North America Leveraged Finance House: Wells Fargo
Delivering on success Wells Fargo’s multi-year push to carve out market share in the US leveraged finance space, backed by a hefty balance sheet and an army of new recruits, paid dividends in 2024. It is IFR’s North America Leveraged Finance House of the Year.
In 2024, the leveraged loan and high-yield bond market sprang back to life after a fallow period for the asset class. Wells Fargo hit its stride under the leadership of Charles Scharf who has been building its investment banking business since he became CEO in 2019.
While the bank has been a perennial player in the pro rata loan market, it stood out last year for its ability to capture coveted lead-left mandates for dividend recaps, LBOs, acquisitions and general purposes.
Competition for such business – which carries better economics for banks – is always stiff, but particularly so in 2024 when borrowers were largely focused on refinancings and repricings. Yet Wells Fargo won a string of new clients and proved it could execute these complex trades.
After several years of nipping at the heels of the asset class’s dominant banks, Wells Fargo in 2024 took second spot on LSEG’s leveraged new money league table – a notable achievement for a bank that was sixth in 2020.
With an 8.47% market share and credit for US$28.74bn of new money loans, Wells Fargo pushed out JP Morgan, which for years has regularly jostled with Bank of America in first or second place.
It was a similar story on the M&A league for high-yield bonds, where Wells Fargo landed in third spot in 2024, up from fifth place the prior year and 10th in 2020.
Part of that success came down to investments in new talent. Over the past four years, Wells Fargo has made 50 senior hires in its corporate and investment banking team and deepened relationships with C-suite executives and the sponsors that drive the asset class’s biggest and most lucrative deals.
“What we have done with the new hires is diversified our client relationships, which has shown up in our market share gains,” said Trip Morris, who co-leads Wells Fargo’s leveraged finance team with Alexandra Barth.
Issuers compensated the bank for those efforts by awarding it a slew of top mandates. As of early December, it had won more than 70 institutional lead-left positions in 2024, 43 in the term loan B space and 29 on high-yield bond mandates, nearly tripling the amount the bank clinched in 2021, said Morris.
Importantly, 19 were on much-coveted sponsored deals – a business that Wells Fargo has grown substantially after hiring Malcolm Price from Credit Suisse as head of financial sponsors.
These included multiple debt offerings for Blackstone-backed garage door opener manufacturer Chamberlain. The bank also got its foot in the door at Ellucian, the education software firm owned by Blackstone and Vista Equity Partners, which came to market with a Wells Fargo-led bond that was part of a US$3bn financing package to pay a dividend.
“To come from not being in [Ellucian’s] LBO to lead the bond tranche is illustrative of the kind of movements that have been happening over the course of the year,” said Barth.
Nor was the bank on earlier deals for Pactiv Evergreen, which mandated Wells Fargo as lead-left on a US$1.3bn term loan B. Success begets success, and the bank has helped finance the packaging company’s purchase by Apollo-owned Novolex in a transaction valued at US$6.7bn.
With junk-rated borrowers offering a greater array of financing options as the private credit market grows, Wells Fargo showed it can be nimbler and more creative to compete in this tough marketplace.
By providing capital quickly to clients, the bank gained market share in acquisition financing, advising Tempur Sealy on a proposed US$4bn purchase of Mattress Firm and leading a US$1.6bn term loan B amid regulatory pushback. It was also part of an earlier US$625m delayed draw term loan A for the acquisition, complete with ticking fee.
“Delayed draw facilities are something that private credit has been able to provide in size,” Barth said. “But in the syndicated market, specifically Wells and its underwriters have been more flexible about the introduction of these facilities.”
Steel manufacturer Cleveland-Cliffs, a relatively new relationship for the bank, also awarded Wells Fargo three lead-left mandates in 2024, culminating in a US$1.8bn junk bond to help fund its acquisition of Canadian company Stelco Holdings.
More recently it was sole underwriter on a US$10.7bn acquisition financing for building products manufacturer Quikrete’s purchase of cement producer Summit Materials. “[We] used the balance sheet at a time when the client said we need significant dollars and we showed up,” said Barth.
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