Keeping busy
Being able to engage with thousands of companies of all sizes and in all sectors across the globe makes JP Morgan a major player in every segment of the capital markets. But balance sheet alone doesn’t win business. That takes intellectual prowess, finesse, experience and creativity – all of which were in evidence in the bank’s M&A group in 2023. JP Morgan is IFR’s M&A Adviser of the Year.
The value of M&A deals announced in 2023 fell 17% to US$2.9trn, its lowest level for 10 years and significantly below 2021’s US$5.8trn peak, according to LSEG data. Large US banks remained the most active advisers, with 47% of deals targeting US companies, and none more so than JP Morgan.
“In 2021 almost anyone could get an M&A deal done but 2023 required a lot more finesse, experience, creativity and structuring to get deals done,” said Anu Aiyengar, global head of M&A at JP Morgan. “While the market was challenging in 2023, on a relative basis JP Morgan had a good year.”
For 2023, revenue from JP Morgan’s advisory group fell 8% compared to a decline of more than 20% on average among the top five M&A advisers.
The bank completed 290 deals for clients during the year, worth US$695bn collectively. Its market share grew the most of the top five US banks, up 4.1 percentage points to 27.2%. This was some performance considering the value of completed deals fell 30% to US$2.55trn.
“We wanted to do a deal a day, or around 350 in a year,” said Aiyengar. “We exceeded our goal.”
Aiyengar focuses on the number of deals done in any given year. “That matters,” she said. “The more deals you do, the more relevant you are in the market. You have more information and more visibility and in uncertain times you have a greater ability to give clients confidence about what will work. Confidence is a key driver of M&A,” she said.
JP Morgan had much success in private equity transactions, which overall were down 30% in 2023 to US$566bn.
Internationally one of the highest profile of those deals was KKR’s US$23.6bn offer for the fixed network business of Telecom Italia. JP Morgan was one of several banks advising the sponsor in this highly sensitive process. The sale was finally agreed in November but will only complete in 2024.
Similarly in the US, the bank was advising technology group FIS on the sale of a majority stake in Worldpay to private equity purchaser GTCR valuing Worldpay at US$18.5bn. It was also active on some high profile take-private deals in the UK, such as Homeserve and Aveva for US$5.8bn and US$4.7bn respectively.
“We had disproportionate success in getting sponsor deals done,” said Aiyengar. “This required more nuance, creativity and structuring. We focused more on sponsors and on the middle market, through our differentiation in having a commercial bank with a broad footprint and being able to provide investment banking services to those clients.”
That trend could increase in future years. JP Morgan was not only a top M&A adviser, it was also a participant in one of the year’s most significant deals, buying First Republic for US$12.1bn after the US regional lender’s travails earlier in 2023 forced it to seek emergency assistance from the Federal authorities. The deal has already expanded JP Morgan’s presence in middle market M&A.
In addition to its own deal, however, JP Morgan was also a player advising major financial situations throughout the year. The bank had a role advising UBS on its SFr3bn (US$3.3bn) rescue of Credit Suisse and advised BNP Paribas on the US$16.3bn sale of Bank of the West to Bank of Montreal.
JP Morgan was also sole adviser to Black Knight on its US$14.3bn acquisition by Intercontinental Exchange, which had taken some time to close as well.
The bank was active in almost every sector.
“We had our best year ever in diversified industrials, energy and commodities and towards the end of year healthcare was active,” said Aiyengar. The total value of healthcare deals rose by 8% in 2023, countering the general trend downwards.
One of the biggest completed deals was the US$27.6bn sale of Horizon Therapeutics, which was advised by JP Morgan. On the buyside the bank is advising AbbVie on its US$9.7bn approach for ImmunoGen, which was announced at the end of November.
Fortress balance sheet
While JP Morgan is sensitive to claims that it leads with its balance sheet, its size does mean the bank has certain built-in advantages. Primarily it has touch points with many more clients than its rivals by the very nature of its banking relationships with a large universe of companies.
When those companies think about M&A, that can automatically put JP Morgan on the short-list of potential advisers.
“We are very proud of our balance sheet and the comprehensive solutions that we can provide our clients. Having said that, a balance sheet alone does not allow you to have a leadership position in M&A,” said Aiyengar.
Opportunistic approaches were a theme of the year. “There was a significant amount of unsolicited approaches to clients in 2023. Corporates were not actively putting assets up for sale so potential buyers had to knock on doors,” said Aiyengar.
In Australia, for instance, the bank advised Newcrest Mining on the approach from US gold mining rival Newmont. The bank succeeded in getting the bid lifted and Newcrest’s board finally recommended a US$19.7bn sale to its shareholders.
Defence work, too, is core to JP Morgan’s franchise. So is having sector specialists who have deep relationships with clients in all geographies. Notable international deals included Dutch consumer goods producer DSM’s US$20.7bn merger with Swiss rival Firmenich.
“Not every firm has a global standalone M&A team. Our ability to combine our global M&A team with a global coverage footprint is differentiated and allows us to add value through cycles,” said Aiyengar.
Having a presence in Saudi Arabia certainly paid off. It acted for Savvy Games, owned by sovereign wealth fund PIF, on its US$4.9bn purchase of LA-based computer games company Scopely. Also in leisure, the bank advised World Wrestling Entertainment on its US$9.2bn merger with UFC.
JP Morgan’s global presence was reinforced over the year through a series of leadership changes. At the beginning of the year Dirk Albersmeier, global co-head of M&A with Aiyengar, stepped back to focus on “a wholly client and transaction-focused role”, advising UBS and others.
And in October Haidee Lee and Carsten Woehrn were named co-head of M&A for the strategic investor group, which includes financial sponsors, sovereign wealth funds, family offices and alternative assets managers.
Woehrn was also appointed co-head of M&A for EMEA with Dwayne Lysaght. Former EMEA co-head Guillermo Baygual, like Albersmeier, will take a more client-facing role as co-head of global real estate and infrastructure with Tom Grier.
In North America Jay Hofmann and Ben Carpenter were appointed co-heads of M&A for the region, after former head Marco Caggiano left in July. Hofmann has been with the bank for 23 years and was co-head of technology M&A. Carpenter joined in 2021 as co-head of healthcare M&A.
Looking ahead, the bank’s prowess in energy and commodities deals is set to continue. It is advising on two major deals recently announced: Hess’s US$59.6bn sale to Chevron and Chesapeake’s proposed US$7.4bn purchase of Southwestern Energy.
And in Europe across the same sector it hopes to complete Glencore’s agreed US$18bn sale of agricultural commodities arm Viterra to major rival Bunge as well as Harbour Energy’s planned US$9.9bn purchase of Wintershall Dea’s upstream oil and gas assets.
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