Scaling new heights
As Stifel scales up its investment banking practice to suit the needs of its more mature clients, it remains true to its core mandate of serving the middle-market. The senior roles and promotions it has earned through the longevity of its relationships and the breadth of its IPO platform make Stifel IFR’s US Mid-Market Equity House of the Year.
Being a full-service investment bank for middle-market clients is one thing. Defending and maintaining those relationships as companies grow is a more difficult proposition.
“We know exactly who our clients are,” said Brad Raymond, head of investment banking at Stifel. “Our ability to scale up and scale down within that client set is what drives our business.”
Stifel was a bookrunner on 69 deals in 2017 to earn league table credit of US$2.8bn, ranking 13th in the US equity league table and including 13 IPOs. That is up from 31 and US$958.1m in 2016, when it ranked 20th, according to Thomson Reuters data.
IPO mandates for meal-kit provider Blue Apron, Chinese micro-lender Ppdai Group and fire engine, ambulance and bus maker REV Group highlighted the breadth of the underwriting platform.
Stifel did accept co-manager roles on another 53 deals, the point being that accepting lower-fee, no league-table business is part of a relationship, and something not all rivals are willing to extend.
Accepting a co-manager slot on Athene’s US$1.2bn IPO in December 2016 led to bookrunner assignments on two subsequent follow-on offerings by the Apollo-backed insurance company in March (US$1.5bn) and June (US$912m) – by far the largest deals that Stifel bookran during the year.
The obvious preference is to win bookrunner business on the IPO, and maintain the designation throughout. Stifel preserved that relationship with Advanced Disposal Services on both the garbage collector’s IPO and a US$333m secondary share sale in June.
Loyalty can take time to pay dividends, but Stifel has stuck with clients. Zogenix, a biotech Stifel helped take public in 2010, changed its focus in 2015 from developing opioid drugs to treating rare diseases. In early October, the company raised US$251m in its fifth and largest equity raising, elevating Stifel from co-manager to one of two bookrunners.
“Stifel didn’t miss a beat when we changed our focus,” said Zogenix CEO Stephen Farr. “Stifel has grown with us. I look forward to hearing the new ideas that they bring to the table in the future.”
CROSS-COUNTRY
Arguably, there is no better validation of mid-market reach than Stifel’s Keefe Bruyette & Woods unit, which covers financial institutions. KBW bookran 28 deals earning credit of US$1.2bn, representing nearly half of Stifel’s US$2.8bn bookrunner activity.
“There is not a bank in any US state that we are not monitoring,” said KBW co-head of ECM Lisa Schultz.
Byline Bancorp and its US$125m IPO represented a significant win on consolidation of the Chicago banking market. Byline’s IPO in June followed on from its acquisition of Ridgestone Bank that was completed the previous December.
IPOs for CBTX and Metropolitan Bank, both in early November 2017, were marketed on similar growth opportunities in Houston and New York City, respectively.
KBW was also able to bring clients to market quickly to capitalise on very attractive conditions for banks after Donald Trump’s election as president in November 2016.
In the space of one week in December, KBW brought Texas-based Southside Bancshares and New Jersey’s Valley National Bankcorp to market with follow-on offerings. It was sole bookrunner on both offerings that secured US$69.4m for Southside and US$92.3m for Valley National. Both were opportunistic moves with no use of proceeds.
The following week KBW was back, by which point the KBW Bank Index had risen 21.8% since the election, this time as Renasant of Tupelo, Mississippi raised US$65m overnight.
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