Investors will get a little time to catch their breath after Friday's record-breaking Alibaba trading debut, but not too long.
On the heels of what is the largest initial public offering on record, Wall Street will be asked to digest what could be the largest bank or thrift IPO ever—the expected $3.36 billion offering from Citizens Financial Group.
The Citizens IPO should price on Tuesday, and while flying below the radar thanks to all the hype over e-commerce superstar Alibaba, it has substantial market implications.
Tech has dominated the offering landscape so far in 2014 with $11.4 billion worth of deals—not including Alibaba, which by itself is expected to generate $22 billion—but finance has been a surprisingly close second at $11.2 billion, according to Dealogic. Total IPO deals including Alibaba have raised $67.1 billion, a 103 percent jump from 2013, according to Thomson Reuters.
Investment banks have noticed and are flocking toward the sector. The Citizens IPO has drawn 21 underwriters, with Morgan Stanley landing the lead spot and Goldman Sachs on board to serve as joint global coordinator with Morgan, according to SNL Financial:
To lead the execution of the blockbuster deal, Citizens Financial has chosen investment banks with broad reach. Morgan Stanley not only brings a large institutional investor book but also a vast retail distribution network, while Goldman has a strong brand reputation with institutional investors.
The two firms have been busy in assisting deals lately, helping Royal Bank of Scotland sell up to 28.8 percent of its Citizens Financial ownership position. The two also were involved in helping RBS deal ownership stakes in several other companies over the past several years.
Recall that Morgan's brand took a hit on its handling of 2012's disastrous Facebook IPO. But the recent spate of activity helps end a relatively dry spell for both Morgan and Goldman, according to SNL's Joe Mantone.
The Citizens Financial IPO will certainly serve as another prominent transaction for Morgan Stanley and Goldman, and it will help end a U.S. bank IPO drought for them. Morgan Stanley's most recently completed U.S. bank IPO was the BankUnited deal, which closed in January 2011. Goldman's two most recent bank IPO deals — Capital Bank Financial Corp.'s offering and National Bank Holdings Corp.'s offering — both were completed Sept. 19, 2012.
Still, even though it has been a while since Goldman and Morgan Stanley have been on an IPO in the space, this deal should put both of them in a high position on the 2014 bank and thrift IPO league tables.