Sunday, May 15, 2005
Barclays Ramps Up in M&A Advisory
Barclays Edges into M&A Advisory
Avital Louria Hahn (avital.hahn@sourcemedia.com)
May 16, 2005
After delivering blockbuster growth for the past eight years based almost solely on a fixed-income platform in the U.S., Barclays Capital is branching out slightly and edging into the advisory business in U.S. healthcare mergers and acquisitions.
The bank last week announced the hiring of Perry Bartol, a banker with extensive healthcare and M&A experience. Bartol, who had spent 15 years at JPMorgan, many of them in healthcare, later worked at CRT Capital where he originated and executed M&A and financing deals for healthcare and industrial companies.
But M&A will hardly be his main business at Barclays. Bartol said that the main focus of the dedicated healthcare group he will build, will be to focus on debt products and risk management. Although Barclays has had a healthcare practice under its diversified industries group, the practitioners were not healthcare specialists. Perry, a healthcare specialist, will develop a dedicated healthcare team.
Along with Barclays' mainstay of high-grade corporate debt, the new group will expand to subinvestment-grade debt and also target middle-market companies. When appropriate, it will also give capital structure and M&A advice, Bartol said.
"Barclays Capital's strategy is to be a preeminent fixed income and risk management house, and the healthcare effort will reflect that priority. We also have the capability to advise our clients on capital structure and corporate finance, and over time and where appropriate, strategic matters as well," Bartol said.
Barclays stressed that it is not changing its fixed-income stripes. "We are not getting into M&A at Barclays Capital at the present time," a spokeswoman said in an e-mail. "Our strategy is, as always, to be a leading debt and risk management firm. But Perry sees potential in the healthcare industry, in particular, to branch into subinvestment-grade issuers and to advise our clients both on capital structure and M&A, so Perry would build up that capability in his particular group."
However, no matter how tiny, early steps towards giving M&A advice are significant at Barclays. When Chief Executive Officer Robert Diamond became the head of Barclays Capital in 1997, one of his first moves was to sell Barclays De Zoete Wedd, its investment bank, and in the process shed its M&A advisory, equity capital markets and cash equities businesses (see IDD, "At Barclays, Diamond Hits Home Run," 1/17/05).
Instead, the bank focused on the humbler and steadier areas of fixed income and risk management, which minted money for the firm from 1997 through much of 2004. As of midyear last year, the bank had an enviable 39% return on investment, and it has a strategic plan that calls for 20% growth per year for the next four years. Although Diamond never said he was interested in M&A, he never ruled it out, either.
Given the slump in U.S. debt issuance so far in 2005, Barclays might do well to consider areas other than fixed income. Total debt issuance in the first quarter in the U.S. was down 11.2% to $820.5 billion. High-grade corporate debt was off 17.6% to $168.3 billion in the period, and high yield was down a whopping 29.7%.
But Barclays has always gone its own way stateside, concentrating on areas that it knows and does well and adding others only after it has established itself in the areas it knows best.
Here, too, Barclays is penetrating healthcare with its own twist. While most banks approach healthcare M&A from the equity side, Barclays, which doesn't offer equity capital markets products-other than convertibles, a hybrid instrument-will approach mainly companies that are debt issuers, though healthcare is not known as a particularly big sector for debt issuance. While Barclays bankers have been working with big pharma clients before Perry's arrival, Perry plans to also call on sub-investment grade companies as well as companies that fly under the watchful eyes of Wall Street: middle-market companies in narrow sub-sectors such as healthcare services and mature life sciences.
"We believe Barclays Capital has the balance sheet, debt capital markets and risk management capabilities to compete head to head with the leading US investment banks for business with sophisticated, large cap healthcare companies," Perry said. "However, we also see opportunities with mid-sized firms and in certain subsectors."
