The Changing Scene

Copyright 2008 SourceMedia, Inc.All Rights Reserved Mergers and Acquisitions Journal

September 1, 2008

4926 words

The Changing Scene

Editorial Staff

Banks Bolster Infrastructure Coverage: Goldman, Merrill, KKR and First Reserve, among others, all made notable hires to bolster their infrastructure coverage, plus other news on the personnel front

The hiring at Wall Street's major banks underscores the enthusiasm deal pros are showing for the infrastructure space, one of the few areas, most dealmakers agree, that isn't exposed to larger macroeconomic trends. UBS's decision to shutter its municipal group explains some of the movement in the space, as Merrill Lynch and Goldman Sachs were opportunistic in scooping up some of the more notable names let go. Frank Lauterbur, James Calpin and Nancy Clawson, are just three of the nearly 30 bankers who joined Merrill's infrastructure group, while Goldman Sachs was able to nab Jeff Scruggs, the former head of municipal banking at UBS, as well as three others. Barclays also made a hire in the space.

New hires at Kohlberg Kravis Roberts and First Reserve would seem to support the banks' thesis. KKR brought in John Bryson to focus on global infrastructure opportunities, and First Reserve poached Goldman's Mark Florian to help source investments in the segment.

American Capital Strategies - The private equity fund and asset manager will expand and realign its management team, it announced. Steven W. Burge will become president of its North American Private Finance arm; Ira Wagner will assume the role of president for the European Private Finance segment and John Erickson will establish himself as the company's president of Structured Finance. Finally, Gordon O'Brien will become president of Specialty Finance and Operations.

Malon Wilkus, American Capital's chief executive and chairman, will remain in his current role, but will no longer be president. The four aforementioned individuals will collectively assume the role.

Further, senior vice presidents and regional managing directors Brian Graff and Darin Winn have been bumped up to senior managing directors.

Burge, until he joined American Capital in 2007, worked with Norwest Equity Partners from 1998 to 2006. Wagner joined the firm in 1997 and became executive vice president and operating chief in 2001. Erickson joined in 1998, to become its finance chief-a position he will continue to hold even as he works in his new role. O'Brien joined American Capital in 2001.

Barclays Capital - The international investment bank has tapped a team of investment bankers to start an energy practice in Houston, among a slew of other hires. The bankers will provide financing, risk management and advisory products and services to energy clients from the firm's Houston office. They will work closely with professionals in the commodities business.

The group will be led by Joseph Gatto Jr. and Russell Johnson, who join Barclays as managing directors. Gatto was most recently a managing director in Merrill Lynch's global energy investment banking group in Houston. He spent 11 years at Merrill.

Johnson, meanwhile, comes from Deutsche Bank Securities, where he was a managing director in its natural resources investment banking group since 2004. He previously spent 11 years as an investment banker on JPMorgan's oil and gas team.

Barclays also bolstered other industry segments, hiring James Paris, who was named head of paper and packaging investment banking. Paris, who had most recently been the managing director of the leveraged finance group at Deutsche Bank, will be based in New York. Thomas Rosén was also hired by the bank to head its power sector team as a managing director, while Trace McCreary was named as the head of its US infrastructure finance practice.

The Blackstone Group - The public PE giant opened up a representative office in Beijing, hiring Shan Fu as its chief representative for the outpost. Fu previously served as a vice president of Beijing Mainstreets Investment Group. He also has experience with the government, working for China's National Development and Reform Commission, the State Economic and Trade Commission of China, the Office of Economic and Trade in State Council of China and the Office of Production of the State Council of China.

The Chinese government, through the State Investment Co. of China, poured $3 billion into Blackstone Group as part of its IPO last year. The investment, at the time, gave the nation a 9.9% stake in the PE firm.

Citigroup - The investment bank said Michael Klein, chairman of Citigroup's Institutional Clients Group (ICG) and head of the private equity and global financial entrepreneurs divisions, is leaving the bank after 23 years.

Klein joined the M&A group of one of Citi's predecessor firms, Salomon Brothers, upon his graduation from the University of Pennsylvania's Wharton School of Business. Since 1987, he has overseen the firm's private equity and global financial entrepreneurs divisions.

During his tenure, he held positions such as co-head of global investment banking for Salomon Smith Barney and CEO of Citi Markets & Banking for Europe, the Middle East and Africa. Klein was put in charge of expanding European investment banking in early 1999, and led the merger of merchant bank Schroders into Salomon Smith Barney's European banking operations.

Klein was appointed CEO of global banking in February 2004. He became ICG chairman and a firm vice chairman in March 2008.

Credit Suisse - The Swiss bank announced four senior appointments in its investment banking department in Asia, excluding Japan, as part of an ongoing push to strengthen its presence in China.

Credit Suisse and its partner, Founder Securities, recently received approval from the China Securities Regulatory Commission, or CSRC, to establish a joint venture in China. Through this newly formed entity, Credit Suisse will be able to provide investment banking services in the domestic Chinese market.

