Coffee Break with Jean-Baptiste Charlet, Co-Head of Investment Banking France at Morgan Stanley

Jean-Baptiste Charlet is Co-Head of Investment Banking France at Morgan Stanley. He has more than 25 years of experience in Finance.

On behalf of BSPEC, the Bocconi student Private Equity Club, we would like to thank you for accepting our informal invitation to this “Coffee Break with”.

Could you please describe your academic background, and underline the reason that led you to switch from a role as Officer in the French Navy to Investment Banking? When you were a student at HEC in Paris, did you already know that you wanted to pursue a career in Investment Banking? What are the reasons that made you make this choice?

Thank you and thanks for giving the opportunity to introduce me to BSPEC, it’s a pleasure to help students to understand what business has to offer to young graduates and students. I decided to do finance when I studied at HEC Paris. After gaining experience in a variety of industries through different internships, I understood that for me, M&A in an Investment Bank was the most exciting activity of all of them. At the end of the day, what we do here is advising clients, governments, large corporates and institutions at the core of their strategic decision process so they can protect their customers and employees, and grow their businesses by making the right choice and executing that decision correctly.

However, I first went to the French navy. Back then, doing a military service was obligatory in France and instead of serving only for one year, I enjoyed the full experience as an Officer, gaining huge exposure towards the army, before subsequently starting a very long professional career in Investment Banking.

Your journey in Morgan Stanley is a very long-lasting one which sees you continuing strongly for more than 26 years. How would you describe your bottom-up ascent along the Investment Banking hierarchy? What is your biggest satisfaction during this journey and do you have any regrets?

That’s an interesting question. I’ve been at Morgan Stanley for more than 25 years. My biggest satisfaction at the end of the day is two-fold. Firstly, having been able to see so many situations and do so many jobs in the same organisation. Secondly, having helped this institution build its business franchise operations across Europe and France. Just to give you a flavour, I joined Morgan Stanley in 1997 in the Real Estate department to launch the Real Estate business in France. Then I went back to core Mergers and Acquisitions and IPO execution, being part of a team doing acquisitions and financing. After a while, I became Chief Operating Officer for Morgan Stanley in London and managed the business there and finally came back to France to cover clients and develop client-relationships while focusing on both transaction origination and advisory. Then, between 2009 and 2014. I was in charge of our European Industrial Services Business before becoming responsible for Investment Banking in France in 2015.

As you can see, you can work for 25 years and touch many different industries and work with many different product categories. So, to come back to your question, every time I do a deal it means facing a different experience, with different people, in a different industry and under different circumstances. By doing so, you learn and learn and learn.

When you start in Investment Banking, you learn the bricks which you started to study at school but actually, gain real traction here; modelling companies’ balance sheets to understand their financials, the taxation and legal processes, as well the strategic aspects you face in dealing with consultants. As an Investment Banker, you’re in the middle of all of this and you need to bring it all together. The more you work, the more it all becomes a reflex because you have already learned a lot. At a certain point, you get a feeling for whether a deal makes sense or not even before running extensive analysis. After having been approached for a deal, a CEO comes to you asking “Does this deal make sense strategically? And financially? Can I finance it? Am I putting my organisation at risk?” it becomes easy for you after years of experience to answer these questions because you have already been through it several times. That’s the most interesting part of the job when you can have these conversations with CEOs, having the trust and ability to be a decision-maker.

To conclude my answer, what are the frustrations? It’s not obvious. When I started working in Investment Banking, I thought I would do a few years to learn the job and then switch to Private Equity or something else. But then, two to three years pass and you become Associate. Because you now gain new responsibilities, you stay another two to three years, and then you become Vice President, then Executive Director. And once you’re Managing Director, you’re done – you don’t move away because that’s where all the fun begins. I’ve been a banker for 25 years and I will probably be for another 15, and my biggest regret is probably to not have seen or done it all in my career yet. But you know, it’s a choice.

Throughout your banking career, is there any remarkable deal that you believe contributed to your personal and professional growth? How many deals did you participate in? What makes you love your job?

Every time you do a deal you get one of these plastic deal toys. As you can see from my wall, I have a collection of more than 100 plastic toys. But the secret is that before you conclude 100 deals you have to work on almost 400 because 3 deals out of 4 don’t make it to the end. To answer your question, I’ve done lots of complicated and highly visible deals but what I like and what also illustrates what is important in this business to me, is when you helped clients so much that they call you back again and again in the most difficult situations because you have earned their trust.

