Restless Dealmakers Pursue Mega Deals in Energy and Power Sector
Six U.S. oil and gas bankers who departed from mergers and acquisitions giant Citigroup last year to join smaller firm Guggenheim Securities are now making another move, heading to Moelis & Co, according to insiders familiar with the matter. This merry-go-round highlights the ambition of dealmakers seeking high-profile deals while maximizing their earned advisory fees. The energy and power sector has been a bustling hub for dealmaking in 2022, with global transactions amounting to a staggering $460.3 billion, a 4% YoY increase (LSEG data). The sources, who wished to remain anonymous, confirmed that Moelis has recruited the former Citigroup bankers, including Muhammad Laghari, Alexander Burpee, Benjamin Dubois, and Ryan Staha. After completing their gardening leave, these bankers will join Moelis in the coming weeks. Both Moelis and Guggenheim declined to comment on the matter.
Surge in Deal Activity Among Oil and Gas Producers
The oil and gas industry has witnessed a surge in deal activity over the last two months as companies strive to enhance profitability by acquiring valuable, productive acreage. Exxon Mobil successfully secured a $60 billion deal to purchase Pioneer Natural Resources, while Chevron announced a $53 billion agreement to acquire Hess. Occidental Petroleum recently revealed its plans to purchase CrownRock, a privately-held U.S. shale oil producer, for $12 billion, including debt. Notably, Citigroup advised Exxon during its acquisition of Pioneer, but Guggenheim and Moelis were not involved in these particular deals.
Benefits of Boutique Investment Banks
Boutique investment banks, such as Moelis and Guggenheim, have gained popularity among bankers due to their policy of allowing bankers to retain a larger share of client fees compared to large bulge-bracket banks like Citigroup. The latter, with their more diverse business portfolios, have additional expenses to cover. Guggenheim, although ranking 19th in LSEG’s league table for U.S. oil and gas deals this year with $5.8 billion in announced transactions, was previously ranked outside the top 25 advisers in 2022. Nevertheless, the firm maintains close relationships with major international energy clients, including Saudi Aramco and Abu Dhabi National Oil Co.