First Southwest & Co., a Texas-based investment banking firm on a roll since new owners took over in 1991 and infused it with new life and cash, has snared a veteran Wall Street banker and rainmaker.
Joseph M. Giglio Jr., a managing director at Smith Barney Shearson, will be joining First Southwest on Dec. 6 as chairman of the firm's municipal group. He will also become an owner investing an undisclosed amount of money.
The appointment adds another notch in the firm's broadening belt.
"He brings credibility and smarts and focus in the muni area," said Robert K. Utley 3d, First Southwest's co-chief executive officer and chairman of the board.
For Giglio, who brings over 15 years of banking and management experience in the municipal securities industry to the burgeoning regional banking and financial advisory firm, this marks a major change in his career. He has been based on Wall Street all of his career and has never owned a securities firm.
For First Southwest, founded in 1946, Giglio's commitment signals national expansion, both in financial advisory and underwriting business lines, according to Utley.
In October 1991, the firm was acquired by an investor group led by Utley and Hillel A. Feinberg, president and co-chief executive, both of whom are the main shareholders and friends of Giglio. At the time, there were rumors that Utley and Feinberg wanted Giglio, then at Chase Securities Inc., to join the firm.
Since then, First Southwest has been on a building spree. The firm has also become a major player in the region.
In an interview with The Bond Buyer this summer, Utley said, "We are very committed to the building of an institution. We intend to be the premier investment banking firm in the Southwest."
More capital has been committed to expand the staff, from about 120 people to about 190, and increase services and geographic coverage.
Recent newcomers include Charles P. Ripley, formerly a senior vice president at Rauscher Pierce Refsnes who was named a director this month and will focus on institutional fixed-income bond sales, and Michael J. Marz, who was named a managing director last month and is concentrating on corporate finance and capital markets.
First Southwest, which has been developing its underwriting ability since the acquisition, ranks eighth as a senior manager of Texas municipal debt to date this year. The firm has been the lead underwriter for 59 issues totaling $662 million, a 4.5% share of the Texas market. As a co-manager, the firm ranks 14th, with 89 issues totaling $1.9 billion. As a financial adviser, the firm leads the field, with 315 issues totaling $4.6 billion in Texas.
To further business, First Southwest plans to open a sales and banking office in New York City soon. The firm already has branches in Dallas, Houston, San Antonio, Austin, Abileen, and Longview.
The firm has already ventured beyond Texas, working in Florida, Arizona, and Oklahoma. It has added imaginative and innovative twists to municipal finance, recently using a dutch auction-like process for selling bonds for Texas cities.
The firm has diversified its business lines, Utley noted. In the first year after the acquisition, financial advisory activities generated about 70% of revenues. Now, advisory business makes up 30% of the total, with the rest coming from new lines of work. Assets under management have grown to more than $1 billion, he said.
"We have brought in some star players," Utley said in a telephone interview on Friday, describing the people the firm has hired over the last 18 months. With the addition of Giglio, "our whole objective is to say to the world, we are going to be smart and you need to look at us. In the financial advisory world we are not going to be reactive, we are going to be proactive."
Giglio, 50, who built up and ran two public finance departments before joining Smith Barney, said three things motivated him to join First Southwest, including his relationship with Utley and Feinberg.
"Being an owner; working with two people who are intellectually strong, with higher energy levels and who are two of my closest personal friends; and to build First Southwest into the premier full-service, regional investment banking firm in the country and to make them a niche player nationally - and there are a lot of niches nationally," Giglio said.
He noted that "apart from being a full participant in management, initially my responsibilities will be munis - I'll go with my strength."
After stints working for the federal government, New York State, and New York City, Giglio joined the public finance department of Bear, Stearns & Co. in 1978, where he worked his way up to senior managing director and head of public finance.
He resigned from Bear Stearns in 1988 to revamp and build Chase Securities Inc.'s municipal securities department. While there, he lured a number of veteran banking and bond professionals to the staff.
But later, as part of a business strategy, Chase said it decided to get out of municipal securities. In a move that stunned the municipal industry, the firm closed the department and laid off the staff in the spring of 1991.
Giglio then moved in June 1991 to Smith Barney as a banker, no longer running a department, but doing what some in the industry consider one of his fortes: developing and landing new business.
Now at First Southwest, Giglio said his "first goal is going to understand the capital financing requirements of Texas issuers and to see and to determine how First Southwest can be of greater assistance."
Giglio is no stranger to Texas. As a banker, he beat the ground looking for and landing deals there. As an educator, he lectured at the Lyndon B. Johnson School of Public Affairs at the University of Texas. As a public policy expert, he worked with the Select Interim Committee on Capital Construction in the Texas House of Representatives in the late 1980s.
During his tenure on Wall Street, Giglio also worked in Washington, D.C., on various projects, specializing in infrastructure. He served as chairman of the National Council on Public Works Improvement, which released a report "Fragile Foundations," in February 1991. He has also published numerous articles on the nation's infrastructure problems.
As for leaving Wall Street for a regional firm, Giglio said, "I think that the regional firms will continue to get stronger in the future, if for no other reason than the cost pressures on national firms and the fact that the regional firms have, over the last few years, developed the same technical expertise as the larger firms."
In addition to his work at First Southwest, Giglio will be joining Apogee Research Inc., where he has a stake in the firm, as chairman. The Bethesda, Md.-based firm specializes in economic and financial analysis of various types of public works, including airports, highways, mass transit, and wastewater treatment.
