White Cap Industries, one of the West Coast's largest distributors of building supplies to contractors, has been building new banking relationships.
When White Cap executives decided to go public last fall, they tapped BancAmerica Robertson Stephens to co-lead the company's $78 million initial public offering. They had been familiar with Robertson Stephens ever since the firm made a private equity investment in their company, months before the investment bank was acquired by BankAmerica Corp.
After the offering, White Cap chose Bank of America to lead a $100 million credit facility, including a $25 million, four-year revolver and a $75 million, four-year acquisition line. It was the first credit facility Bank of America had worked on for the company.
White Cap's chief financial officer, Chris Lane, spoke with American Banker about the convergence of commercial and investment banking.
How did you select Bancamerica Robertson Stephens to co-manage your initial public offering?
Primarily through our relationship with Bayview Capital, which is a private equity fund of Robertson Stephens. They started a dialogue with us in November of 1996 and made a private equity investment in February 1997. It was just a natural progression in the relationship because of all the work they had done to gain an understanding of the company. We did interview a large number of other banks and selected one other as co- manager, Donaldson, Lufkin & Jenrette.
Did you interview both large investment banks and other securities units of commercial bank holding companies?
BancAmerica Robertson Stephens was the only one that wasn't a real bulge-bracket firm. The relationship we had with one of their investment bankers, Bob Grady, and their analyst coverage had a lot to do with it. I think the analysts at Bayview transferred that knowledge and all the work they did before on the private equity deal. They already had a deep understanding of the business, not just some minor high-level understanding.
And that led you to obtain credit facilities with Bank of America for the first time?
Yes, we chose them primarily because our investment banker from Robertson Stephens introduced us to some people in the bank's leveraged finance group. We actually looked at three of the major money-center banks in New York. But with Bank of America, we didn't have to reinvent the due diligence process from scratch, which was a big issue to the company. Bank of America was also competitive on price.
Would you have worked with either the bank or the firm prior to their merger on either of these deals?
We would have definitely worked with Robertson Stephens on the IPO. I don't know for sure where we would have ended up with the bank loan. I think Robertson Stephens played a big role in our choosing Bank of America. The commercial banking side still had to do their work, but they had a big leg up versus the other banks that had to start from scratch.
Who was your historical lender, and why did you make the switch to B of A?
For many years we were with HSBC; we had also worked with Mellon. There wasn't any problem with our relationships anywhere else. But from a business standpoint, it was just the right time to move. We're an aggressive, fast-growing company. We looked at all the factors, and decided our best move was to go with Bank of America.
On the basis of experience, what do you think of commercial bank holding companies' getting into investment banking?
As a business manager, I think that investment banking companies working together with commercial banks can provide benefits to the company in terms of due diligence. You get people from different disciplines looking at a business. I think it's something that's going to continue to develop.
I was also happy and surprised at how well the two companies worked together. You don't really expect two large organizations to come together as smoothly as they did. I think for all banks that are doing this, it's going to take a while for them to realize all the benefits.
