UPDATE 1-Boutique investment bank Moelis's shares rise in debut

Wed Apr 16, 2014 11:29am EDT

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By Avik Das

April 16 (Reuters) - Shares of Moelis & Co rose as much as 9 percent in their debut, after the boutique investment bank cut the size of its offering and priced it below its targeted range.

The company raised about $163 million after its offering was priced at $25, below the expected price range of $26-$29 per share.

Moelis, founded and led by veteran Wall Street investment banker Ken Moelis, offered 6.5 million shares of Class A common stock, lower than the 7.3 million it had initially planned.

The company's shares opened at $27 on the New York Stock Exchange on Wednesday and touched a high of $27.22 in early trading before giving up some gains.

The recent pullback in U.S. stocks has hurt the IPO market, which got off to a strong start in the first quarter of the year.

The S&P 500 index has fallen 3 percent since touching a life-high of 1,897.28 on April 4 - the same day that Moelis announced its expected pricing range.

A number of recent high-profile trading debuts such as those of Ally Financial Inc and King Digital Entertainment Plc failed to click with investors, who have been picky in a crowded IPO market.

In contrast, IPOs of smaller technology firms, mostly cloud-based service providers, and biotechnology companies have fared better.

At least 84 companies have raised about $18 billion so far this year in the U.S. IPO market, the highest since 2008.


Ken Moelis will retain control of the company by holding all of the class B shares, which have more voting rights than the shares offered in the IPO. (r.reuters.com/dyz37v)

Moelis founded the company in 2007 after leaving UBS AG , where he was president of UBS Investment Bank and previously joint global head of investment banking.

Moelis, 55, started his career in 1981 at junk-bond pioneer Drexel Burnham Lambert after graduating with an MBA from the Wharton School of Business.

The New York-based company, which says it has advised on deals valued at more than $1 trillion, has about 300 advisers in 15 offices across the world.

The company advised H.J. Heinz Co in its $23 billion takeover by Warren Buffett and Brazilian private-equity firm 3G Capital. It also advised Omnicom in its $35 billion merger with Publicis SA.

Moelis was also an underwriter for its own offering, which was led by Goldman Sachs & Co and Morgan Stanley.

Moelis' IPO comes at a time when the M&A market is starting to perk up but shares of other boutique investment banks have been under pressure.

Shares of Greenhill & Co Inc have fallen about 9.3 percent this year to Tuesday's close, while those of Evercore Partners Inc are down 10.3 percent.

Moelis's net income almost doubled to about $70 million in 2013, while revenue rose about 7 percent to about $411 million.

IPOs of Chinese social media company Weibo Corp and Sabre Corp, the owner of Travelocity website, will be priced later on Wednesday. (Reporting by Avik Das in Bangalore; Editing by Prateek Chatterjee and Saumyadeb Chakrabarty)

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