SunTrust Banks Inc. has started an investment banking unit that will advise middle-market commercial clients on mergers and acquisitions.
SunTrust R-H Advisors, unveiled Wednesday, targets companies with sales of less than $250 million that are either making acquisitions or selling their businesses.
"We've got great momentum going in delivering investment banking products to the commercial market," said R. Charles Shufeldt, the Atlanta banking company's corporate and investment banking chief. "We're trying to be a total solutions provider."
The new unit is part of SunTrust Capital Markets Inc., the investment banking arm created in July when SunTrust bought Robinson-Humphrey LLC's institutional business from Citigroup Inc.
SunTrust R-H Advisors will target companies throughout the Southeast, where SunTrust Robinson-Humphrey's M&A practice focuses on larger companies, Mr. Shufeldt said.
SunTrust vice chairman John Clay said in a prepared statement: "M&A activity for middle-market commercial businesses is a niche not well-covered by other large financial institutions or investment banks; our competition primarily will be local boutique firms or professionals such as attorneys and accountants,"
But SunTrust, which has assets of more than $100 billion, is bucking the trend. The companies SunTrust R-H Advisors is concentrating on tend to sell for $10 million to $30 million; most other banks go try to secure bigger deals, Mr. Shufeldt said.
He said the unit could also generate business for the parent company's trust, money management, and private client areas by helping business owners manage the profits from the sale of their companies. "Our belief is banks in general have been missing out on this, and we intend to stop missing out on it."
Philip Marshall, who was a managing director with SunTrust's debt capital markets origination group before establishing SunTrust R-H Advisors, heads the division. He works with two other senior M&A bankers, supported by analysts and associates, Mr. Shufeldt said.
"We think we are properly staffed right now in that group," Mr. Shufeldt said. If business grows as expected, "I would see us looking to add modestly."
Nancy Bush, an analyst at Ryan, Beck & Co., said, "I certainly hand it to them that they are making the effort so early on in their ownership."