J.P. Morgan & Co. has held job talks with Richard Ivers, the highly regarded former head of leveraged buyout financing at Citicorp.
While it remains to be seen whether Mr. Ivers will be joining Morgan, the talks indicate that the banking company is beefing up its leveraged finance capabilities.
Reached at home Wednesday, Mr. Ivers said it would be "inappropriate" to comment on the talks with Morgan. He said only that he has been considering a number of options since leaving Citicorp in January, after a falling-out with management.
Morgan also declined comment on the discussions.
Reputation as Rainmaker
At Citi, Mr. Ivers had the reputation of being a rainmaker, bringing in lending assignments from big LBO shops, such as Kohlberg Kravis Roberts & Co.
Morgan has never been much of a factor in the buyout loan business, limiting itself to deals that involve its largely bluechip, investment-grade client base.
Other banks, particularly Bankers Trust New York Corp., pursued the buyout lending business on a so-called transactional basis during the 1980s.
Increasingly, though, Morgan clients are spinning off subsidiaries and nonstrategic businesses as part of a continuing corporate trend that is creating more leveraged lending opportunities for the bank.
Lending Seen as Attractive
"We're seeing growing interest among our clients in spinning off subsidiaries as new highly leveraged companies, and lending to them is an attractive, profitable business," said a Morgan spokesman.
Several years ago, for example, Morgan led the bank financing for the buyout of International Business Machines Corp.'s typewriter business by an investor group led by Clayton, Dubilier & Rice.
In some cases, corporate spinoffs are accomplished through initial public offerings of stock, which are often accompanied by new bank financings and bond underwritings. And in other cases, subsidiaries are spun off to existing shareholders of the parent company.
Although some of these divested companies are investment grade in their own right, others are not.
Right now, Morgan is leading an $850 million bank financing for highly leveraged Western Atlas, which is in the process of being spun off from Litton Industries.
Other Morgan clients that have recently spun off subsidiaries include Atlantic Richfield Co., Ryder System, and The Limited.
Morgan also hopes to win junk-bond underwriting assignments for such spinoffs, complementing its investment-grade bond business.