JPMorgan Finance Group Essay

1. Why do you think JPMorgan and Merrill Lynch were selected to underwrite and book-run all $23.3 billion in financings (all debt, joint note, and interchangeable), instead of sharing the underwriting with additional hards? JPMorgan and Merrill Lynch had positive reputations after they both ranked highly in convertibles and common stock underwriting. These trustworthy banks had well-established ties to FCX. Also, these two firms agreed to issue a span loan to FCX previous to the acquisition. 2. What was the role of the leveraged finance convocation at JPMorgan and why was its involvement important to the acquisition? The leveraged finance group was responsible for the analysis behind making the bridge financing commitment to FCX. This was important to the acquisition because the bridge loan enabled FCX to show Phelps Dodge that they were committed to financing them.3. Describe the forms of riskiness that an investment bank must(prenominal) consider in relation to acquisition and underwriting proceeding. Describe what it means for a firm to set divagation capital when it completes underwriting transactions. Capital Risk-financial risk a bank takes on when it agrees to finance an acquisition. Reputation Risk-comes from associating the investment firm with the company for which it is raising capital for or funding. When a bank sets aside capital when completing underwriting transactions it is usually cash invested in risk-free securities to hedge their risk. 4. Describe the role and importance of faith paygrade agencies in the Freeport-McMoRan transaction. Which group within an investment bank has the primary responsibility to work with companies regarding grade say-so considerations? The credit rating agencies were important because they were needed to secure the highest possible ratings on the upcoming bond offerings. This determines how much a bank can borrow and at what cost. The debt capital markets group works with the credit rating agencies.5. Describe the role of equity research at JPMorgan in the transaction. How has the role of equity research changed since 2003? candour research groups provide investment ideas to the institutional gross revenuepeople who take these ideas to portfolio managers. Equity research analyst provided the institutional sales force an overview of the equity and convertible offerings. Then, a presentation was done by the FCXs sales squad to explain the acquisition of Phelps Dodge and gave information to convince employees of the acquisition. The role of equity research has changed since 2003because now analysts are able to give investment opinions. 6. Who are the clients of the institutional sales team at JPMorgan? What is meant by a limit order, and what is its impact on the sales wreak? Describe the role of an Equity Capital Markets rout group. The clients of the institutional sales team are portfolio managers of large assets. A limit order is the highest price in which is willing to pay for stock in the primary stock market.Its impact on the sales function is that firms have to set a good limit order so that the price of the newly issued stock is neither too high nor too low. The role of an equity capital markets syndicate group is to jumper cable investors worries and concerns and their feedback about the transaction. This group helps the firm properly price stock and convertibles to better keep investors happy. 7. outwear the following fees were paid M&A fee of 0.5 percent of the transaction value debt fees of 0.75 percent on all debt and loan financing equity fees of 3 percent on all equity and convertible financing.Calculate the estimated total fees for both JPMorgan and Merrill Lynch. Indicate whether you think these fees were justified and support your views. These fees represent paying for risk and also for commissions. These fees are justified because of the long process of acquiring another business and what goes into this process to necessitate sure t hat it is done without error. A lot of equity research is done prior to the investment and credit rating companies need to be paid too. These fees are valid because it took so many groups within JPMorgan, Merrill Lynch, and FCX to draw off an informed decision to acquire Phelps Dodge. This totals 4.25% in fees for both JPMorgan and Merrill Lynch.