MUFG and Morgan Stanley
The combination of Morgan Stanley and MUFG, forged from the global financial crisis, has delivered extraordinarily well in Japan, where the two groups formed a surprisingly successful joint venture that has confounded expectations of insurmountable cultural challenges.
The bank stands comparison with any international or domestic player, and its point of differentiation is that it does both at the same time. Data from Dealogic show that during our review period, Morgan Stanley – whose statistics include those from the JV – generated almost three times as much investment banking fee revenue as the next foreign bank, JPMorgan, which itself is considered to have had an excellent year. And domestically, when pitted against the likes of homegrown Nomura, it still ranks top three in equity capital markets, domestic DCM, Japanese issuer dollar bonds (where it clearly leads) and international yen bonds.
This has been a year for M&A, and although the venture was not on the definitive Takeda-Shire deal in an advisory role (it instead handled the euro and dollar bonds for the M&A financing), it was on numerous other landmark transactions. The sale of ABB to Hitachi represented a newly streamlined and focused Hitachi now able to purchase international assets better suited to its model.
The issuance of new Yahoo Japan shares to SoftBank, and repurchase by self-tender, was big and sensitive. The acquisition of Magneti Marelli by Calsonic Kansei, through CK Holdings, was a good cross-border deal following Morgan Stanley’s previous advice to KKR in buying Calsonic Kansei in the first place, kicking off the trend of US private equity buyouts in Japan. Tokyo Century buying Aviation Capital Group was a strong example of outbound cross-border ambition.
Nobody had a good year in ECM last year, and being on the record-breaking SoftBank KK IPO is a mixed blessing, given the deal’s immediate performance. But there were better, smaller deals with Morgan Stanley involved, notably the Recruit Holdings Y374.1 billion ($3.4 billion) global follow-on and a euro-yen convertible for Takashimaya.
In debt, the JV handled a $2.5 billion benchmark from Panasonic, the first such deal from the issuer since 1992. Kansai Electric’s $500 million deal was the first non-yen benchmark bond for 10 years. Morgan Stanley considers deals such as this de-facto IPOs, such has been their absence from the market and the need to tell their story.
In domestic debt, the group is among the leaders in domestic yen, corporate hybrids and ESG. All told, Japan chief executive Alberto Tamura and head of investment banking Haruo Nakamura preside over a business with no obvious weakness.