Almost two years after Societe Generale bought it, the New York investment bank Cowen & Co. is still straining to find its way.

The struggle raises questions about whether the two will succeed in melding their businesses.

Market-share figures in Cowen's traditional niches show the scars. Its share of technology and health-care investment banking has dropped substantially since France's No. 2 bank said in February 1998 that it would buy the firm for $540 million.

In 1999 - a record year for initial public offerings - SG Cowen has led just five such transactions.

"They were starting to come into their own as a lead manager for deals before the merger," said a San Francisco banker. "We haven't heard much from Cowen since then."

In U.S. technology equity offerings, Cowen fell from No. 13 in 1997, with a 2.4% market share, to No. 19, with a 0.5% share, in 1998. Through the first nine months of 1999 Cowen ranked 18th, with a 0.6% share in technology offerings, according to Thomson Financial Securities Data.

In health-care common stock offerings it dropped from fifth place in 1997, with a 6.6% share, to 11th, with a 3.2% share in 1998. In the first nine months of this year it led no equity offerings in that category.

"Societe Generale has a very poor track record in investing in investment banks," said Benoit Vincenzi, an analyst at Fox-Pitt, Kelton in London. "They would have been better off servicing a geographic area instead of focusing on global products, like IT, where the big investment banks have a pricing advantage."

Some executives say the commercial bank's strategy in dealing with Cowen's general partners alienated some of the original staff members after the deal was completed. Early on, the banking company suffered departures of senior executives, and some say it was slow to attract new top-tier talent.

Kim Fennebresque, the former head of mergers and acquisitions at Cowen, who became chief executive of SG Cowen in November, acknowledged that the integration process was bumpy. "There was a necessary and understandable turnover in personnel related to the merger," he said.

Several members of its equity research team, including the top-ranked analyst Daniel Lemaitre, left. And it lost some the newer investment bankers, such as mergers managing director Stefan Selig, who is now a co-head of mergers at Banc of America Securities.

Mr. Fennebresque depicted the turnover as part of an upgrading. Since early 1998, when he joined the firm, "we didn't lose one managing director we cared to retain," Mr. Fennebresque said.

SG Cowen has had an additional integration adjustment to deal with: a shift in its parent's strategy. At the time of the Cowen acquisition, SocGen was intent on building a global investment banking franchise.

The company altered that plan, analysts say, because of losses in fixed-income resulting from the 1998 emerging-market crisis and a lengthy but unsuccessful bid this summer to merge with the French investment bank Paribas.

"It's the same management, but they have significantly changed their strategy" since buying Cowen, said Sarah Manton, an analyst at HSBC Investment Bank PLC in London. "They're more interested in shareholder-friendliness, and more focused on their region and areas of expertise."

Mr. Fennebresque said the parent's merger battle had no impact on its hiring abilities. "The commitment [of Paris] remains unabated," he said.

SG Cowen has been filling in gaps since the early spring, and most of its major division heads came from outside the company, including Mr. Fennebresque, who joined from UBS AG.

In March, SG Cowen hired three managing directors to head technology corporate finance, including Timothy Walsh of Morgan Stanley Dean Witter & Co. In June the firm said that Peter Reikes, the former head of PaineWebber's health-care practice, had joined the firm.

Mr. Fennebresque said SG Cowen is already benefiting from its first-half hiring and has quickly built up a backlog of equity deals for next year. It has completed some, serving as lead manager on the $67.5 million initial public offering by Crossroads Systems of Austin, Tex., which more than quadrupled in value the first day of trading.

But the surest sign that SG Cowen is beginning to move back up in the league tables will be when its name starts appearing more often on the left-hand side of issuers' prospectuses, where the lead managers appear, rather than on the right, where the co-managers are listed.

It has its work cut out for it. In the first 11 months, SG Cowen co-managed 51 common stock deals in the United States but was the bookrunner on only six deals.

And key personnel changes have continued this quarter, a sign that there may still be further wrinkles to smooth out.

Curtis Welling, who had been head of investment banking at Societe Generale since 1996, resigned in early November because of differences "over the strategic direction of Societe Generale's investment banking business," he said from his Connecticut home. Sources said the resignation of Mr. Welling, who oversaw the acquisitions of Cowen and the utilities mergers specialist firm Barr Devlin, was closely linked to his failure to get the top position at SG Americas after the death of chief executive Jean Huet in mid-October.

SocGen has had much more success with Barr Devlin, which brought 14 mergers and acquisition specialists to the banking company. The company is the No. 10-ranked firm in the utilities field, with a 10% share of the market.

Societe Generale is one of many commercial banks trying to build equities or advisory functions by buying boutique investment firms. Most recently, Chase Manhattan Corp. announced in September that it would buy Hambrecht & Quist Group. And other firms are still digesting merger prizes, as Bank of America Corp. is doing with Montgomery Securities.

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