Liping Zhang, head of Credit Suisse's China investment banking department, has been appointed vice chairman of the non-Japan Asia investment banking department. In this capacity, Mr. Zhang will take on additional regional client coverage oversight responsibilities. He will continue to be based in Hong Kong, reporting to Paul Raphael, head of investment banking for Asia Pacific.

Janice Hu, managing director and vice chairman of the China investment banking department, and Jeremy Xiao, managing director and head of the investment banking department's office in Beijing, have been appointed co-chairmen of the China investment banking department.

Separately, the investment bank announced Erin Callan, who was recently ousted from her position as Lehman Brothers' chief financial officer, will begin a new role as head of its global hedge fund business on Sept. 2.

Callan will also join Credit Suisse's investment bank management and global client steering committees, boosting her clout within the organization. She will work in Credit Suisse's New York office and closely collaborate with the prime services, financial institutions and global markets solutions groups.

Callan spent 13 years at Lehman Brothers before her ouster. Prior to starting as Lehman's CFO on Dec. 1, Callan was head of the global hedge fund coverage division. Before joining Lehman, Callan worked at Simpson, Thacher & Bartlett. She became the first woman to serve on Lehman's executive committee.

Dresner Partners - The middle market investment bank announced it has named Richard L. Wottrich managing director of international operations. In his new role he will help Dresner Partners serve international clients through IMAP, a global organization of M&A advisory firms.

Prior to his new role, Wottrich served as managing director and president of DSI Global M&A, an international M&A advisory firm he founded in 1992. Wottrich's former firm managed more than 200 deals in 15 nations. Wottrich has also served as an IMAP board member, board chairman and president.

Duff & Phelps - The New York-based investment bank has acquired Kane Reece Associates, a valuation consulting firm. Kane Reece was founded in 1986 and is located in Westfield, New Jersey. Jack Kane, co-founder and principal of Kane Reece, will be joining the firm as part of the deal.

Separately, the firm hired two managing directors, Joseph Pimbley and Kai-Ching Lin, in the financial engineering practice group.

Fortress Investment Group - The asset manager brought on Gene Taylor, most recently president of corporate and investment banking at Bank of America.

Taylor, who left BofA in December after 38 years with the firm and its predecessors, will reportedly help the private equity and hedge fund manager evaluate investment opportunities and sit on portfolio company boards. At BofA, Taylor was also a vice chairman. He started at the firm in 1969 as a credit analyst.

Taylor led the integration of Barnett Bank into NationsBank in 1997. He became head of consumer and commercial banking in the Western US in 1998 upon NationsBank's merger with BofA. Three years later, he was named president of the consumer and commercial banking division. Taylor was charged with managing the combined commercial banking businesses of BofA and Fleet after they merged in 2004.

Goldman Sachs - The bulge-bracket investment bank hired four senior bankers from the recently shuttered public finance group at UBS Securities, including former head of municipal banking Jeff Scruggs, who has come aboard as a managing director and will run the public sector banking group with Sue Benz and Tim Romer.

In addition, Mark Florian, managing director and head of Goldman's infrastructure banking, has departed, the firm said. Florian is heading to First Reserve Corp., a private equity firm that specializes in the energy industry, according to market sources. He will be replaced by managing directors Greg Carey and John Ma. Managing director Tim Vincent will also be a senior member of the group.

Goldman Sachs' other hires from UBS include Rondy Jennings, who joins as a managing director in the healthcare group, Freda Wang, who joins as a vice president in the capital markets group, and Neil Morrison, who joins as a vice president in the Northeast coverage group.

Golub Capital - The debt investment firm bolstered its leveraged finance ranks by promoting Gregory Cashman and Andrew Steuerman to senior managing directors.

Cashman, who joined the specialty lender 12 years ago from Bristol-Myers Squibb, will oversee the day-to-day management of the firm's operations with private equity sponsors. He will also help with new investments and portfolio company oversight.

Steuerman, who came to Golub in 2004 from mezzanine investment firm Albion Alliance, will have responsibilities similar to Cashman's. Together, Cashman and Steuerman aim to invest $1.1 billion in mid-market transactions, generally in the form of senior loans and related one-stop financings.

Over the past year, Golub increased its senior lending business by more than $1.5 billion and closed on more than $1 billion for a new general debt investment fund that's still being raised.

Greenhill & Co. - The investment bank added Richard Jacobsen Jr. as a managing director focused on the healthcare services sector.

Jacobsen will be based in San Francisco. He spent 17 years at Citigroup, most recently as head of healthcare services investment banking.

Imperial Capital - The investment bank brought aboard Jeff Kessler as a managing director in its sales and trading group.

He was previously a senior research analyst at Lehman Brothers for 20 years. At Los Angeles-based Imperial, Kessler will be responsible for security industry analysis and supporting clients considering investments in the sector.

Inflexion Private Equity - The mid-market private equity investor announced the appointment of two new members to its investment team and three internal promotions.

