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Morgan Stanley Usurps Rivals for a Critical Role in IPO Relaunch

Morgan Stanley stock

Morgan Stanley managed to overtake rivals such as Citigroup, Deutsche Bank, Goldman Sachs, and Credit Suisse, no leading a $1.45 billion relaunch of an IPO. It’s Hong Kong’s second-largest IPO this year, and an oddly dramatic shuffle of roles on this big deal.

Morgan Stanley was approached to this back in August by ESR Cayman and Warburg Pincus, Cayman’s main backer. They came requesting aid in developing a rescue plan for ESR. The group’s first Initial Public Offering (IPO) was forced to stop in its tracks back in June.

CLSA, Citigroup, Morgan Stanley, Goldman Sachs, and Credit Suisse all predictably declined on commenting about anything. No one said a word about the massive shuffle of banks that worked on the deal, not even ESR and Warburg Pincus.

Worldwide, banks compete vehemently with each other for an IPO’s top billing. This is determined by who is at the top of the list, or to the left in each category. It seems like it just matters about publicity, but league-table credit is also derived from this, and it’s usually reflected with the fees a bank is willing to take.

Interestingly enough, Morgan Stanley didn’t have any role in the first IPO attempt. From literally nothing, Morgan Stanley has managed to take the proverbial throat, leading the relaunch of the IPO as the JGC, or the Joint Global Coordinator. The so-called “lead left” of the IPO.

A senior equity capital banker, one that’s uninvolved with the transaction, stressed how incredibly rare this event is. It’s not every day that a bank that wasn’t even working on a deal get offered one of the most important roles within it.

The way an IPO operates in Hong Kong is interesting. The top-ranked banks are known as sponsors. They carry legal accountability for the prospectus’s accuracy. Below them are the Joint Global Coordinators, and the bottom rung is the Joint Bookrunners (JBRs). JBRs are those who collect orders from prospective investors, but they don’t typically play a larger role than that.

Back in the June deal, CLSA and Deutsche Bank were the lead sponsors. Credit Suisse, Citigroup, Goldman Sachs, and DBS were the joint global coordinators as well, but this time would be different.

With the relaunch, the investor meetings are being led by Morgan Stanley. They will lead with the deal on Wednesday in London. This is just a continuation of a roadshow that already happened in Hong Kong and Singapore, finishing on Thursday in New York.

Only two banks’ analysts are producing the deal’s research: Deutsche Bank and Morgan Stanly. Typically, this is a sign of what banks are at the help of the IPO. While technically CLSA and Deutsche Bank are still considered sponsors, this is because removing them as such would mean the entire IPO needs to be redone.

With the second attempt, ESR is still planning to do the same thing. They want a market capitalization of $6.74 billion, selling shares for up to $1.45 billion to enable this.

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Ali Raza

A journalist, with experience in web journalism and marketing. Ali holds a master degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.