Morgan Stanley profit rises on dealmaking boost

[NEW YORK] Morgan Stanley reported a rise in second-quarter profit, driven by strong mergers and acquisitions activity despite macroeconomic uncertainty.

A lenient regulatory environment and buoyant equity markets have helped company executives across sectors to pursue large-scale deals, generating a windfall in advisory fees for investment banks.

Mega-deals helped drive the total value of announced mergers and acquisitions to US$2.8 trillion in the first six months of the year, up 48 per cent from a year ago and marking the highest first-half total since LSEG records began in 1980.

Among the notable deals in the quarter, the bank acted as a financial advisor on Fertitta Entertainment’s agreement to buy Caesars Entertainment in a deal valued at US$17.6 billion.

Morgan Stanley served as a lead underwriter for the record US$2 trillion market debut of Elon Musk’s SpaceX, a landmark initial public offering that was a part of the revival of activity in US listings market.

The investment bank was a lead underwriter on chipmaker Cerebras’ stellar New York IPO and a joint book-running manager on Alphabet’s equity capital raise announced last month.

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JPMorgan Chase, Bank of America and Goldman Sachs – who were also part of the bookrunning syndicate for the landmark SpaceX IPO – reported a similar jump in investment banking on Tuesday.

Morgan Stanley’s investment banking revenue soared to US$2.44 billion- from US$1.54 billion in the year earlier, boosted by a rise in M&A advisory fees.

Net income applicable to the investment bank came in at US$5.58 billion, or US$3.46 per share, in the three months ended June 30, compared with US$3.54 billion, or US$2.13 per share, a year earlier. REUTERS