Morgan Stanley's other IPO boom
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The IPO boom is turning into a windfall for Morgan Stanley's wealth management business as newly public companies create a fresh wave of rich clients.
Why it matters: While Wall Street banks make money from underwriting IPOs, they can also score big by managing the newfound wealth of founders, executives and employees after their companies go public.
Driving the news: Morgan Stanley's wealth management unit took in more than $116 billion in new client assets connected to IPOs in its latest quarter, the company reported Wednesday.
- Overall, the unit reported $232 billion in net new assets, which was about $150 billion+ more than the same period a year earlier.
- Wealth management revenue rose 10.1% to a record $9.1 billion, including a 15.8% increase in asset management revenue to $5.5 billion.
Between the lines: Morgan Stanley has spent years building a pipeline of potential wealth management clients by managing employee stock compensation plans for private companies.
- When those companies go public, Morgan Stanley is well positioned to turn their employees into wealth management customers.
- In July, CFO Sharon Yeshaya told investors that Morgan Stanley had "about 70% of the top 100 unicorns" in its workplace pipeline.
- "We've spent a lot of time thinking about how do we service some of these companies at the very early stages," she said.
What they're saying: "With an active IPO calendar, the pace of our funnel accelerates and client interest in advice increases," Yeshaya said on today's call.
- "While flows will fluctuate as lockups expire, funds make distributions and individuals use assets for consumption, our pipeline and our connectivity across channels allows us to build relationships early and deepen them over time."
By the numbers: U.S. IPO proceeds topped $141 billion through early July, according to data from Renaissance Capital, Axios Pro's Lucinda Shen reported.
- That put it on the precipice of topping 2021's record $142.4 billion mark, powered in part by the all-time U.S. record with SpaceX.
What we're watching: The widely expected IPOs of Anthropic and OpenAI — and which investment banks get their business.
The bottom line: For Wall Street, the IPO payday can begin long before a company goes public — and continue long after the shares start trading.
