Bank of the Year: Morgan Stanley
Asian capital markets activity was muted for most of the year, but even in the doldrums Morgan Stanley was able to deliver outstanding transactions, demonstrating why top-tier clients pick it for crucial deals. Landing leading roles on the region’s biggest and most significant deals, it is IFR Asia’s Bank of the Year.
In a year when Asian international capital markets activity began to rebound, Morgan Stanley was at the centre of the biggest deals, and used its global footprint to ensure the success of cross-border transactions.
Chinese stocks appeared to bottom out around March, but it was not until the announcement of a jumbo stimulus package in September – shortly after the US Federal Reserve made its first rate cut of the cycle – that global investors really bought into the China recovery story. Even before the comeback was cemented, Morgan Stanley delivered some stunning deals that might have been fumbled by less skilled hands.
“The first eight to nine months of the year were tough going, but against that backdrop we did large and historic transactions,” said Saurabh Dinakar, co-head of Asia Pacific global capital markets. “You would not have imagined these deals were possible against a challenging China backdrop. Overall deal volume was slow, but we have been advisers of choice for sponsors and corporates who want to recycle capital as well as corporates looking to raise capital.”
The pick of the bunch was Walmart’s sell-down of its entire stake in Chinese e-commerce giant JD.com in August. The bank was sole bookrunner for the US$3.6bn block, which was the largest-ever sell-down of American depositary receipts in a Chinese company.
Morgan Stanley’s equity-linked business had a banner year, as Chinese companies were reluctant to sell new shares at what they felt were depressed valuations, while investors saw potential for share price gains but wanted some downside protection.
Its deals included a US$5bn CB for Alibaba Group Holding in March, a US$3.5bn trade for Ping An Insurance, a €1.5bn transaction for Amer Sports and US$2bn issue for Zijin Mining. Notably, the Zijin deal was the biggest offshore CB from a company with only A and H share listings, and the first from China to draw substantial demand from global long-only investors. The trade was accompanied by a US$500m equity follow-on.
Morgan Stanley delivered electric-vehicle company Zeekr Intelligent Technology’s US$441m listing in May, the largest US IPO by a Chinese company in almost three years, at a time when the outlook for EV sales was gloomy and political tensions were high.
While China was largely quiet early in the year – for other banks, at least – India was a hot market and the source of some huge transactions.
In June, Morgan Stanley helped Vodafone Group sell a whopping 18% stake in telecommunications infrastructure company Indus Towers through an upsized block that raised the equivalent of US$1.8bn. Two months later it brought an upsized US$1.3bn block trade in Indian airline InterGlobe Aviation.
“Transactions were not easy this year,” said Cathy Zhang, head of equity capital markets for APAC. “We needed to identify the right pockets of demand and the right windows.”
In October, at the start of the China rally, Morgan Stanley was well positioned to bring Hong Kong’s biggest IPO of the year, a HK$5.4bn (US$696m) deal for autonomous driving technology company Horizon Robotics. That deal priced at the top of guidance, closing heavily oversubscribed, and traded up 28% on debut – a rare achievement in a difficult year for Hong Kong listings.
The same month, the bank brought the Rs278.7bn (US$3.3bn) float of Hyundai Motor India. The deal was India’s largest IPO and priced at a premium to South Korean parent Hyundai Motor, unlocking value and encouraging other multinational businesses to start work on listing their Indian units.
Morgan Stanley’s strengths in cross-border transactions were on display throughout the year. The bank helped Super Hi International, which operates overseas branches of Chinese hotpot restaurant Haidilao, and Korea-founded Webtoon Entertainment to list in the US.
Its geographic diversity paid off with roles in some of the most significant deals in each country: in Australia, the market-opening IPO of Mexican restaurant chain Guzman y Gomez, and an entitlement offer followed by a placement for data centre company NEXTDC; in Vietnam, the country’s only block trade of the year, as CVC Capital Partners exited its position in Asia Commercial Bank.
