(Adds Breaking Views link, updates closing share price)
By Avik Das and Mike Stone
April 16 Shares of Moelis & Co rose as
much as 9 percent in their debut on Wednesday despite recent
market pressure on financial stocks including boutique
Underwriters cut the size of the offering and priced it
below its targeted range. Still, 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, fewer 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 early on
before giving up nearly a dollar from that high. The shares were
at $26.40, up 5.6 percent, in afternoon trading.
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
The S&P 500 index has fallen 3 percent since touching
a lifetime 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 including
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
At least 84 companies have raised about $18 billion so far
this year in the U.S. IPO market, the highest amount since 2008.
KEN MOELIS KEEPS CONTROL
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)
The voting structure of the shares will not only protect the
company from attacks by activist shareholders but also provide a
shield from volatility created by Wall Street consensus
estimates, Moelis said.
The 55-year-old 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 said it was important to provide a liquidity event
for employees with a stake in the firm, adding that many
employees had received a portion of compensation in stock for up
to seven years. Still, managing directors are prevented from
selling stock for at least three years, he said.
Moelis started his career in 1981 at junk-bond pioneer
Drexel Burnham Lambert after graduating with an MBA from the
Wharton School of Business.
The compensation structure the IPO creates will allow the
company to remain focused on clients, versus companies where
control rests in the hands of shareholders, he said.
The New York-based company, which says it has advised on
deals with a combined value of 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
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' 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.
Moelis' shares closed at $26.15, up about 4.6 percent, on
Wednesday on the New York Stock Exchange.
(Reporting by Avik Das in Bangalore and Mike Stone in New York;
editing by Prateek Chatterjee, Saumyadeb Chakrabarty and Matthew