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    Investment BankingInvestment Banking

    Alan SchwartzAlan Schwartz

    President and CoPresident and Co--Chief Operating OfficerChief Operating Officer

    Investor Day March 29, 2007

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    Continuation of StrategyContinuation of Strategy

    Deliver intellectual value added solutions

    Focused industry based strategy with emphasis on core clients

    Seamless delivery of all the firms capabilities

    Leverage Strategic Finance to quickly respond to new and

    emerging opportunities

    Aggressively managing costs and productivity while expanding

    producer base

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    Banking Revenues Achieved Record Levels in 2006Banking Revenues Achieved Record Levels in 2006

    $617$728

    $823 $829

    $1,058

    0

    600

    $1,200

    2002 2003 2004 2005 2006

    Prior period net revenues reclassified to conform to current reporting.

    millions

    14% CAGR

    Investment Banking Segment Revenue

    (excluding Merchant Banking)

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    Key Themes Driving Activity in 2006Key Themes Driving Activity in 2006

    Globalization driving liquidity creation and capital flows

    Rising corporate liquidity

    Lower interest rates and risk premiums Ample liquidity

    Growing size of financial sponsors

    Aging western populations Demand for yield and

    absolute return

    New products and investment vehicles

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    Providing Intellectually Value Added SolutionsTo Our Core Corporate ClientsProviding Intellectually Value Added SolutionsTo Our Core Corporate Clients

    We expect to be active when our clients are active

    For corporate clients, market forces drove significant

    activity in

    Mergers & Acquisitions Corporate restructuring oriented M&A

    We creatively addressed our clients needs though the

    combination of strategic insight and structuring

    capabilities

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    Advised Time Warner on the

    joint $12.7 billion acquisitionwith Comcast Corp. of

    Adelphia Communications

    $12.7 Billion

    Advised NRDC Equity Partnerson the $1 billion acquisition ofLord & Taylor from Federated

    Department Stores

    $1 Billion

    Advised and rendered a

    fairness opinion to Verizon onthe $13 billion spin-off of

    Idearc.

    $13 Billion

    Advised GMAC on the sale of a51% controlling interest to a

    consortium of investors led byCerberus Capital Management

    $7.4 Billion

    Advised Boston Scientific on its

    $27 billion acquisition ofGuidant Corp.

    $27 Billion

    Advised and rendered a fairnessopinion to Fidelity National

    Financial and Fidelity Information

    Services in the merger of FIS with

    Certegy.

    $4.7 Billion

    Marquee M&A Transactions Deal of the Year Nominees

    Marquee M&A Transactions Deal of the Year Nominees

    Advised Viacom in its $50.8billion separation into twopublicly traded companies

    $50.8 Billion

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    M&A Revenue Has Grown Due To BothCorporate And Financial Sponsor ActivityM&A Revenue Has Grown Due To BothCorporate And Financial Sponsor Activity

    $159

    $302 $306 $309

    $494

    0

    200

    400

    $600

    2002 2003 2004 2005 2006

    millions

    33% CAGR

    Prior period net revenues reclassified to conform to current reporting.

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    Financial Sponsor BusinessFinancial Sponsor Business

    Low risk premiums and ample liquidity are fueling a surge in sponsor activity

    Sponsors now account for over 20% of the total Investment Banking fee pool

    We have successfully delivered high intellectually value added resources to

    sponsors in the form of:

    Industry expertise

    Corporate relationships

    Innovative financial solutions

    Depth of industry knowledge and management access is increasingly important tosponsors

    Growth in sponsor business is felt throughout the platform

    M&A

    Leveraged Finance

    Equity (IPOs and follow-on offerings)

    CMBS securitizations to finance company acquisitions Permanent capital vehicles

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    Marquee Financial Sponsor TransactionsMarquee Financial Sponsor Transactions

    Advised Blackstone on its$36 billion acquisition ofEquity Office Properties

    $36 Billion

    Acted as joint book runner for$2.1 billion of debt financing

    and M&A advisor related to theacquisition of the Burlington

    Coat Factory Warehouse Corp.by Bain Capital

    $2.1 Billion

    Acted as exclusive financialadvisor to Apollo and has

    provided committed financingto Apollo on its acquisition of

    TNT Logistics

    $1.9 Billion

    Acted as joint book runner on a21.6 million share IPO for

    J.Crew

    $376 Million

    Acted as sole book runner on a$230 million equity

    underwriting forFidelity National Information

    Services, Inc.

    $230 Million

    Acted as sole lead arranger andjoint book runner on a $1.7billion senior secured credit

    facility and joint book runneron a $1.0 billion senior notes

    offering for MetroPCS

    $2.7 Billion

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    Strategic Finance Seamless Delivery ofFinancing Products to Our ClientsStrategic Finance Seamless Delivery ofFinancing Products to Our Clients

    Focused expansion of equity product offerings

    Initial public offerings

    Focused coverage on both sponsor and industry accounts

    Maintained quality

    Grew revenues through leading larger deals

    Doubled our IPO revenue since 2004

    Customize/Structured finance solutions to meet the demand for yield

    and absolute return

    Structured equity products Created to deliver attractive yields in a low yield market

    Permanent capital vehicles for our alternative asset manager clients

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    International OpportunitiesInternational Opportunities European sales and trading platform now at critical mass

    A necessary precondition for expanding banking

    Growth of sponsor activity, structured products and alternative investment vehiclesplay to our strengths

    Starting to make selective key hires and transfers

    2006 saw a variety of successful transactions proving we can execute significantbusiness for clients

    Arranged $925 million Phase Ifinancing for construction of

    Oman's Blue City. First realestate bond financing in the Gulf

    $925 Million

    Acted as joint book-runningmanager on its $4.485 billion

    inaugural debt offering related toSprint/Nextel merger

    $4.485 Billion

    Advised Merck KGaA on itsunsolicited public takeover offer to

    Schering AG Shareholders to combinethe two companies and provide

    committed debt financing for thebridge loan facility

    $7.4 Billion

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    Growing Producer Base Provides Capacity forFuture Organic GrowthGrowing Producer Base Provides Capacity forFuture Organic Growth

    100% 115%

    140%

    175%

    200%

    0%

    50%

    100%

    150%

    200%

    250%

    2002 2003 2004 2005 2006

    Production greater than $7.5 million

    2002 number of producers indexed to 100%.

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    Investment Banking at Bear Stearns State ofthe FranchiseInvestment Banking at Bear Stearns State ofthe Franchise

    Steady, profitable growth across cycles

    M&A franchise continues to maintain market leadership in our focus

    industries

    Significant participation in the growth of financial sponsor activity

    while maintaining a healthy balance between corporate and financial

    sponsor clients

    Extremely active in new and emerging areas such as permanent capital

    vehicles

    Growing producer base from organic development and select key hires

    Maturation of our sales and trading platform in London provides basis

    for measured expansion of Investment Banking footprint in Europe

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    Certain statements contained in this discussion are forward-looking statements within the

    meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements

    are subject to risks and uncertainties, which could cause actual results to differ materially from

    those forward-looking statements. Numerous factors may affect our business, including butnot limited to interest rates, market conditions, transactions included in our backlog failing to

    close, general economic conditions in the US or other geographic regions that may suffer

    economic downturns. For a fullerdiscussion of these risks see Managements Discussion

    and Analysis of Financial Condition and Results of Operations and Risk Management in the

    Companys Annua