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Lazard Ltd Shs A LAZ

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SPACs Are at Worst Neutral to Investment Banking Revenue and Could Be Meaningfully Positive

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

We believe that special-purpose acquisition companies, or SPACs, are a net positive to industrywide investment banking revenue. We estimate that the three SPAC-related investment banking fees—initial SPAC underwriting, private investment in public equity placement fees, and acquisition advisory fees—for a relatively large SPAC worth $1 billion can be as much as 50% higher than the traditional IPO underwriting fee for bringing a private company public. For an average SPAC of around $300 million, we estimate investment banks will earn about as much SPAC-related revenue as they would from a traditional initial public offering process. In aggregate, we estimate that there's $17 billion-$20 billion of investment banking revenue related to the $200 billion of SPAC capital raised over the previous two years.

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Company Profile

Business Description

Lazard has a storied history that can be traced back to 1848. The company's revenue is nearly equally split between financial advisory, such as acquisition and restructuring advisory, and asset management. The company's asset management business is primarily equities (over 80% of assets under management), has an international focus, and is geared toward institutional clients. By geography, the company earns approximately 60% of revenue in the Americas, 30% in EMEA, and 10% in Asia-Pacific. Lazard has offices in over 40 cities across more than 25 countries and over 3,000 employees.

2 Church Street, Clarendon House
Hamilton, HM11, Bermuda
T +1441 2951422
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 3,100