Goldman gets off to a slow start in the M&A leagues

 
David Hellier
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Maybe it just says something about the company I’m keeping but I’ve recently been drawn into countless discussions about the relative underperformance of Goldman Sachs in the latest Thomson Reuters mergers and acquisitions (M&A) rankings.

In the worldwide category, Goldman, normally such a predictable M&A machine, slumped from first to fourth. In M&A with a US involvement it slipped from first to tenth.

Untypically, but making things worse, Goldman has been omitted from a number of big deals recently.

Take the £4.4bn share issue announced over the weekend by the luxury German carmaker Porsche. Deutsche Bank, Morgan Stanley and JP Morgan are all on the ticket – but there is no room for Goldman.

Then there’s AT&T’s $39bn bid for Deutsche Telekom’s T Mobile unit. Again, Goldman is on the sidelines, reputedly because of its advisory role with rival Sprint.

Goldman is also excluded from the considerable action possibly about to surround the commodities giant Glencore if its $60bn IPO goes ahead. Goldman would normally be expected to be involved in such a huge mining IPO so its likely absence from the roster of banks has led to some interesting theories.

One doing the rounds is that Glencore, which has a nine per cent stake in the Russian aluminium group Rusal, still remembers Goldman’s role, or should we say non-role, in the £18bn IPO of Rusal in 2009.

Glencore chief executive Ivan Glasenberg is also a non-executive director of Rusal and it is said that Goldman’s decision to exit the IPO at the last minute (where it was replaced by Bank of America Merrill Lynch) naturally did not go down well with members of the Rusal board.

Hence when it came to sharing out the work for the Glencore float there was no room for Goldman.

This theory is rubbished by Glencore insiders who point to the fact that the three main banks on the deal, Credit Suisse, Morgan Stanley and Citi, are all major lenders to Glencore, unlike Goldman.

As one banker put it: “There will be many theories about why one bank or another doesn’t make an IPO. You will never get to the bottom of it, but it is unfortunate for Goldman not to be there.”

Fortunately for Goldman, the bank does do better in a host of Dealogic tables out yesterday, which show it coming top in the global equity capital markets ranking.

One should bear in mind that all these tables can be skewed by a couple of large deals and do not always reflect the longer-term performance of a bank. Goldman itself would rather wait to be judged at the end of the year. We shall see.

Meanwhile, Bank of America Merrill Lynch had cause for celebration yesterday as it came first in Dealogic’s Europe Middle East and Africa (EMEA) equity capital markets table. The bank’s leading position took into account its work on the privatisation of VTB Bank, a large placement of shares in BASF and the Meggitt rights issue in the UK.

“We’ve had a contribution from a very wide range of industries and countries,” said Craig Coben, head of EMEA Equity Capital Markets at BofA Merrill Lynch.

david.hellier@cityam.com