The Future of Syndicate

So Wells Fargo comes to market this week looking for $10 billion to help finance its acquisition of Wachovia.  This will be a good test to the equity markets.  I’ll be curious to see how WFC performs post-offering.  If the company can place an offering of this size and if the stock can hold its own in the period following this offering, markets may have finally begun to find confidence in the US banking system.  If not, I think it could be another bearish catalyst.

Wells Fargo said late Wednesday afternoon that it was planning to sell $10 billion in common stock to help fund its purchase of Wachovia, in a deal that would create the fourth-largest American bank in terms of assets….

…The stock offering is expected to be priced on Thursday and could grow. Wells Fargo said the transaction was not dependent on the $25 billion it expected to receive from the Treasury….[More]

As is typical the end of the press release finishes with the list of underwriters and bookrunners.  It was amazing to see Morgan Stanley and Goldman Sachs in print as bookrunners again, feels like forever-a-go that a deal was done.  

Its still hard to believe that Merrill, Lehman and Bear are gone.  Man when syndicate picks up, the firms left standing are going to make a bundle!  

JPMorgan is arranging the stock offering, with Goldman SachsMorgan Stanley,UBS Securities and Wachovia Securities serving as joint bookrunning managers.

I’m suspicious, however, of the wording “JPMorgan is arranging” as opposed to underwriting. I imagine the fed is technically the underwriter if you believe they control JPM’s balance sheet.  Huh, an equity offering from Uncle Sam?

Wells Fargo to Sell $10 Billion in Stock
Dealbook, November 5, 2008


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