New hires worth $300m to banking trio
Managing directors hired by Lazard, Greenhill and Evercore since the financial crisis started will bring in $300m (€202m) in additional revenues for their new employers, according to new research that suggests aggressive hiring by the independent investment banks will pay dividends when M&A activity rebounds.
Analysts at Keefe, Bruyette & Woods have upgraded their 2010 and 2011 earnings per share estimates for Lazard, Greenhill and Evercore, based on the earning power of the managing directors they have hired from bulge-bracket rivals.
In a report released last week, KBW's analysts wrote: “We believe the boutique advisory firms are among the key beneficiaries of the consolidation and dislocation on Wall Street as specialised advice is anything but a commodity. The incremental revenue impact from the surge in senior-level bankers hired from the once dominant bulge bracket firms that either failed or were severely weakened will be very visible in 2010 and 2011.”
Over the past year Lazard has hired 17 managing directors in its financial advisory business, bringing the total to 147. Senior appointments include Tom Tuft as chairman of global capital markets from Goldman Sachs and Alexis De Rosnay as vice-chairman of Lazard International from Lehman Brothers.
Managing directors at Lazard are the most revenue-generative of the three boutiques, according to the report, and will bring in around $8m each for 2009. KBW predicts the new recruits will bring in an additional $43m in 2010 and $79m in 2011.
Greenhill has hired 21 bankers at manging director level or above including energy banker Vittorio Perona from Dresdner Kleinwort, and consumer specialists Seamus Moorhead and Charles Gournay from UBS in London. Last week it announced the hire of UK-based restructuring specialist Gareth Davies. KBW estimates they will bring in an additional $35m in 2010 and $65m in 2011, based on the fact they should generate more than $6m each by the end of this year.
Evercore hired seven senior managing directors in the third quarter of 2007, including FIG specialist Mark Burton from Barclays and M&A adviser Robert Gillespie from UBS. Managing directors at Evercore will generate around $3m each in 2009, based on the first three quarters annualised. KBW predicts they will generate an additional $50m in 2010 and $33m in 2011.
KBW analysts said: “There has been a steady migration of senior talent from failed, merged, or weakened competitors to many of the boutique firms, both public and private. On the investment banking front, Lehman Brothers, UBS, RBS, and Dresdner as well as Merrill Lynch have lost a considerable amount of senior talent. Of the 67 senior MD hires between Evercore, Greenhill, and Lazard, 27 (39%) have come from the aforementioned five firms.”
Lazard and Evercore declined to comment. Greenhill was not immediately available for comment.
--write to lvaughan@efinancialnews.com
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