Japan's best international bank 2017: Morgan Stanley
Morgan Stanley has an enviable position in Japan, being the only international bank to have a joint venture with a large local player.
In fact, Morgan Stanley and Mitsubishi UFJ have two: one largely led by the US bank, the other run by MUFG. That may have appeared confusing when it was first unveiled more than six years ago, but the structure – designed in large part to placate local regulators – has proved an unqualified success.
The two joint ventures have snagged key roles on some of the most prominent deals in the country over the last 12 months. This includes Renesas Electronics’ ¥348.5 billion ($3.2 billion) follow-on offering, Softbank’s $4.5 billion offshore hybrid capital issue and Sekisui House’s ¥120 billion domestic hybrid.
The bank has also worked on landmark M&A deals in and out of Japan over the last year, one area where few of its rivals are in a position to compete.
The biggest is also one of the most recent: Morgan Stanley is advising Bain Capital and SK Hynix on their $17.9 billion acquisition of Toshiba Memory, a deal announced in late September. It has also been on plenty of other deals.
The bank was the sole financial adviser to Endurance Specialty, a Bermudan insurer that was bought by Japanese insurance company Sompo for $6.3 billion in March 2017. It was also the sole adviser to KKR when the private equity firm, undoubtedly a discerning client, bought auto supplier Calsonic Kansei for around $4.5 billion in May.
Morgan Stanley’s tie-up with Mitsubishi UFJ has been a remarkable success story, particularly against the backdrop of Japan’s otherwise rather staid banking system, where meaningful tie-ups are rare and a small handful of large firms are consistently vying for the biggest deals.
Morgan Stanley’s president and chief executive in Japan, Jonathan Kindred, deserves a lot of credit for making sure that what could have been a clash of cultures works rather well.
Morgan Stanley’s rivals have done some impressive work in Japan, particularly in the country’s debt capital markets. But by expanding its client reach with the joint venture, and bringing its M&A and ECM skills to bear in a market that offers large, but irregular opportunities in both, the US bank has an indisputable claim to be the top foreign bank in the country.