Morgan Stanley - Good And Not So Good

The Daily Telegraph reports that Morgan Stanley was the toast of the City last week after it pulled off a deal some of its rivals are thought to have run a mile from. But, before we get too carried away, the firm has also come in for some criticism as a result of another transaction it managed last week.

The firm received well deserved plaudits for its successful £159m placing of Liberty International shares. The deal was not without risk as it involved underwriting the placing, in other words Morgan Stanley would have ended up holding the debt if it had not done its job properly.

It has been claimed that Liberty's usual house brokers, UBS Warburg and Merrill Lynch, were not interested in the transaction due to the underlying risk. In stepped Morgan Stanley, who did the deal and walked away with a fee of around £1.6m.

But it is not all good news for the firm. Morgan Stanley also worked hard last week disposing of a large chunk of Cable & Wireless shares on behalf of Verizon Communications. Once again, the transaction was a success, but the firm has come under fire as the price of Cable & Wireless shares fell sharply after the sale. One unnamed fund manager is quoted by the Times as saying that 'They (Morgan Stanley) are good at getting a decent price for the seller, but not so good at maintaining a strong after-market for the institutions they've just sold to.'

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