Copyright 2005 Thomson Media Inc. All Rights Reserved.
http://www.thomsonmedia.com http://www.iddmagazine.com
Avital Louria Hahn (avital.hahn@sourcemedia.com)
May 16, 2005
After delivering blockbuster growth for the past eight years based almost solely on a fixed-income platform in the U.S., Barclays Capital is branching out slightly and edging into the advisory business in U.S. healthcare mergers and acquisitions.
The bank last week announced the hiring of Perry Bartol, a banker with extensive healthcare and M&A experience. Bartol, who had spent 15 years at JPMorgan, many of them in healthcare, later worked at CRT Capital where he originated and executed M&A and financing deals for healthcare and industrial companies.
But M&A will hardly be his main business at Barclays. Bartol said that the main focus of the dedicated healthcare group he will build, will be to focus on debt products and risk management. Although Barclays has had a healthcare practice under its diversified industries group, the practitioners were not healthcare specialists. Perry, a healthcare specialist, will develop a dedicated healthcare team.
Along with Barclays' mainstay of high-grade corporate debt, the new group will expand to subinvestment-grade debt and also target middle-market companies. When appropriate, it will also give capital structure and M&A advice, Bartol said.
"Barclays Capital's strategy is to be a preeminent fixed income and risk management house, and the healthcare effort will reflect that priority. We also have the capability to advise our clients on capital structure and corporate finance, and over time and where appropriate, strategic matters as well," Bartol said.
Barclays stressed that it is not changing its fixed-income stripes. "We are not getting into M&A at Barclays Capital at the present time," a spokeswoman said in an e-mail. "Our strategy is, as always, to be a leading debt and risk management firm. But Perry sees potential in the healthcare industry, in particular, to branch into subinvestment-grade issuers and to advise our clients both on capital structure and M&A, so Perry would build up that capability in his particular group."
However, no matter how tiny, early steps towards giving M&A advice are significant at Barclays. When Chief Executive Officer Robert Diamond became the head of Barclays Capital in 1997, one of his first moves was to sell Barclays De Zoete Wedd, its investment bank, and in the process shed its M&A advisory, equity capital markets and cash equities businesses (see IDD, "At Barclays, Diamond Hits Home Run," 1/17/05).
Instead, the bank focused on the humbler and steadier areas of fixed income and risk management, which minted money for the firm from 1997 through much of 2004. As of midyear last year, the bank had an enviable 39% return on investment, and it has a strategic plan that calls for 20% growth per year for the next four years. Although Diamond never said he was interested in M&A, he never ruled it out, either.
Given the slump in U.S. debt issuance so far in 2005, Barclays might do well to consider areas other than fixed income. Total debt issuance in the first quarter in the U.S. was down 11.2% to $820.5 billion. High-grade corporate debt was off 17.6% to $168.3 billion in the period, and high yield was down a whopping 29.7%.
But Barclays has always gone its own way stateside, concentrating on areas that it knows and does well and adding others only after it has established itself in the areas it knows best.
Here, too, Barclays is penetrating healthcare with its own twist. While most banks approach healthcare M&A from the equity side, Barclays, which doesn't offer equity capital markets products-other than convertibles, a hybrid instrument-will approach mainly companies that are debt issuers, though healthcare is not known as a particularly big sector for debt issuance. While Barclays bankers have been working with big pharma clients before Perry's arrival, Perry plans to also call on sub-investment grade companies as well as companies that fly under the watchful eyes of Wall Street: middle-market companies in narrow sub-sectors such as healthcare services and mature life sciences.
"We believe Barclays Capital has the balance sheet, debt capital markets and risk management capabilities to compete head to head with the leading US investment banks for business with sophisticated, large cap healthcare companies," Perry said. "However, we also see opportunities with mid-sized firms and in certain subsectors."
Copyright 2005 Thomson Media Inc. All Rights Reserved.
http://www.thomsonmedia.com http://www.iddmagazine.com
# posted by Tom @ 5:09 PM 
