Best global equity capital markets house:
Morgan Stanley
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Also shortlisted: |
Talk to anyone in ECM about the 12 months just past and the conversation will quickly turn to the $25 billion IPO of Alibaba in September 2014, the largest IPO in history and one that attracted overwhelming demand. Jack Ma may be renowned as the visionary founder and builder of China’s leading e-commerce business but he’s also a shrewd manager of his suppliers of banking services. Each of the six leads was declared an active bookrunner, given their own role and equal league table credit.
Morgan Stanley and Credit Suisse (eighth in the global ECM bookrunner rankings for the year under review and not short-listed for this award) were the longest-standing advisers to the company.
Evan Damast, global head of syndicate in ECM at Morgan Stanley, says: “Morgan Stanley was one of two firms working closely with Alibaba. In the intense six months running up to the IPO, I would say that we took the lead on positioning the company and on the preparation of all marketing materials. During the execution, we took the lead on price, with a view the stock would sustainably trade at least in the mid- to high-$80s, when some other firms doubted the deal would have that staying power.”
The NYSE-listed deal was priced at the top end of a pricing range that had been revised up from $66 to $68, immediately making Alibaba at the time of its stock market debut the fourth-largest technology company in the world by market capitalization.
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Alibaba rewarded Morgan Stanley in various ways beyond deal fees. “The company recognized our distribution strength by rewarding us with a higher retail allocation than any other firm. Alibaba also appointed Morgan Stanley as sole credit rating adviser and lead left on its first $8 billion bond deal that followed soon after the IPO in November,” Damast says.
In Europe, Morgan Stanley acted as joint global coordinator and joint bookrunner on another landmark IPO, the privatization sale of Spanish airports operator Aena, which it priced at €58 a share, to raise $4.8 billion equivalent after exercising the greenshoe.
The deal was the largest-ever airport IPO, the largest IPO in Europe since Glencore in 2011 and the largest privatization in western Europe since EdF in 2005 – both deals Morgan Stanley was also a lead on.
Morgan Stanley decided it should not sell the deal just to Spanish pension funds and UK long-only asset managers, the traditional audience. It also approached specialist infrastructure investors, certain hedge funds and sovereign wealth funds, wall-crossing a number of them to anchor the deal.
“The European IPO markets regained their footing in 2014 with a number of sizeable and successful deals,” says Damast. “Even still, the privatization of Aena was substantially larger when compared with recent IPOs. In 2014 Spain became the destination of choice in Europe for local and global investors, which gave us confidence that a sizeable transaction could be well executed.”
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We are proud of our leadership on the Citizens IPO, Paul Donahue, Morgan Stanley |
After the 2014 IPO process was halted, he says the restart in 2015 had to be a success – and it was. “The cornerstone process, rare in Europe until then, went very well, and with three sizeable orders from the start. On the back of a successful marketing programme we were able to raise the price range, which is rare in Europe. The key judgments that were made through the process regarding price, size and marketing allowed Morgan Stanley to deliver a highly successful IPO outcome.”
Morgan Stanley also wins this year’s best investment bank award in part because the different divisions are now working so well together, notably M&A and financing. For Tyson Foods it raised $2.4 billion through a concurrent equity and tangible equity units offering to finance a portion of the $8.7 billion acquisition of Hillshire Brands. It was the largest US consumer retail equity raise since 2010.
Paul Donahue, head of ECM for the Americas at Morgan Stanley, says: “Tyson needed a capital raise with high equity content but wanted to minimize dilution, and we saw an opportunity in equity-linked to do that with a large mandatory offering, raising more through tangible equity units than through common stock.”
In the US IPO market, Morgan Stanley led the $1 billion IPO of fintech disrupter Lending Club. Perhaps even more impressively, Morgan Stanley led the $3.5 billion IPO of Citizens Financial Group, marking the first step for RBS to comply with regulatory demands to exit by the end of next year.
Some potential investors clearly sensed the chance to take advantage of a forced seller. Donahue says: “We are proud of our leadership on the Citizens IPO, where we found every last marginal dollar of demand for the stock from all channels, arriving at an efficient clearing price such that the stock traded flat in its early hours. This reinforced confidence in the deal and the company’s ability to deliver, allowing the stock to trade up, which ultimately closed up 7% on day one, a good outcome for all parties, including buyers from the Morgan Stanley Wealth Management system who were substantial investors in Citizens IPO.”
