Forget high-tech. Think irrigation.

Bucking the trend of many investment banks that sought a larger presence in California during the past five years, the latest firm to open a West Coast investment banking office is being lured by drainage manufacturers rather than Web site entrepreneurs.

U.S. Bancorp Piper Jaffray, the investment bank subsidiary of U.S. Bancorp in Minneapolis, said Tuesday that it had opened a Los Angeles office that should have more than a dozen investment bankers in two years.

But in contrast to high-tech development that spawned an influx of investment bankers to California - including 70 executives who have flocked to Piper Jaffray offices in Menlo Park and San Francisco - this newest location has a distinctly Old Economy origin.

The Los Angeles office is part of a national middle-market mergers and acquisition group, and will target manufacturing and services corporations on transactions that fall in the $50 million to $1 billion range. "Those companies are very highly sought-after acquisition targets but they can't get the attention of large Wall Street firms," said Dan Donoghue, co-head of the middle-market mergers advisory group.

Take, for instance, National Diversified Sales of Lindsay, Calif. In June, Piper Jaffray completed its advisory work on a sale of the drainage and irrigation products manufacturer to Graham Partners, an East Coast buyout firm.

By putting bankers in Southern California, the firm expects to do business with many more companies like National Diversified. "We saw a great opportunity in the Los Angeles market for penetrating high-quality middle-market manufacturing and services sectors," said Jeff Turner, who is co-head of the group with Mr. Donoghue.

The market may be ripe for advisory services, and U.S. Bancorp is not alone in trying to pluck it. Donaldson, Lufkin & Jenrette Inc., a Piper Jaffray competitor on middle-market deals, has one of the biggest investment banking offices in Los Angeles with 120 professionals. And Merrill Lynch & Co., another national competitor in middle-market advisory, has also been building its presence in California.

There is a second draw to Los Angeles for Piper Jaffrey. Half to 60% of its mergers advisory business involves the sale of a private company to a strategic buyer, and with private equity firms involved in a large number of those deals, a key part of the practice is having close ties to the buyout firms.

At least two private equity firms that invest in middle-market companies are based in Los Angeles - Aurora Capital Group and Brentwood Associates.

Piper Jaffray has modeled much of its investment banking practice on the same emerging growth, technology, and health care industries that have reaped windfalls for FleetBoston Financial Corp.'s Robertson Stephens unit and Chase Manhattan Corp.'s Chase H&Q.

Piper started the separate middle-market unit five years ago. In early 1997, it expanded the unit's territory with offices in Chicago and later Seattle. About 50 investment bankers now work in the middle-market group, according to Mr. Donoghue.

Even though Piper Jaffray already has bankers and support in Northern California, mostly focused on tech-related companies, Los Angeles was the obvious next step for the growth for one simple reason: the sheer number of middle-market companies in the surrounding area. Steven P. Cesinger, a former principal of local investment bank Greif & Co. who was hired to run Piper Jaffray's Los Angeles office, said a conservative estimate puts 7,000 to 10,000 companies with over $25 million in revenue in the southern part of the state.

At Greif, where he spent the last eight years focusing on the similar clientele, the conventional wisdom was that one-half to two-thirds of the middle-market mergers were completed without an investment bank adviser. "If you just drive around the City of Industry [Calif.] you see row after row of companies" in this market, he said.

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