Bank mergers have cost SPP Hambro some partners, but the one-stop- shopping craze has helped the investment boutique to continue building its practice.
Having lost two joint venturers, First Fidelity and NBD Bancorp., to mergers, the New York-based investment bank recently signed deals with Michigan and New Jersey-based banks, Comerica Inc. and United Jersey Bank, a unit of UJB Financial Corp.
The relationships will enable the banks to provide another important capital market service to their clients - private placement.
"Where we no longer had a relationship in a geographic area, we desired to enter into one," said Neil H. Powell Jr., the former Bankers Trust executive who is Hambro's chairman. "The mergers created an opportunity for another bank to work with us in those areas, which was not lost on the institutions, nor on us."
Hambro, founded in 1989, led 37 deals last year, for a total of $3.7 billion in private placements. Such debt typically exceeds the duration of bank loans; does not require the same disclosure as registered, public securities; and is sold to insurance companies, pension funds, and other institutional investors.
It appears that the new relationships have hit the ground running; with Comerica and SPP are already leading one private placement.
That job led to the client's naming Comerica as agent for its senior bank debt, too, said Michael L. Fidler, a first vice president at Comerica who heads syndications and placements.
The Comerica relationship presents a great opportunity for the joint venture to win attractive market share in an active Michigan market, said Stefan L. Shaffer, Hambro's president.
For United Jersey, the relationship with Hambro "not only provides incremental fee income ... but also enables us to get some other transactions on the commercial-banking lending side that we might not be able to get (otherwise)," said Robert W. Eberhardt Jr., an executive vice president of the bank.
Comerica's Mr. Fidler said teaming up with Hambro lets his bank offer more products. "We can offer one-stop shopping to our customers, which is the way the market is moving," he said.
The time and money needed to get a private placement operation up and running convinced Comerica that a partnership with Hambro was a good idea, he said.
"They have a tremendous reputation as being able to execute and distribute those deals in the marketplace," Mr. Fidler said. "That is something that's difficult to duplicate in a short period of time."
Traditional private placements require extensive negotiation between the buyers and sellers of debt, experts said. A partnership with a specialist enables a bank to take advantage of economies of scale.
United Jersey's Mr. Eberhardt said Hambro knows what investors want and how to price and structure a deal.
Hambro has joint-venture partnerships with Boatmen's Bancshares, KPMG Peat Marwick, Wells Fargo & Co., Hibernia Bancshares, and Hambros Bank.
Market sources said Hambro may have another international joint-venture partnership to announce soon.
