This time last year, Euromoney’s discussions with shortlisted candidates for this award were peppered with a cautious optimism that 2023 would turn out to be a better year for business than 2022. That turned out to be nearly a year premature: from a mid-2024 vantage point it can be difficult to recall just how tricky 2023 was.
The year demanded complex, multiproduct solutions for clients that required different parts of a firm to work together seamlessly. All banks tell you that they do this, but only some really deliver. In 2023, the firm that did this best was Morgan Stanley, the world’s best bank for financing this year.
“The Covid years were anomalies with regard to capital raising,” says Anish Shah, global head of investment grade acquisition finance. “In 2022 inflation was becoming a big concern and the rapid move in rates meant that clients were effectively on pause. It was only in 2023 that they started thinking strategically again.”
The firm correctly anticipated that the first wave of activity would come from corporates, followed by financial sponsors.
Shortlisted
- Goldman Sachs
- BNP Paribas
In May, the firm was joint bookrunner on the $3.5 billion exit of Femsa’s stake in Heineken, following the sale of just under €10 billion worth of stock since 2017. Morgan Stanley is the only firm to have led all Femsa’s sell-downs in Heineken, and the deal involved close cooperation between US equity capital markets and Latin American banking.
“The Femsa/Heineken deal was a good example of the integrated firm at work,” Mo Assomull, global head of capital markets, tells Euromoney.
The full force of the franchise came to bear with what the team see as their key deal: the bridge facility and takeouts to back the $14 billion strategic acquisition by Canadian energy firm Enbridge of three different gas utility assets from Dominion Energy.
The assets had to be bid on separately, so Morgan Stanley structured a $9.4 billion deal that effectively bundled the transaction into three bridges. The takeouts were done in the Canadian dollar and hybrid US dollar bond markets, one of which in September was the biggest bought deal in either jurisdiction since 2009.
The $3.5 billion offering of three-, five-, seven- and 30-year notes raised a peak orderbook of $19.8 billion despite there being 14 other issuers in the market the same day.
The Enbridge deal was structured as multiple M&A transactions to minimize dilution and to protect the rating. The September deal followed a $3 billion deal for the firm in March, which included a $2.3 billion sustainability-linked tranche – the biggest to date in US dollars.
That ability to lead with advice but also follow through with funding is something that very few firms have.
“When financial markets are very predictable, the ability to get a deal completed takes on less importance,” says Dan Toscano, global head of leveraged finance at the firm. “In 2023, the ability to get a deal completed became a big topic.”
This has also been in evidence in 2024 with the $3.35 billion whole business securitization for Subway’s buyout by Roark Capital Group in May.
The Femsa/Heineken deal was a good example of the integrated firm at work
Mo Assomull
“When the Subway transaction was agreed to, no one thought we could raise $3.5 billion from a whole business securitization,” says Toscano. “We could do it because we have all the product capabilities. We were seeing capital flows rising across all asset classes. We were watching cash building up and felt comfortable leaning in. Six months earlier we wouldn’t have had the confidence to lean into capital raises of that magnitude.”
This is a global award and while Morgan Stanley is unsurprisingly preeminent in the US, it has been right in the middle of key deals elsewhere as well. Its powerful financial institutions franchise meant that it was dead centre of the defining transaction in the sector last year: UBS’s takeover of Credit Suisse. And it was also lead financial adviser to the emergency weekend capital raise for Metro Bank in the UK.
Elsewhere in Europe, Morgan Stanley was joint global coordinator on the landmark €2 billion Hidroelectrica IPO in Romania. The project team ran a bespoke marketing process for that deal, targeting 78 unique investors for early-look meetings, which produced three cornerstone investors. The roadshow involved meeting more than 150 investors, and the final deal was many times oversubscribed. The transaction reflects the US firm’s understanding of flows in the region and judgement of what could get done.
That ability to read the market and know what is possible certainly stood the firm in good stead in 2023 and, as the Subway deal shows, well into 2024. It will continue to be essential even as market conditions improve as many clients remain cautious after a bruising few years.
“Boards are less willing to live with uncertainty,” points out Evan Damast, global head of equity and debt syndicate. “I can’t see that pendulum swinging back.”
