IPO Preview: Moelis & Co.

Apr.15.14 | About: Moelis & (MC)


An investment bank specializing in mergers and acquisitions.

Sector stocks have not performed well in the last month.

80% of the proceeds not going to the company.

Based in New York, NY, Moelis & Company (NYSE:MC) scheduled a $201 million IPO on the NYSE with a market capitalization of $999 million, at a price range midpoint of $27.50, for Wednesday, April 16, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint Managers: Goldman Sachs, Morgan Stanley, Moelis & Company, J.P. Morgan, UBS Investment Bank

Co-Managers: Keefe Bruyette Woods, Sanford Bernstein, JMP Securities

End of lockup (180 days): Monday, October 13, 2014

End of 25-day quiet period: Monday, May 12, 2014


MC is an investment bank specializing in mergers and acquisitions.



Valuation Ratios


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13 yr. assuming 40% tax, adj income

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Greenhill (NYSE:GHL)







Evercore Partners (NYSE:EVR)







Lazard Ltd. (NYSE:LAZ)







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GHL and EVR are both down 10% in the last month.


Sector stocks have not performed well in the last month, see valuation and chart below.

80% of the proceeds not going to the company.

The rating for MC is neutral+; 'plus' only because the public stock of segment competitors is owned mostly by institutions, who may want to include MC in their sector holdings.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.


MC is a leading global independent investment bank that provides innovative strategic and financial advice to a diverse client base, including corporations, governments and financial sponsors.

MC will be a holding company, and its only asset will be its partnership interests in Group LP, its equity interest in the sole general partner of Group LP, Moelis & Company Group GP LLC, and its interests in its subsidiaries.


MC assists its clients in achieving their strategic goals by offering comprehensive, globally-integrated financial advisory services across all major industry sectors. MC's team of experienced professionals advises clients on their most critical decisions, including mergers and acquisitions ("M&A"), recapitalizations and restructurings and other corporate finance matters.

Since its inception, MC has achieved rapid growth by hiring high-caliber professionals, expanding the scope and geographic reach of its advisory services, developing new client relationships and cultivating its professionals through training and mentoring.

Today, MC serves its clients with over 300 advisory professionals, including 87 Managing Directors, based in 15 offices around the world. MC has advised on over $1 trillion of transactions, including three of the ten largest announced global mergers and acquisitions and four of the ten largest announced global recapitalizations and restructurings in 2013.

MC creates lasting client relationships by providing focused innovative advice through a highly collaborative and global approach, not limited to specific products or access to particular regions.

MC's compensation model fosters its holistic approach to clients by emphasizing quality of advice, and is not a commission-based structure where employees are compensated on a defined percentage of the revenues they generate.

MC believes its discretionary approach to compensation leads to exceptional advice, strong client impact and enhanced internal collaboration.


MC was founded in 2007 by veteran investment bankers to create a global independent investment bank that offers multi-disciplinary solutions and exceptional transaction execution, combined with the highest standard of confidentiality and discretion.

Dividend Policy

MC intends to pay a quarterly cash dividend initially equal to $0.17 per share of Class A common stock, commencing with the third quarter of 2014.

Annualized, that's a 2.47% yield at the price range mid-point of $27.50.

Holders of MC's Class B common stock will be entitled to receive dividends of the same type as any dividends payable on outstanding Class A common stock.

Dividends on shares of Class B common stock will be calculated based on the applicable subscription amount, such that the aggregate dividends payable with respect to Class B common stock will equal the dividends payable with respect to an equivalent dollar amount of Class A common stock.


MC's competitors are other investment banking and financial advisory firms. MC competes on both a global and a regional basis, and on the basis of a number of factors, including depth of client relationships, industry knowledge, transaction execution skills, its range of products and services, innovation, reputation and price.

MC believes its primary competitors in securing advisory engagements include the investment banking businesses of Bank of America Corporation, Citigroup Inc., Credit Suisse Group AG, The Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley and other large investment banking firms, as well as independent investment banking firms, such as Evercore Partners Inc., Greenhill & Co., Inc., Houlihan Lokey, Inc., Lazard Ltd. and NM Rothschild & Sons Limited.

5% stockholders

Kenneth Moelis 96.6%

Use of proceeds

MC expects to net $176 million from its IPO. Proceeds are allocated as follows:

$23 million of the net proceeds to make one-time payments to the partners of Old Holdings who received, directly or indirectly, shares of Class A common stock in exchange for the Group LP Class A partnership units they would otherwise have received in connection with the reorganization.

Moelis & Company will use the remaining net proceeds from this offering to purchase Class A partnership units directly from Group LP.

Group LP will use $118 million of the net proceeds it receives from this offering to make a one-time cash distribution to the partners of Old Holdings who hold Group LP Class A partnership units as of the day prior to the closing of this offering.

Group LP will use the remaining net proceeds that it receives for general corporate purposes.

Disclaimer: This MC IPO report is based on a reading and analysis of MC's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.