For example, in 2012 I was called by Peugeot who were in a difficult situation after the 2009 crisis and needed to raise equity, but through a partner, because they were too small. We spent 6 months negotiating a partnership with General Motors. Finally, General Motors agreed to build a certain number of cars together with Peugeot in New York, to share technologies, and to combine their purchasing power, allowing them to save a lot of money. Also, General Motors agreed to inject $700m of equity in Peugeot, and so we were able to save their balance sheet. That was one interesting transaction, but it didn’t ultimately help Peugeot to get out of the crisis as well as planned, and the situation got worse. Peugeot called me back two years later, in 2014. This time around, they didn’t need $700m of equity but about $3bn. So, we negotiated another partnership with Dongfeng, their partner in China. Dongfeng and also the French government ended up contributing money to Peugeot. Additionally, we raised another $2bn of equity and a remainder of debt on public markets to cover all the needs of Peugeot’s balance sheet. By doing so, we saved Peugeot from bankruptcy through a series of transactions. Peugeot started getting a lot better and in 2017, they called me back, but this time to buy Opel, and there we go. We spent another 6 months negotiating with General Motors in a very complicated transaction where General Motors carved out all of their European businesses under the Opel and Vauxhall brands, and Peugeot acquired them for almost $3bn. In 2019, two years later, they came back again and wanted to buy FIAT, in the largest merger in the automotive industry to date. We spent one year structuring this complicated merger between the Peugeot group (including Citroen, Opel, Peugeot) and the FIAT group (including Maserati, Chrysler). I’ll stop here, but this is basically what can happen if you sit with a client, earn their trust, and create a long-term relationship.

You covered roles of enormous responsibility during some of the worst economic crises of our history, going through the Dotcom bubble, being promoted to MD right after the financial crisis, and being Co-Head of Investment Banking in France during one of the worst pandemics in history. We are wondering about what have been the main challenges for you while leading MS during these difficult scenarios, and what do you believe your main duty has been?

First and foremost, when the Covid-19 crisis hit, everything went into paralysis and we moved from originating and executing transactions to a freezing mode to save balance sheets, with clients being very worried about their financing structure. It took three months to understand that the wave was under control to kick off strategic dialogues again. So, it was kind of an awkward period and since then, even frankly with ups and downs due to new lockdowns, we have been back to business as usual.

But, to answer your question, the most important thing that I did personally, which was the main challenge as well, has been people. When we all went into the confinement, we had to send people home to work remotely, and the first challenge of it was logistic, making sure they could work from home, sending them computers and other needed equipment. We realised quickly that it was pretty easy to work with Zoom and Teams and continue to operate the business from home, but very rapidly the questions became: “How do we make sure people are well? How do we make sure people don’t feel lonely or have personal and health issues? How do we make sure to keep people motivated?”. And that hasn’t been easy. During the confinement period, management activities and talking to people, which usually takes less than 10% of my time, suddenly takes 30% of it. Again, talking, making sure everyone was fine, setting up calls and events to cheer people up, and ensuring that on the back of everyone’s well-being the business could continue. This was the main challenge and it’s not over yet. We need to ensure to retain the motivation, health and the same culture, ethics, and bonds as we had them when we were all in the same office.

You have held several high-ranking positions over your career. What do you think made you successful and made you different from the others?

Things in this job come together when you have a profile that matches your organisation’s needs. Morgan Stanley is a place that invests in people with a long-term perspective, which makes its structure very cohesive. Success in Investment Banking requires to be in synchrony with your company’s values and cultural environment, and that’s been the case for me. In this sense, the mix of educational background, the mindset, and most importantly, the personal and relationship building skills that you have, by which I mean the ability to show your clients that you care and that you can empathise with them, is crucial. You need to show your clients that you’re not there to make money and run away, but to stay for a long time – that you’re willing to invest time and listen to their issues and make their interests your highest priority. That’s what makes the difference for a long and successful career in Investment Banking.

Traditionally we conclude our program “Coffee break with…” with some tips to students who want to enter the industry or who are entering the industry next summer. What advice would you give them?

Show enthusiasm! Coming out of Bocconi you have the right education, the right toolkit, and the right mentality. You’ve been selected coming in, properly trained, and formed in one of the world’s best-known and reputable universities, and it is well-known that you can do well in Investment Banking. What makes the difference is people skills. Show you are committed, show you care, show you’re pumped and have the vitality and show that you’re enthusiastic for the job.

Authors:

Luca Cefalù

Matteo Armstrong

Editor:

Florian Kramer