Taking aim at some of the most important users of junk bonds, Canadian Imperial Bank of Commerce has hired a high-profile banker with ties to some of the largest leveraged-buyout shops.
Canada's second-largest bank has snared Patrice Daniels from Bankers Trust New York Corp. to work in its nascent financial buyers banking group. Ms. Daniels, who has worked extensively with Stonington Partners and other well-known LBO firms, is set to join the Canadian bank's Los Angeles office on Monday, where she will report to managing director Bruce Raben.
Ms. Daniels joins Canadian Imperial as it seeks to become a major player in the high-yield bond and senior bank loan market. The bank made a big commitment to the junk market in 1995 when it acquired Argosy Partners, a high-yield-bond boutique.
To augment that purchase, Canadian Imperial has been increasing its contributions to leveraged buyout funds, hoping that a financial commitment will help it win lead positions on junk bond issues and leveraged loans.
"In the last couple of years, I hear CIBC's name much more often," said M. William Benedetto, principal of Benedetto Gartland & Co., a New York firm that raises money for LBO funds. Contributing to buyout funds "seems to be a more important part of their strategy now," said Mr. Benedetto.
Since buying Argosy, the Canadian bank has risen in the rankings of lead-managers of public and private junk bonds to 13th at the end of 1996 from 17th in 1994. At the same time, Canadian Imperial's market share grew to 2.5% from 0.8%, according to information from Securities Data Co.
The purchase of Argosy-a firm founded by former Drexel Burnham Lambert junk bond bankers-is often referred to as a "reverse merger," because its employees, including co-chief of high yield and managing director Dean Kehler, have a higher profile than many of Canadian Imperial's commercial bankers. They also outnumber them.
"In a power struggle, Argosy would win," said an observer of the bank.
The Canadian bank plans to continue to expand its high-yield franchise by hiring other senior-level bankers with experience similar to that of Ms. Daniels, said managing director William Phoenix.
The bank, however, faces some significant challenges in developing ties to buyout firms. Chase Manhattan Corp., Bankers Trust New York Corp., NationsBank Corp., and BankAmerica Corp. have done the lion's share of bank business with these firms, which include such household names as Kohlberg Kravis Roberts and Hicks, Muse, Tate & Furst.
"Hiring a few people doesn't do it," said a banker who works with the buyout firms. "You have to have long-term relationships."
Mr. Phoenix agreed that long-term relationships are important, but added that the bank has contributed to several funds for years, and has established a number of important relationships.