Randy Pike held his first Ukraine corporate bond conference in Kyiv back in June 2014, a time when the crisis sparked by Russian military aggression in Crimea and the country’s eastern borderlands was at its height. Despite this somewhat inauspicious start, his team plowed ahead, returning every June to offer a conference where Ukrainians had the opportunity to pitch their companies to foreign investors. This patience and persistence appears to have paid off. With Ukraine’s president and parliament now aligned for the first time since the country gained independence in 1991, Pike, who is president of US-based emerging market bond broker BCP Securities, is taking the next step, with the opening BCP’s Ukraine office in September. “Ukraine is white hot,” Pike says of the surge in foreign investor interest in Ukraine following the country’s recent presidential and parliamentary elections. “This is a year, when, wow – everybody seems to be on the same page.” Many business journalists in Kyiv believe BCP will benefit from first mover’s advantage. In a sign of the changes currently underway in the investment climate, BCP is the first international corporate bond broker to plant its flag in Ukraine since war and recession scared away international investors five years ago.
Pike founded BCP 30 years ago. Since then, it has grown to become a leading broker dealer for emerging market corporate bonds. Over the last 12 years, this fully licensed US investment bank has helped raise USD 15 billion for companies, largely in Latin America. BCP has grown into a partnership of 15 financial professionals, most of whom have worked together as a team for the last 15-20 years. The BCP Ukraine office will be located in the heart of Kyiv and headed by James Brooke, known to many in the Kyiv business community as editor of the Ukraine Business News morning email. In late July, Brooke got a taste of the growing investor interest in Ukraine during a visit to New York. “The Ukrainian parliamentary election had taken place on Sunday, and on the following Monday morning, BCP sales people started calling around to see if anyone wanted to hear about Ukraine. Doors just flew open,” recalls Brooke. In a day and a half, Brooke briefed eight different hedge funds and major institutional investors in Manhattan. “Asset managers were intrigued to learn that BCP was expanding to Ukraine and excited by what is going on in Ukraine.” Pike also recalls the enthusiastic response. “In one day, all the biggest investors wanted to see him. And these were guys who didn’t want to come to the Ukraine conference just weeks earlier in June.”
BCP’s business stands on three pillars. It originates bond deals, drawing on relationships built up over years with 1,500 financial institutions including private banks, hedge funds and asset managers. “For a Ukraine bond, we will have 40 sales people spending the week on the phone, and they are going to sell it,” Pike said in early August, when he spent two weeks meeting Ukraine corporate finance officers in Kyiv. Building on relationships with institutions specialized in emerging market risk and reward, BCP has a strong record for selling new issuances. A look at their ‘tombstones’ – notices of transactions over the last two years – shows that issuers repeatedly return to BCP. “Our clients are very loyal to us and we are very loyal to them,” comments Pike. BCP also distributes research coverage to every issue “for the life of the bond.” Covering 250 emerging market bonds, including 18 from Ukraine, Pike explains, “BCP is the only one in EM hiring for research. The research team is lead by Ben Hough, a managing partner who was a top portfolio manager for two decades in New York.”
This flow of information by an independent research unit generates business for BCP in the secondary market. One month after a recent Brazilian bond placement, Pike said his trader in Rio de Janeiro checked the volume of trades. BCP accounted for 80% of the first month’s volume. “This is another reason why issuers love us,” says Pike. The company makes about 25,000 trades a year, turning over USD 10 billion in bonds. Today, BCP has trading desks in Greenwich, Miami, Los Angeles, Madrid, Mexico, Rio de Janeiro and Singapore. Meanwhile, the bulk of BCP’s bond work is with Mexico, Brazil and Argentina.
Despite this focus on Latin America, the expansion to Ukraine is not entirely out of Pike’s comfort zone. BCP worked extensively in Russia from 2003-2010. As a legacy, the company has several Russian-speaking staff members. Pike’s first exposure to the Russian language was in April 1975 when he piloted a US Air Force intelligence gathering plane over Laos, listening to Soviet radio traffic surrounding the fall of Saigon. Fast forward to last month and Pike was in a classroom five afternoons a week, taking Russian language lessons in Kyiv’s Podil riverside district.
About the interviewees: Randall E. Pike (left) is president of BCP Securities, LLC. James Brooke (right) is Managing Director of BCP Securities Ukraine (Photography: Veronica Green Photography and Alexander Bugaenko)