CIBC Wood Gundy is gearing up to make a push in health-care financing.
The subsidiary of Canadian Imperial Bank of Commerce is building a team of six specialists in health-care finance around managing director Martin Jackson, most recently of Cleveland-based McDonald & Company Securities. The bank unit will tap its existing ability to offer primarily middle- market and noninvestment-grade companies loans and structured financing, derivatives and high-yield products, and merchant banking services.
Establishing the team is part of the unit's larger corporate finance strategy of developing industry groups. Last year, it developed an airline and aerospace group.
Michael Goldhawk, managing director and head of corporate finance and loan products, said the new team would focus on the consolidating physician practice management, managed care, and health-care information systems sectors.
"We see this industry as the largest and most fragmented in all of the U.S.," said Mr. Goldhawk, who will oversee Mr. Jackson's group.
Health care proved fertile ground in 1996 for banks focused on the sector. Banks managed a record $3.4 billion of initial public offerings and about $44.3 billion of merger and acquisition activity.
"From an M&A standpoint, 1997 has the potential to be as good if not better than 1996," said John D. Fowler, managing director and co-head of the health-care group at Salomon Brothers Inc.
"It is our view that the consolidation that has gone on in the health- care sector is going to continue for the next several years," he said. "Larger companies will benefit from economies of scale just as they do in other industries."
But capital-raising this year, particularly equity offerings, will vary widely by subsector, he said, noting that biotechnology companies are unlikely to raise as much capital as they did in the first half of 1996.
Even if the market repeats last year's performance, Mr. Jackson's new team at CIBC Wood Gundy faces stiff competition from established players in health-care finance.
"It's very hard, from a platform that's just beginning, to catch a wave that's already moving forward," said an investment banker in the health- care sector.
With the exception of J.P. Morgan & Co., commercial banks that have recently moved into health-care finance "have not had much impact in the sector," said another investment banker.
But Mr. Goldhawk disagreed with those who claim the health-care finance market is already too crowded.
"We're focusing on this because we see fantastic opportunities well into the future," he said.