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8/12/2019 Investment Banking Investment Banking2122
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Investment BankingInvestment Banking
Alan SchwartzAlan Schwartz
President and CoPresident and Co--Chief Operating OfficerChief Operating Officer
Investor Day March 29, 2007
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Continuation of StrategyContinuation of Strategy
Deliver intellectual value added solutions
Focused industry based strategy with emphasis on core clients
Seamless delivery of all the firms capabilities
Leverage Strategic Finance to quickly respond to new and
emerging opportunities
Aggressively managing costs and productivity while expanding
producer base
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Banking Revenues Achieved Record Levels in 2006Banking Revenues Achieved Record Levels in 2006
$617$728
$823 $829
$1,058
0
600
$1,200
2002 2003 2004 2005 2006
Prior period net revenues reclassified to conform to current reporting.
millions
14% CAGR
Investment Banking Segment Revenue
(excluding Merchant Banking)
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Key Themes Driving Activity in 2006Key Themes Driving Activity in 2006
Globalization driving liquidity creation and capital flows
Rising corporate liquidity
Lower interest rates and risk premiums Ample liquidity
Growing size of financial sponsors
Aging western populations Demand for yield and
absolute return
New products and investment vehicles
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Providing Intellectually Value Added SolutionsTo Our Core Corporate ClientsProviding Intellectually Value Added SolutionsTo Our Core Corporate Clients
We expect to be active when our clients are active
For corporate clients, market forces drove significant
activity in
Mergers & Acquisitions Corporate restructuring oriented M&A
We creatively addressed our clients needs though the
combination of strategic insight and structuring
capabilities
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Advised Time Warner on the
joint $12.7 billion acquisitionwith Comcast Corp. of
Adelphia Communications
$12.7 Billion
Advised NRDC Equity Partnerson the $1 billion acquisition ofLord & Taylor from Federated
Department Stores
$1 Billion
Advised and rendered a
fairness opinion to Verizon onthe $13 billion spin-off of
Idearc.
$13 Billion
Advised GMAC on the sale of a51% controlling interest to a
consortium of investors led byCerberus Capital Management
$7.4 Billion
Advised Boston Scientific on its
$27 billion acquisition ofGuidant Corp.
$27 Billion
Advised and rendered a fairnessopinion to Fidelity National
Financial and Fidelity Information
Services in the merger of FIS with
Certegy.
$4.7 Billion
Marquee M&A Transactions Deal of the Year Nominees
Marquee M&A Transactions Deal of the Year Nominees
Advised Viacom in its $50.8billion separation into twopublicly traded companies
$50.8 Billion
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M&A Revenue Has Grown Due To BothCorporate And Financial Sponsor ActivityM&A Revenue Has Grown Due To BothCorporate And Financial Sponsor Activity
$159
$302 $306 $309
$494
0
200
400
$600
2002 2003 2004 2005 2006
millions
33% CAGR
Prior period net revenues reclassified to conform to current reporting.
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Financial Sponsor BusinessFinancial Sponsor Business
Low risk premiums and ample liquidity are fueling a surge in sponsor activity
Sponsors now account for over 20% of the total Investment Banking fee pool
We have successfully delivered high intellectually value added resources to
sponsors in the form of:
Industry expertise
Corporate relationships
Innovative financial solutions
Depth of industry knowledge and management access is increasingly important tosponsors
Growth in sponsor business is felt throughout the platform
M&A
Leveraged Finance
Equity (IPOs and follow-on offerings)
CMBS securitizations to finance company acquisitions Permanent capital vehicles
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Marquee Financial Sponsor TransactionsMarquee Financial Sponsor Transactions
Advised Blackstone on its$36 billion acquisition ofEquity Office Properties
$36 Billion
Acted as joint book runner for$2.1 billion of debt financing
and M&A advisor related to theacquisition of the Burlington
Coat Factory Warehouse Corp.by Bain Capital
$2.1 Billion
Acted as exclusive financialadvisor to Apollo and has
provided committed financingto Apollo on its acquisition of
TNT Logistics
$1.9 Billion
Acted as joint book runner on a21.6 million share IPO for
J.Crew
$376 Million
Acted as sole book runner on a$230 million equity
underwriting forFidelity National Information
Services, Inc.
$230 Million
Acted as sole lead arranger andjoint book runner on a $1.7billion senior secured credit
facility and joint book runneron a $1.0 billion senior notes
offering for MetroPCS
$2.7 Billion
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Strategic Finance Seamless Delivery ofFinancing Products to Our ClientsStrategic Finance Seamless Delivery ofFinancing Products to Our Clients
Focused expansion of equity product offerings
Initial public offerings
Focused coverage on both sponsor and industry accounts
Maintained quality
Grew revenues through leading larger deals
Doubled our IPO revenue since 2004
Customize/Structured finance solutions to meet the demand for yield
and absolute return
Structured equity products Created to deliver attractive yields in a low yield market
Permanent capital vehicles for our alternative asset manager clients
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International OpportunitiesInternational Opportunities European sales and trading platform now at critical mass
A necessary precondition for expanding banking
Growth of sponsor activity, structured products and alternative investment vehiclesplay to our strengths
Starting to make selective key hires and transfers
2006 saw a variety of successful transactions proving we can execute significantbusiness for clients
Arranged $925 million Phase Ifinancing for construction of
Oman's Blue City. First realestate bond financing in the Gulf
$925 Million
Acted as joint book-runningmanager on its $4.485 billion
inaugural debt offering related toSprint/Nextel merger
$4.485 Billion
Advised Merck KGaA on itsunsolicited public takeover offer to
Schering AG Shareholders to combinethe two companies and provide
committed debt financing for thebridge loan facility
$7.4 Billion
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Growing Producer Base Provides Capacity forFuture Organic GrowthGrowing Producer Base Provides Capacity forFuture Organic Growth
100% 115%
140%
175%
200%
0%
50%
100%
150%
200%
250%
2002 2003 2004 2005 2006
Production greater than $7.5 million
2002 number of producers indexed to 100%.
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Investment Banking at Bear Stearns State ofthe FranchiseInvestment Banking at Bear Stearns State ofthe Franchise
Steady, profitable growth across cycles
M&A franchise continues to maintain market leadership in our focus
industries
Significant participation in the growth of financial sponsor activity
while maintaining a healthy balance between corporate and financial
sponsor clients
Extremely active in new and emerging areas such as permanent capital
vehicles
Growing producer base from organic development and select key hires
Maturation of our sales and trading platform in London provides basis
for measured expansion of Investment Banking footprint in Europe
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Certain statements contained in this discussion are forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements
are subject to risks and uncertainties, which could cause actual results to differ materially from
those forward-looking statements. Numerous factors may affect our business, including butnot limited to interest rates, market conditions, transactions included in our backlog failing to
close, general economic conditions in the US or other geographic regions that may suffer
economic downturns. For a fullerdiscussion of these risks see Managements Discussion
and Analysis of Financial Condition and Results of Operations and Risk Management in the
Companys Annual Report to Stockholders, which has been filed with the Securities and
Exchange Commission.
The information in this document is provided by Bear Stearns for informational purposes only,and should be considered current only as of the date of its initial publication, without regard to
the date on which you may actually review the information.
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Alan SchwartzAlan Schwartz
President and CoPresident and Co--Chief Operating OfficerChief Operating Officer
Investor Day March 29, 2007
Investment BankingInvestment Banking