J.P. Morgan is the best current example of a success story on Wall Street. With its fortress balance sheet and careful management of risk, the bank grew and remained profitable throughout the financial crisis. J.P. Morgan was the leading arranger of debt and equity offerings worldwide last year. The fact that the investment bank serves nearly 20,000 clients is a tribute to the appeal of its offerings. In addition to lending money and raising capital, J.P. Morgan provides strategic advice and risk-management services to customers in more than 100 countries.
The bank aims to be the global leader in all of its business lines. It came close last year, although it did not take the title in M&A.; James “Jes” Staley was named head of investment banking at JPMorgan Chase in September 2009. He previously was the company’s head of asset management. Staley joined J.P. Morgan in 1979 and has spent his entire career at the bank.
The better-than-expected earnings of JPMorgan Chase in the first quarter of 2010 were largely the result of strong earnings in its capital markets-related businesses. The bank earned $3.3 billion in the first quarter, up from $2.1 billion in the same period a year earlier. The investment bank generated strong net income and fixed-income markets revenue.
The global equity capital markets sprang to life in the final quarter of 2009, the busiest three-month period on record, according to Thomson Reuters. Issuance totaled $858 billion for the full-year 2009, an increase of 36% over 2008. J.P. Morgan was the number-one underwriter in the equity capital markets for the second straight year. It led 389 issues, with total proceeds of $104 billion. J.P. Morgan Cazenove was a lead manager of the largest underwritten offering of 2009, a $22.5 billion rights issue of Lloyds Banking Group. J.P. Morgan Cazenove became a wholly owned part of J.P. Morgan in January 2010. Previously, it was a joint venture of J.P. Morgan and UK-based investment bank Cazenove.
Global debt capital market activity rose 29% last year from 2008, reaching $5.6 trillion. Investment-grade corporate debt, excluding debt issued by financial companies, was a record $1.2 trillion. J.P. Morgan ranked number one in the league tables for global debt underwriting in 2009, with $511 billion in proceeds from 1,313 deals, according to Thomson Reuters. The bank led in both investment-grade and high-yield debt underwriting.
Morgan Stanley topped the worldwide rankings of financial advisers on mergers and acquisitions announced last year. The firm advised on 311 deals valued at $624 billion, giving it a market share of 30.1%. Morgan Stanley’s ranking improved from number five in 2008.
Morgan Stanley worked on each of the top five deals in 2009, and it was the leading financial adviser in Europe as well as Asia. China International Capital Corp (CICC), Morgan Stanley’s joint venture with Construction Bank of China, was the first international investment bank to be licensed by China’s central bank in 1995. Morgan Stanley plans to sell its 34.3% share of CICC and establish a new business platform in China that will be more directly under its control.
GulfMerger was established in Kuwait in March 2007 as an investment bank focused on middle-market M&A; advisory services in the Middle East. In the 12 months through March 1, 2009, GulfMerger advised on 18 deals, more than any other bank in Kuwait.
“GulfMerger recently advised on some of the region’s ground-breaking transactions, including the first-ever acquisition of a public transport company in Jordan and the first-ever acquisition of an aircraft-leasing company in Kuwait,” says Yann Pavie, chief executive of GulfMerger. “We believe these transactions are likely to trigger further consolidation in the Middle East in these sectors.”
GulfMerger was sole financial adviser to City Group, Kuwait’s largest ground transport provider, on its acquisition of a 51% stake in Comprehensive Multiple Transportation, which operates a bus company in the Greater Amman area of Jordan. The deal could be a catalyst for regionalization of a sector with significant economies of scale, Pavie says.
Bank of America Merrill Lynch
Bank of America Merrill Lynch (BAML) devised innovative share structures that were used in capital raisings by major financial institutions in the US and Europe last year. Among its many achievements, BAML was joint global coordinator of the largest ever fully underwritten capital raising in Europe, a $35 billion recapitalization of Lloyds Banking Group. The financing included the largest rights issue ever, which was combined with the largest exchange offer ever by a European financial institution. BAML designed a new form of contingent capital securities, known as enhanced capital notes, which enabled Lloyds to raise capital when it needed it most. “This innovative structure will become the template for contingent capital issuers around the world,” says Purna Saggurti, co-head of global investment banking at BAML. “Creativity and innovation are the keys to our success and the reason why we have become the first call for our clients that want customized solutions.”