OGFJ: Activist pressure in both oil and gas and power and utilities has increased
recently. Tell us how you’ve seen activist campaigns change and how Moelis & Company
works with companies facing activists?
KM: The same forces that make for a constructive deal-making environment also help
grow activist pressure, so we see that theme continuing to play out. For oil and gas companies that have navigated the volatility well, shareholders want them to go out and put
their excess capital to work, but some shareholders are very specific as to how they think
companies should put that capital to work. In contrast, for companies that have lingering
balance sheet or liquidity issues, some shareholders are applying pressure. In the current
environment, activists are making recommendations ranging from not doing M&A, to
pushing for consolidation, to breaking up companies for a sum-of-the-parts valuation.
Simply put, shareholders are becoming more active and have views that span the entire
spectrum of alternatives a company may consider pursuing.
We think that these types of situations highlight the importance of working with an
independent advisor, and how important it is to avoid conflicts of interest.
OGFJ: You mentioned your presence in Dubai earlier, and I wanted to ask about the
activity we have seen out of the national oil companies in the Middle East. In October,
you were listed as an advisor to Abu Dhabi National Oil Company on the $3 billion
bond offering by its subsidiary, Abu Dhabi Crude Oil Pipeline LLC. There have also
been numerous stories in the international press about the planned IPO of Saudi
Aramco. Earlier this year, various media outlets mentioned that Moelis & Company
has been chosen as the sole independent adviser for that IPO. If these reports are
accurate, this would be a real coup for Moelis and would represent the biggest equity
advisory mandate to date. What, if anything, can you tell us about this?
KM: Our role advising ADNOC on the $3 billion bond offering by its subsidiary, ADCOP, is
very-much in the public domain via the offering documents. But, beyond that, I will let the
transaction speak for itself. It was one of the largest asset-backed bond offerings in the history
of the region, and ADNOC and its subsidiary have been very clear about the use of proceeds.
As I mentioned earlier, confidentiality is at the core of our business. We pride ourselves on
our discretion and therefore do not discuss stories in the press or any client business.
OGFJ: What aspect of your business
keeps you awake at night?
KM: What I am most concerned about
is our access to top-level junior talent. I
think the same reasons I left UBS 10-or-so
years ago – the bureaucracy, lack of focus
on clients, the consolidation in banking
that took the culture and excitement out
of being a banker – has trickled down to
the young college graduates who are
about to launch their careers. Thirty years
ago, the top 5% of college graduates were
excited to start a career on Wall Street.
They were attracted to the high-profile
work they could do right out of the gate,
and the comradery of working on a team
of brilliant people to find solutions for
the world’s largest companies.
That opportunity is still there and that
work is as important as ever, but today,
that same 5% have the opportunity to go
into lucrative careers at tech companies
and startups, which are attractive because they offer new recruits a chance
to be innovative, to scratch their entrepreneurial itch. That’s what I think got
squashed as those universal, behemoth
banks were created over the last two
At Moelis we foster a tight-knit culture
that encourages innovation and celebrates entrepreneurship. Our clients,
many of which are the world’s largest
multinational corporates, rely on us for
advice, and I continue to believe that
advising these clients through the strategic decision-making process is one of
the best professional experiences out
there – and one of the few professions
where, even as a young banker, your work
has real impact.
As you can tell from our conversation,
there are a number of disruptive forces
at play, not just in energy, but across every
industry. I think banking puts you on the
forefront of disruption, challenges you
to think critically about how the world
is being changed, and to actively take
part in shaping it.
OGFJ: Thanks for taking time to talk
with us, Ken.
LtoR: Adrian Goodisman, managing director, upstream oil & gas; Bryan Lastrapes, managing
director, upstream oil & gas; Ken Moelis, founder, chairman, and CEO; Brian Jinks, managing
director, midstream oil & gas and MLPs; David Cunningham, head of US oil & gas and oilfield
services. Not pictured: Bassam Latif, managing director, oil & gas restructuring; and David
Bradshaw, senior advisor, upstream oil & gas.