Financial Sponsors Groups rankings?
Hi,
I found a ranking on here from 2012, but would really like to get an updated sense of where the best FSG are. Or directions to league tables specific to sponsors, which I'm having trouble finding.
Thanks in advance
CS JPM / BAML / Citi (Balance Sheet play banks) Rest
Best Sponsors practice: 1. CS 2. BAML / JPM 3. GS
Best Sponsors group to work in: 1. BAML 2. CS 3. JPM
http://dmi.thomsonreuters .com/Content/Files/4Q2015_Global_Investment_Banking_Review.pdf
Delete the spaces above - for some reason I can't post links...
Go to Slide #8 for data on Financial Sponsor league tables. For those of you who are too lazy:
1.) Goldman Sachs 2.) Morgan Stanley 3.) Credit Suisse 4.) JP Morgan 5.) Bank of America Merrill Lynch 6.) Barclays 7.) Deutsche Bank 8.) Citi 9.) Jefferies 10.) RBC Capital Markets
Couple notes: - You'll notice that there is not that big of a fee difference between the BBs because financial sponsors usually tend to share the fees across several banks in a financing/exit to keep them all happy.
Jefferies is sort of an anomaly because they have recently been positioning themselves as a go-to bank for any LBO deals that require more than 6x leverage (which is what the regulators demand that too big to fail banks abide by in terms of maximum leverage offered). Jefferies falls outside of the regulatory reach, so they've been offering themselves as the bank that'll get the sponsors the 6.5 - 7.5x leverage that BBs cannot offer. Hence their rise in the whole financial sponsors space is something that's been recent. (2014~2015)
Out of all BBs, CS tends to be the most aggressive in terms of financing (LBOs, Dividend Recaps etc), hence their top reputation within the financial sponsor space (a couple years back, they even got a warning letter from the regulators telling CS to tone it down with the leverage). If you connect the dots, you can see why this translates particularly well to the analyst experience, in terms of PE exit opps in that group.
This list is not relevant to answering the question about which Sponsors groups are best - this list includes significant fees paid by Sponsors for deals that are not run out of Sponsors groups (like a sell-side M&A process) which explains why a bank like MS which does not have a reputable FSG is highly ranked in this list.
To answer the OP's question you need to look at the top financing shops that lead large LBOs and that's always CS / BAML / JPM.
I get the gist of what you're trying to say, but I disagree with your general statement.
The word "Best" is subjective, and it depends on what criteria we use to determine a group as the "best". Yes, if we're speaking strictly in terms of pure LBO financing, then I'd say the ranking you've put above is accurate (I'd also tack in DB/Barclays and possibly even Jefferies to round out the top 5). But financial sponsors (FS) groups also work with other products such as exits (IPO/M&A), hedging (risk/swaps), and portfolio acquisitions (can be done out of FS group or respective industry group), along with the standard LBO/DiviRecap/refinancing etc.
In 2015 in particular, the equity markets were at an all-time high and corporates were sitting on a ton of cash, leading to a lot fewer LBOs (because potential LBO targets were either too expensive, or PE firms couldn't outbid corporates without sacrificing too much IRR), and a lot more of exits (read: IPO). GS and MS are particularly strong when it comes to equities, and coupled with their historically strong industry M&A groups (for portfolio acquisitions), it's no surprise that they're on top of the financial sponsor league tables for 2015.
But to get to your point, once the LevFin markets start to heat up, we will see a lot more LBOs and the firms you've mentioned above (CS/JPM/BAML) will come out stronger in league tables as they take the charge with the debt financings (an area that GS/MS are typically unwilling to push very hard in, due to their smaller balance sheet).
TL;DR: If the OP is asking strictly in terms LBO financings, then yes CS/JPM/BAML have the best financial sponsors groups for that, but if you're talking about the entire spectrum of product offerings / dealflow related to financial sponsors clients (exits, securitization, hedging, add-on M&A etc.) then the league tables I've shown above are generally accurate. Again, take the league tables with a grain of salt because the standings change frequently year after year.
Hope this helps.
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