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Summary

  • Moelis, a global investment bank, with principle offices in New York, New York, plans to raise $200.8 million in its upcoming IPO.
  • MC has very strong underwriters, and has established itself in tough economic conditions.
  • While some may have reservations towards investment banks in general post-financial-crisis, MC’s core advisory business should mitigate risk; we are positive on this IPO.

Moelis & Co (NYSE:MC), a global investment bank with principle offices in New York, New York, plans to raise $200.8 million in its upcoming IPO.

The firm will offer 7.3 million shares at an expected price range of $26-$28 per share. If the IPO can find the midpoint of that range at $27 per share, MC will command a market value of $1.6 billion.

MC filed on March 4, 2014.

Lead Underwriters: Goldman Sachs & Co, Morgan Stanley & Co LLC

Underwriters: J.P. Morgan Securities LLC, JMP Securities LLC, Keefe Bruyette & Woods Inc, Moelis & Company LLC, Sanford C. Bernstein and Co Inc, UBS Investment Bank

A Global Business

MC is an independent global investment bank offering strategic and financial advice to clients that include corporations, governments, and financial sponsors. The firm maintains 15 offices around the world, and has advised on over a trillion dollars in transactions since its 2007 founding; in 2013, the firm advised on three of the ten largest announced global mergers and acquisitions along with four of the ten largest announced global recapitalizations and restructurings. Its clients have included the likes of Yahoo! (NASDAQ:YHOO), Anheuser Busch (NYSE:BUD), and Heinz.

Valuation

MC offers the following figures in its S-1 balance sheets for the year ended December 31, 2013:

Revenue: $411,386,000.00

Net Income: $70,225,000.00

Total Assets: $444,463,000.00

Total Liabilities: $134,093,000.00

Stockholders' Equity: $309,370,000.00

MC Stands Apart From Competition

MC competes with other large financial institutions, many of which have significantly greater financial resources and are able to offer a wider range of products than MC. MC believes that its concentration on advising sets it apart from its competitors, which focus on trading and lending.

Management With 30 Years' I-Banking Experience

CEO Kenneth Moelis has served in his current position since 2007, and has more than 30 years of experience in investment banking and mergers and acquisitions.

He previously served as the President of UBS Investment Bank and as the Head of Corporate Finance at Donaldson, Lufkin & Jenrette.

He received a BS and an MBA from the Wharton School at the University of Pennsylvania.

Investors Should Consider Buying Into MC IPO

We are positive on this IPO in the proposed range. MC has become a leader in the financial advising world with numerous high profile clients, and it should be able to take advantage of the increasing financial activity accompanying the recovering global economy.

MC's very strong batch of underwriters is also encouraging.

The firm's ability to establish itself in harsh economic conditions is impressive, and MC has done far more than this, generating strong profits in 2013.

We are concerned that some investors may retain reservations towards investment banks in general in the wake of the financial crisis, though those who perform enough research to understand that the heart of MC's business is in advising shouldn't be scared off.

Source: Moelis IPO: A Well-Advised Pick