Best Investment Banks 2011: Global Winners

Global Winners

Best Investment Bank

Morgan Stanley

Morgan Stanley’s broad-based strength in equity underwriting and financial advisory work on mergers and acquisitions worldwide is unparalleled. The investment bank’s only relative weakness is in the fixed-income area, which it is working to build up with a string of recent hires.

“Our performance in 2010 reflects a core strategic commitment to serving clients,” says Paul J. Taubman, co-president of institutional securities and head of Latin America and Japan at Morgan Stanley. “That business principle sets us apart, particularly in challenging markets and economic cycles. During the recent financial crisis, for example, we redoubled our commitment to maintaining a leading client franchise. We invested in talent, resources and ideas.”

In 2009, Morgan Stanley acquired a controlling stake in Smith Barney from Citi to create a joint venture wealth-management firm, known as Morgan Stanley Smith Barney.

Morgan Stanley is concentrating on more stable and less capital-intensive areas, such as wealth management and M&A; advice, rather than on proprietary trading. Its net income in 2010 rose to $4.5 billion from $1.3 billion a year earlier. “I believe we are better positioned and more qualified than ever to add value to our clients’ businesses over the long term,” Taubman says.

Best Equity Bank

Morgan Stanley

Morgan Stanley led all equity capital market underwriters globally in 2010. Not only did the bank lead in initial public offerings, as well as follow-on issues, but it also was the leading equity bank in North America, Western Europe and Asia.

Morgan Stanley underwrote 322 equity and equity-related issues worldwide last year, with total proceeds of $80.7 billion. Of these, 99 were IPOs, which raised a total of $22.4 billion. Overall, global equity capital market issues declined by 2% last year, despite a record fourth quarter, which included proceeds of $23.1 billion for General Motors and a record $17.9 billion Hong Kong IPO by AIA, the life-insurance unit of AIG. Estimated fees from equity issues fell by 13.7% from 2009, according to Freeman Consulting.

Best Debt Bank

Barclays Capital

Barclays Capital was the number-one bookrunner for global debt deals in 2010, with a strong showing in investment-grade and international bonds. The bank managed 1,123 deals with total proceeds of $422.9 billion. Barclays Capital was the leader in US debt transactions and number two in global investment-grade corporate debt.

Overall global debt capital market proceeds totaled $5.1 trillion in 2010, a decline of 10% from a year earlier, despite an increase of 18% in the number of global offerings, according to Thomson Reuters. There were more than 16,000 debt offerings last year, up from 13,746 in 2009. The volume of corporate high-yield debt set a full-year record of $317.5 billion in 2010, with a quarterly record of $102.2 billion in the fourth quarter.

Best M&A; Bank

Morgan Stanley

As the global economy began to strengthen in 2010, mergers and acquisitions rose 29.3% from a year earlier. Energy and power companies were the leading sector for announced M&A; deals announced last year, followed by financials. Morgan Stanley was number one in the number of announced deals, with 394. It also led in the value of announced transactions, if the conversion of American International Group’s preferred stock held by the US Treasury is counted as a change of control.

Regarding the outlook for 2011, Paul J. Taubman at Morgan Stanley says: “Clients are telling us they want to grow. Strategic transactions certainly will play a major role across all our global regions. I expect our M&A; and event financing teams will remain busy coordinating solutions for a wide range of clients in virtually every sector.”

Best Up-and-Comer

QInvest

Amid the financial crisis, Doha-based QInvest embarked on a major expansion program in 2009 and created a broad-based, shariah-compliant investment banking platform. The bank has since won and executed numerous high-profile transactions. It was sole financial adviser to Qatari Diar on the acquisition of the US Embassy premises in London. QInvest also is advising Qatar Holding on the purchase of Harrods, the London-based department store. It is advising Qatar Navigation on its $2.3 billion proposed merger with Qatar Shipping.

“We are committed to continually offering innovative financial solutions which deliver high-quality products and services to clients, covering advisory, financing and investment activities,” says chief executive officer Shahzad Shahbaz. “This award is a significant achievement for the experienced and talented team we have assembled at QInvest. It demonstrates our progress in the past few years positioning us for solid future growth.”

QInvest was joint lead manager and bookrunner on the $750 million sukuk of Qatar Islamic Bank in October 2010. This was the first international sukuk offering by a Qatar-based financial institution. In February 2010, QInvest took a 25% strategic stake in Ambit, an investment bank based in India.

Most Creative

Bank of America Merrill Lynch

Bank of America Merrill Lynch can take credit for a long list of innovative deals in 2010. The bank created farm-asset-linked capital securities, or falcons, to meet the capital needs of Farmer Mac, the Federal Agricultural Mortgage Corporation. BoAML completed six concurrent capital markets transactions for Arizona-based trucking company Swift Transportation, including an IPO and refinancing.

“As a trusted adviser with global reach and a leadership position across all product lines and asset classes, we work toward providing a creative, optimal solution for our clients,” says Purna Saggurti, co-head of global investment banking. “We are agnostic to the instrument and focus solely on our clients.”

BoAML helped International Lease Finance Corporation, a subsidiary of American International Group, return to the capital markets. The bank designed an innovative transaction structure that allowed ILFC to raise $1.3 billion of secured financing, which was quickly followed by a $2 billion offering of senior unsecured notes. BoAML also reopened the covered bond market in the US, as lead manager of a $2 billion issue for Canadian Imperial Bank of Commerce.

Saggurti says he is optimistic about 2011, as the cost of debt remains low, corporate cash balances are still high and growth capital is available. “This will result in increased growth primarily through acquisitions,” he says. “Growth will be global and activity could be weighted to natural resources—oil and gas, and metals and mining. Our bank has the financial strength to help our clients in these growth initiatives, both by advising them and raising capital.”