January 16, 2014 11:26 pm

Boutique bank Moelis eyes market debut this year

Kenneth Moelis©Bloomberg

Ken Moelis, a master salesman, has built a firm with $400m in revenue

Moelis & Company, the boutique investment bank, plans to confidentially file for an initial US public offering as soon as Friday, said people familiar with the matter.

The New York-based company is working with Goldman Sachs and Morgan Stanley for a stock market debut that could take place later this year, these people added. A US listing would come six-and-a-half years after Ken Moelis, who leads the company, quit as president of UBS’s investment bank to launch the eponymous boutique.

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Moelis has chosen to file under the Jumpstart Our Business Startups Act, or JOBS Act, which allows companies with less than $1bn in annual revenues to register with securities regulators confidentially and only reveal their paperwork to investors three weeks before to the start of an investor roadshow.

The bank is expected to report revenues in excess of $300m for last year, one person said, and that it was profitable. Goldman Sachs, Morgan Stanley and Moelis declined to comment. Moelis is also working with law firm Skadden, Arps, Slate, Meagher & Flom, which declined to comment.

In its filing, the company is expected to spell out long-term lock-up share agreements for its senior partners to help assure potential investors, one person added. The offering is expected, however, to consist primarily of existing shares, this person said.

The boutique employs about 600 globally with Mr Moelis and its managing directors controlling about 85 per cent of its shares. Sumitomo Mitsui Financial Group, the Japanese bank, bought a 5 per cent stake in 2012 for $93m. Several unnamed US and European investors control the remainder. Moelis paid out $35m to staff and investors last year in what was its first ever cash distribution.

An IPO would come as hopes for a revival in mergers and acquisitions activity are once again starting to take hold after similar optimism for a broad-based recovery in global dealmaking failed to materialise in recent years.

The deal is likely to be marketed as an opportunity for investors to get direct exposure to more M&A activity. It comes as its publicly traded peers have seen their share prices climb rapidly, particularly Evercore Partners, which has risen 85 per cent over the past 12 months.

Moelis has overcome a dull market for dealmaking in recent years, advising on a series of high-profile transactions including the $30bn merger between Omnicom and Publicis to create a giant advertising group, the $23bn takeover of ketchup maker Heinz by Warren Buffett’s Berkshire Hathaway and SABMiller’s $11bn bid for Foster’s, the Australian drinks group.

The bank also advised a group of Co-operative Bank bondholders on a restructuring plan for the UK lender that handed control to its investors. The boutique finished 15th in a 2013 ranking of the top global financial advisers on mergers, according to data from Thomson Reuters.

Mr Moelis cut his teeth on Wall Street, with stints at Drexel Burnham Lambert and Donaldson, Lufkin & Jenrette before he moved to UBS.

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