Glenn, I've decided to take you to the next MS conference. But please no camera's allowed.;-)
>Mercury News
Investment bankers' year-long courtship of the anti-tobacco law firms had an unexpected benefit for Robert Lieff and his partners at Lieff, Cabraser, Heimann & Bernstein: a chance to get into some of the hottest IPOs of the last two years.
Shortly after investment banking firm Morgan Stanley Dean Witter was picked by a group of law firms to develop a tobacco-fee bond deal on their behalf, a team of Morgan Stanley bankers visited Lieff's San Francisco headquarters. Their visit had two purposes: to sell the law partners on the deal and to convince them to let Morgan Stanley manage the expected windfall through its ``private wealth management'' group.
Over pastries and coffee during a morning meeting at Lieff's 29th floor conference room, Morgan Stanley's team spent over an hour enticing the lawyers with flip charts and complex financial terms about how well they handled private fortunes.
Normally, Morgan Stanley would require that clients invest at least $10 million in that elite unit. But if the Lieff firm did the bond deal, it would turn its expected tobacco fees of $400 million over more than 20 years into a lump-sum windfall of perhaps $120 million to $160 million. Typically, investment bankers would get 1 percent to 3 percent of the total to manage this kind of high-roller account.
But for starters, the bankers asked the Lieff partners to invest only a few hundred thousand dollars each.
Lieff and several others agreed.
It was a highly fortuitous move, since Lieff and some of his partners soon found themselves in that rare inner circle of individual investors who get shares of hot initial public offerings at the offering price. Unbidden, Morgan Stanley began doling out shares, up to several hundred apiece, for hot technology IPOs including Agilent Technologies Inc. and Palm Inc.
Lieff was astute enough to sell the IPOs quickly, and he made a quick profit of roughly$700,000, he said. Other firm members held on longer and made less.
Subsequently, the bond deal fell through, as Morgan Stanley couldn't reach agreeable terms with the group of law firms. Though other firms ultimately decided to do a deal with another investment banking firm, Lieff's firm decided not to participate at all.
And that was the end of the IPOs. ``I would not have expected Morgan Stanley to give me the opportunity to invest in IPOs unless I was a serious investor with them,'' said Richard Heimann, another Lieff partner who nonetheless has kept an account at the firm until he decides where to invest his net worth.
Morgan Stanley declined to comment on the episode except to say it's normal business practice to introduce large clients to its private wealth management group. |