Morgan Stanley ensured its block trades were priced to meet investor appetite, achieving the best outcomes for vendors while avoiding costly missteps. It ensured shares traded well in the aftermarket, as was the case for the biggest block of the year in Hong Kong, a HK$3.72bn clean-up trade in Chinese short-video app company Kuaishou Technology.
“There are a lot of times when MS commits balance sheet for block trades,” said Zhang. “You can see our judgement and ability to distribute from how the stock trades afterwards.”
All in all, Morgan Stanley racked up US$16.3bn of equity and equity-linked league table credit in Asia ex-Japan, topping the rankings and more than tripling its 2023 total, according to LSEG data. In a year when international equity-linked issuance from the region reached US$21.5bn, Morgan Stanley recorded volume of US$4.3bn.
The bank’s equity derivatives business also helped clients manage their risk or raise funds while limiting dilution. In addition to arranging delta placements alongside CB offerings, in October Morgan Stanley executed a block in Australia’s Pilbara Minerals as part of an equity collar financing for China’s Ganfeng Lithium.
The bank earned repeat business and demonstrated its abilities for clients across multiple products. It was one of three global coordinators on Zomato’s 2021 float, but the only one selected for its institutional placement in November – which at Rs85bn was almost as big as the IPO.
As well as leading Alibaba’s CB, Morgan Stanley also helped bring its US dollar bond offering and led the Chinese tech company’s sell-downs in India’s Zomato and Indonesia’s GoTo.
“We are well integrated across capital markets,” said Dinakar. “You don’t have to speak to six people at MS, and you don’t have our people not knowing what the others are doing.”
Choosing not to compete for uneconomic deals means it will never top the Asian bond league table, but the bank still made impressive gains. It generated US$9.8bn of league table credit from G3 bonds from Asia ex-Japan, up 40% from the previous year, and gained half a point of market share.
“In DCM, we prioritise clients that pay proper fees, have a holistic relationship with us and are intelligent users of capital markets,” said Dinakar.
“Our focus in DCM is on wallet share rather than league tables.”
It won roles on the region’s biggest and most significant bond deals, many of them in the technology sector, showing the benefits of its strong industry coverage.
Morgan Stanley led online delivery app Meituan’s US$2.5bn bond deal and Korean battery maker LG Energy Solution’s US$2bn triple-tranche offering.
Innovative FIG deals were also a feature. AIA’s US$1bn Tier 2 bond introduced the regulatory capital lock-in feature to Asia, while Morgan Stanley led two Tier 2 transactions for Cathay Life Insurance. The first Cathay Life deal was the inaugural offshore bond issue from Taiwan’s insurance sector, following a change in regulations, and set a benchmark for the industry. Pan-Asian insurer FWD Group Holdings picked Morgan Stanley to reintroduce it to the public bond market following a corporate reorganisation.
The bank also brought sovereign deals from Hong Kong and the Philippines, and landed a first-time bookrunner role for Indonesia.
“What stands out is the completeness and consistency of our platform,” said Oskar Arnoldsson, head of DCM for Asia Pacific.
Morgan Stanley uses its balance sheet selectively in the loan market in the region, saving most of its firepower for event-driven financings.
The bank advised a Blackstone-led consortium on its acquisition of Australian data centre company AirTrunk, which at A$24bn (US$15bn) was the biggest M&A deal completed in Asia ex-Japan during the year. Morgan Stanley also acted as a mandated lead arranger and bookrunner on a A$5.5bn term loan and revolver to support the acquisition as well as future expansion.
The bank was an MLAB on a A$5.8bn multi-part financing for data services company Vocus Group’s acquisition of TPG Telecom’s fibre and fixed network infrastructure assets, and a sole lead arranger for telecom company Voyage Digital’s US$477m Term Loan B that repriced a first lien loan.
Morgan Stanley garnered the most investment banking fees of any international bank in Asia ex-Japan. It earned US$409m, according to LSEG data, up 61% from the previous year, and grew its wallet share by 90bp to 2%.
That performance came even as the overall fee pool in the region shrank by 10% and most of its peers saw a downturn.
“Our revenues are significantly higher compared to 2023 across DCM and ECM,” said Dinakar. “Our competitors haven’t had the same rebound as us in APAC.”
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