Morgan Stanley MS-N 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 U.S. 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.
JPMorgan Chase JPM-N, Bank of America BAC-N and Goldman Sachs GS-N - 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.