Moelis reports £18.5m net loss

Moelis & Co lost almost as much money at its London operations last year as it earned in fees, highlighting how independent advisory groups are struggling to turn European expansion into profits.

The US advisory firm, set up by former UBS banker Ken Moelis on the cusp of the financial crisis five years ago, reported a net loss at its London business of £18.5m in the past year, according to a filing at Companies House.

Its revenues from advisory fees dropped from £20.6m to £19.8m year-on-year amid a difficult market for mergers and acquisitions in the UK and mainland Europe.

Those revenues were eaten up by staff costs of £16.8m, guaranteed payments of £4.6m to its partners and £5.2m in expenses for its share-based pay scheme.

It came as the M&A and restructuring advisory firm embarked on a rapid international expansion.

Last year, Moelis almost doubled its London-based partners to 15 and increased the number of other employees in the UK from 48 to 83. It has this year added a further nine staff members.

In the past 12 months it also opened up offices in India, China, Germany and France. It is now looking for outposts in other Asian countries, Latin America and Canada.

Mr Moelis, chief executive, said the group would continue to hire dealmakers for the London office, which was set up in early 2009 and from where former Merrill Lynch banker Mark Aedy heads the European, Middle East and African business.

“This is a good time for us to be expanding,” Mr Moelis told the Financial Times. “You have to take time to get to know your clients and establish relationships. That way we will be well positioned when activity picks up.”

Global revenues at the firm, which employs 600, were up 35 per cent in the first nine months while revenues in London were also up substantially, people close to the situation said.

This comes despite a ­sluggish market for advisory fees this year, which is on course to be the worst 12 months for the investment banking industry in eight years.

Moelis’s rising overall revenues highlight how boutique firms are taking market share from established rivals.

In the first nine months, independent advisory groups such as Moelis, Greenhill, Evercore and Perella Weinberg increased their share of the overall fee pot by 3 percentage points to 17 per cent, according to Thomson ­Reuters data.