Bernstein JV to deepen coverage as SG steps up in ECM
Bernstein plans to deepen its research coverage as its equities joint venture with Societe Generale enters a new phase after two years of operation, with the expanded tie-up supporting a buildout of the French bank's equity capital markets business, senior executives said.
Those plans come as SG has been picked as one of 21 banks reported to be working on the IPO of SpaceX. The rocket and satellite business is expected to raise about US$75bn in a listing in June, which would easily become the biggest IPO ever. Getting a role, even as one of 16 co-managers, would be a coup for any bank. SG declined to comment on SpaceX.
The Bernstein JV for cash equities and equity research started operating in April 2024. SG has a 51% interest in the JV and is set to take full ownership in 2029 under the terms of the deal by buying the 49% owned by AllianceBernstein.
Bernstein has expanded coverage to about 1,200 companies from 1,000 at the time the JV launched, mostly adding in the US and Asia, and it intends to continue the push, said Stephane Loiseau, deputy CEO of Bernstein.
Loiseau told IFR that Bernstein now covers about 400 US companies, from 300 previously, and it aims to cover 500 by the end of this year.
Bernstein covers about 500 European companies, similar to before, and aims to expand that to 700 in the next 12–18 months, in particular by adding more mid-cap stocks, Loiseau said.
In Asia, he said the JV has expanded to 59 companies in Japan and aims to increase that to 100. It has broadened coverage to about 75 Indian companies and aims to lift that to 110. It also plans to widen coverage of Hong Kong and mainland China companies, taking total Asia coverage to around 270 companies by the end of 2026.
“The whole premise of this joint venture was that you can’t do it regionally, you needed a global offering. We now have a global effort, and connectivity between the regions is key,” Loiseau told IFR in an interview.
He said the buildout has already delivered returns with double-digit percent revenue growth across both research and trading.
Buildup
SG is building up its ECM business to take advantage of the JV, also mainly in the US and Asia.
Anvita Arora, who joined SG in July as co‑head of ECM, said the bank has gone from zero to almost 15 people in its ECM team in the US. She said SG aims to expand in Asia and will have four to five people in its ECM team in the next year or so, notably in India, Hong Kong and mainland China. It has about 40 in ECM in Europe, unchanged from before.
SG's ECM, equity derivatives and prime services platforms are not part of the JV but are connected to Bernstein, and the bank is attempting to make use of the well-respected research and distribution platform.
“We have the trading floor and research, and clients want us to provide advice on ECM,” Arora told IFR.
“We have differentiated access. We bring incrementally good-quality long-only accounts that aren’t on the radar of many of the other banks,” she said.
Arora said the £400m Princes Group IPO in October was the first UK IPO that SG executed in collaboration with Bernstein’s research and distribution teams and the bank brought in differentiated demand from continental European and certain US accounts. That was notable as the deal relied on about a dozen investors to get done and SG was not even top line in the syndicate.
The upcoming IPO of Franco-German defence business KNDS could be the largest in Europe this year with an expected market capitalisation in the region of €20bn–€25bn and has SG/Bernstein as one of four global coordinators. Given KNDS is half-owned by the French state, a domestic bank was expected to feature, but SG still had to fend off its compatriots.
Getting a role on the SpaceX IPO would likely dwarf all other assignments for any bank this year. Other European banks reported to be co-managers are Barclays, Deutsche Bank, UBS, ING and Santander. The syndicate is clearly built around an intention of tapping every geography to maximise demand.
Loiseau said in the US Bernstein will continue to focus on four main industries: energy transition, including infrastructure and data technology; consumer; technology; and financials. He said it may add healthcare coverage later.
He said a lot has happened in the two years of the JV. “We have been helped by the tailwinds in markets, but the integration has happened quickly,” he said.
Bernstein/SG said at the launch of the JV they wanted to create a top 10 global equities firm. Under the terms of the deal, either side can trigger SG’s full takeover on the fifth anniversary of closing the deal. Financial terms of the JV and future purchase have not been disclosed.