The script has flipped from debt binges to equity sales — and Wall Street's making bank either way
Welcome to Wall Street Insider, where we take you behind the scenes of the finance team's biggest scoops and deep dives from the past week.
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It's hard to believe Memorial Day has come and gone already, and that we're just about at the end of May. One area of Wall Street certainly didn't appear to take much time off over recent days. As Alex Morrell reports, US ECM volume roared back this month to close out with a record $72 billion.
Pandemic-fueled debt binges aren't gone, exactly, but the script has flipped. There's debt fatigue among investors, bankers say, and some companies are now turning to equity markets instead to raise cash to ride out any more downturns - and in some cases, potentially do some deals.
And while much of the May activity was follow-ons and convertibles, there are signs that the IPO market has been thawing, too. Warner Music Group, which announced plans for an IPO in February before the pandemic had gripped the US, is now moving forward with its public offering and is set to price next week.
Read the full story here:
Here's what unleashed May's record-setting equity resurgence — and a huge payday for Wall Street banks
On the real-estate front, Dan Geiger explained how a potential court fight over a Victoria's Secret flagship NYC store highlights a wider battle between retail tenants and landlords. He also broke the news that IBM is ditching a big WeWork office in Manhattan, revealing the risks of the popular flex-space model as the pandemic prompts Blue Chip companies to rethink their real-estate footprints.
And in case you missed it last weekend, Casey Sullivan and Meghan Morris had a must-read inside story about elite law firm Boies Schiller — Pay rifts, a partner divide, and a threat at the Ritz Carlton: 50 insiders reveal all on a massive shakeup at BSF.
Thanks for reading, and have a great weekend,
Meredith
Campus housing bets put to the test
As Meghan Morris explains, student-housing providers have seen a wave of money in recent years from public-markets investors and private groups like pension systems and sovereign wealth funds. Now the sector is undergoing its first real test.
With campuses closed for in-person learning and timelines uncertain for reopenings, the basic investment thesis of student-housing being recession-proof has been rewritten. Experts shared their outlook for the sector — and why some are seeing big buying opportunities.
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Big investors poured billions into student housing — thinking it was a recession-proof bet. Then the pandemic emptied campuses and turned that thesis on its head.
UBS's COO on the future of work
Dakin Campbell spoke with Sabine Keller-Busse, UBS's chief operating officer, who laid out the key lessons the bank has drawn from its coronavirus response.
Keller-Busse described five areas where the bank will make or accelerate changes: the use of robots, staff insourcing, remote hiring, its real-estate footprint, and how heavily it will rely on business-continuity sites.
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Robots, remote hires, and insourcing: A top UBS exec lays out how the Swiss bank is tackling the future of work
Bank-fintech deals could get a boost
Nigel Morris, a cofounder of Capital One who spent 10 years as its president and chief operating officer, told Dan DeFrancesco that now is the right time for deals between fintechs and banks.
For fintechs, the coronavirus will force investors to take a harder look at the startups than they have previously, Morris said. And banks have needs as well. The pandemic has demonstrated the urgency for many of them to establish better digital strategies.
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There's never been a better time for banks to buy fintechs, according to a Capital One cofounder
Fintech
- Brex, the $3 billion fintech startup, is laying off 62 workers and restructuring to focus on 'building over growing'
- $3 billion Carta slashed its revenue goal but kept hiring anyway, leading to massive layoffs in April. Insiders describe whiplash and organizational chaos as the company attempts an ambitious new pivot.
Wealth and investing
- E-Trade's stock-plan business is key to the Morgan Stanley deal. Now the unit is staffing up as demand grows during the pandemic.
- Investors are flying blind during the pandemic when it comes to valuing private shares — and it could be what finally makes unicorn profitability a must-have
- Web traffic data shows the biggest winners and losers across 11 different industries during the pandemic: Interest in Chipotle soared while Gucci traffic sank