliance burden on law firms.
J.P. Morgan already offers Escrow services in Brazil, China, Hong Kong, India, the United Kingdom and United States and plans to offer the service in major financial centers in Asia Pacific, Latin America and throughout Europe in the coming year. The expansion of the company’s Escrow services is part of J.P. Morgan Treasury Services’ ongoing plan to invest in systems, innovation and services to benefit its clients throughout the world.
OZ Minerals is an Australian based mining company and operates the new, high quality Prominent Hill copper-gold mine in South Australia.
About JPMorgan Treasury Services
The Treasury Services business of J.P. Morgan is a top-ranked, full-service
provider of innovative payment, collection, liquidity and investment management,
trade finance, commercial card and information solutions to corporations, financial
services institutions, middle market companies, small businesses, governments
and municipalities worldwide. With more than 50,000 clients and a presence in
36 countries, J.P. Morgan Treasury Services is the world's largest provider
of treasury management services and a division of JPMorgan Chase Bank, N.A.,
member FDIC. More information can be found at www.jpmorgan.com/ts
About JPMorgan Chase & Co.
JPMorgan Chase & Co. (NYSE: JPM) is a leading global financial services
firm with assets of $2.0 trillion and operations in more than 60 countries.
The firm is a leader in investment banking, financial services for consumers,
small business and commercial banking, financial transaction processing, asset
management and private equity. A component of the Dow Jones Industrial Average,
JPMorgan Chase & Co. serves millions of consumers in the United States and
many of the world’s most prominent corporate, institutional and government
clients under its J.P. Morgan, Chase, and WaMu brands. In Asia Pacific, J.P. Morgan operates through 25 offices in 15 countries and has developed its wholesale
banking franchise during a history of almost 160 years in the region. More information
about JPMorgan Chase & Co. is available at www.jpmorganchase.com.