Morgan Stanley Beefs Up L.A. Office to Handle Media, Tech Growth

Morgan Stanley Dean Witter is raising the ante in its battle with Wall Street rivals to underwrite deals for capital-hungry Southland media and technology companies.

“We’ve found we need to have more feet on the ground in Los Angeles to discover what these tech companies are doing,” said C. Daniel Ewell, 39, managing director with Morgan Stanley and head of the corporate finance department here. “We’re placing additional focus on getting to know these companies earlier.”

Last year, Morgan Stanley added nine bankers and analysts, bringing the total number in its Century City high-rise to 33.

Most significant, Glenn Robson, 37, a banker specializing in defense and industrial companies, was named a managing director and took on additional responsibilities for networking with “angel” investors (wealthy individuals who invest in companies at the earliest stage), venture capitalists and tech executives.

“There are so many companies cropping up in our back yard, we were finding what we were doing [was] insufficient,” Robson said. “Los Angeles is a hotbed of activity.”

Morgan Stanley is locked in a battle with competitors such as Goldman Sachs & Co. and Credit Suisse First Boston to lead the market for initial public offerings. Morgan last year underwrote the highest dollar volume of California-based IPOs, at $3.4 billion.

Among its pending major deals in Southern California are an $86.3-million IPO for Encino-based ArtistDirect, an online music company, as well as a secondary stock sale from Leap Wireless, a San Diego wireless firm, according to Securities and Exchange Commission filings.

Globally, Morgan Stanley’s investment banking franchise is involved in many high-profile deals. It has advised Time Warner Inc., on its planned merger with America Online Inc.; Germany’s Mannesmann, as it considers the originally hostile bid of Britain’s Vodafone AirTouch; and a growing number of Internet companies, such as Healtheon in its acquisition last year of WebMD to form Healtheon/WebMD Corp.

The firm’s technology staff includes Mary Meeker, who heads Morgan’s Internet research team; and Chuck Cory, who heads a tech merger-and-acquisition practice in Menlo Park, Calif.

In Los Angeles, Ian C.T. Pereira, 40, was transferred from the New York office in late 1997 and now leads an L.A. merger-and-acquisition team of six.

Pereira’s team last year advised Hilton Hotels Corp. on its acquisition of Promus Hotel Corp. and Phoenix-based Phelps-Dodge Corp. on its purchase of Cyprus Amaz Minerals Co. Morgan also helped Times Mirror Co., parent of the Los Angeles Times, on a $2.5-billion recapitalization in September.

“Five years ago, we would have airlifted people in for these deals, [but] today Ian and his team are doing landmark deals here in Los Angeles,” Ewell said.

Other major Southern California clients include Walt Disney Co., Mattel Inc. and WellPoint Health Networks Inc.

Morgan’s Ben Argov, 34, a banker specializing in media deals, will be transferred to L.A. this month from New York. Argov will focus on music and entertainment and their convergence with the Internet. He has worked with such clients as Tickets.com, a Newport Beach retailer.

Initial public offerings, already a strong suit for the firm, will be more of a focus for the Los Angeles team, Robson said. IPOs for which Morgan was the lead manager last year included Agilent Technologies’ $2.2-billion deal, Priceline.com’s $160-million deal and United Parcel Service’s $5.5-billion deal, the largest U.S. initial offering ever.

Morgan Stanley’s 20 California IPOs in 1999 rose an average of 491% by Dec. 31 from their offering prices, paced by deals such as Brocade Communications Systems, a San Jose company that went public in May at $9.50 and ended the year at $177.

CS First Boston was the state’s second-largest lead manager by dollar volume, helping California companies raise $2.4 billion in 30 deals, with those stocks rising even more on average than those of Morgan Stanley.

Goldman Sachs ranked third in California deal volume, though it was the leader nationwide--in part because it underwrote its own huge IPO.

Morgan Stanley, which is negotiating to take additional space in the SunAmerica building in Century City, expects to add at least four more local bankers in corporate finance and mergers and acquisitions this year.

“Our biggest challenge today is hiring,” Ewell said, noting that many young professionals, willing to take on risk in return for potential riches, are attracted to the “dot-com” and venture capital worlds.

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Among recent Southern California venture capital deals:

* Loantrader, an Irvine-based online market that connects mortgage brokers with lenders, recently raised $17.6 million in a first-round funding from a group led by Capital Z Financial Services Fund, LendingTree, Goldman Sachs and a number of angel investors.

* Internet Wire, an L.A. company that distributes news releases and other information over the Internet, got a $17.5-million round of funding from a team of investors led by Sequoia Capital and Hummer Winblad Venture Partners.

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Times wire services were used in compiling this report. Remember that initial public offerings are highly speculative and not suitable for all investors. Debora Vrana covers investment banking and the securities industry for The Times. She can be reached at debora.vrana@latimes.com or at Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053.