Andrew Leek has been appointed as assistant director and brings with him substantial experience from Alchemy Partners and SAATCHiNVEST, a private equity vehicle for Maurice Saatchi and the Partners of M&C Saatchi.

Clara Chen, formerly at Marakon Strategy Consultants, has been tapped to be an investment executive. These appointments follow three others over the last six months.

Additionally, both Christian Hamilton and Catherine Richards have been promoted from assistant director to investment director roles and Tim Smallbone has been promoted to partner.

JC Flowers & Co. - The New York-based private equity firm hired David Morgan as an operating partner and chairman of Australian operations.

Prior to joining JC Flowers, Morgan spent nearly nine years as chief executive of Westpac Banking Corp. before retiring in January. He is also a director on the board of BHP Billiton.

Prior to Westpac, Morgan worked for the Australian Federal Treasury, where he helped float the Australian dollar and deregulate the country's financial sector during the 1980s.

JPMorgan Cazenove - The London-based investment banking joint venture between JPMorgan and Cazenove Group appointed Naguib Kheraj as its chief executive, effective Oct. 6. He replaces Robert Pickering, who resigned in February.

Kheraj spent 10 years at Barclays, where he served as a senior adviser and group finance director. He also held positions in Barclays Capital. Kheraj began his career in 1986 at Salomon Brothers, where he was a director in the investment banking division and chief financial officer for Europe. He worked at Robert Fleming before joining Barclays in 1997.

Kheraj was most recently a senior adviser to the Financial Services Authority, the UK's main financial services regulator. Kohlberg Kravis Roberts - John Bryson, a former chairman of Edison International, has joined the private equity firm as a senior adviser.

Bryson retired from Edison International on July 31. He had served as chairman and chief executive officer of the electric power company since 1990. He joined Southern California Edison, the regulated electric utility subsidiary of Edison International, in 1984. In his new position, Bryson will focus on global infrastructure opportunities. Prior to joining Edison, Bryson was a partner at Morrison & Foerster legal firm.

Separately, the private equity giant announced plans to take the firm public, citing the ability to recruit key executive talent as a motivation for seeking increased capital through a public offering. KPMG Corporate Finance - The mid-market bank tapped Leslie Fenton as a managing director and head of insurance investment banking. She is based in Chicago.

Fenton previously served as a managing director at Navigant Consulting and Navigant Capital Advisors. She was also a vice president at Kidder, Peabody & Co., where she co-founded the insurance investment banking group.

After Kidder Peabody, Fenton was a managing director at Security Pacific Merchant Bank and a partner at Cochran, Caronia & Co. Ladenburg Thalmann - The investment bank appointed Edwin Gordon as a managing director and head of healthcare investment banking. He is based in New York and joins from Merriman Curhan Ford, where he was co-head of life sciences investment banking.

At Merriman, Gordon was also in charge of managing public offerings and private investment in public equity (PIPE) transactions, and marketing research to venture capital firms. Prior to Merriman, Gordon was head of healthcare banking at Punk, Ziegel & Co., which was later acquired by Ladenburg. Earlier in his career, he was a managing director at SG Cowen Securities and a senior healthcare services analyst at Morgan Stanley.

Ladenburg also brought on Amy Cooper from Merriman as a New York-based vice president in its investment banking department. She held the same position at Merriman, where she focused on the healthcare, medical devices and biotechnology sectors. Before that she was an associate and vice president at Punk Ziegel.

Lazard Middle Market - The investment bank has hired three managing directors for its M&A and restructuring practices, and assigned another managing director to lead its private placement group.

LMM brought on middle-market M&A adviser Robert Frost from Piper Jaffray and Andrew Samett from Bear Stearns. Samett will become co-head of LMM's distressed advisory and restructuring team with managing director Andrew Torgove. LMM also tapped M&A banker Scott J.R. Smith from Wachovia Securities to lead its new Southeast office in Charlotte, NC. In addition, LMM managing director Robin Engelson was named head of private placements. Maxim Group - The boutique has hired two professionals, Richard Kreger and Salvatore Renzo, who specialize in structuring private investments in public equity (PIPE) securities.

Kreger comes aboard as a senior managing director of investment banking. He will concentrate on attracting institutional investors from the technology, healthcare, homeland defense, consumer products and security sectors.

Prior to Maxim, he was a senior vice president in the investment banking department at Midtown Partners & Co., a boutique focused on PIPEs, from 2004 until earlier this year. Before Midtown, Kreger was part of H.C. Wainwright & Co.'s investment banking team.

Renzo joins as a senior vice president of investment banking. He was a vice president at Midtown from 2006 to 2007. Earlier in his career, Renzo was chief financial officer of healthcare services provider RRI Managed Services. He was also part of transitional management teams during the restructurings of St. Vincent Catholic Medical Centers, DCS Inc. and other healthcare providers.

At Maxim, Renzo will source and manage transactions for emerging-growth and middle-market companies. Merrill Lynch - The investment bank has scooped up nearly 30 public finance bankers from the ranks of the now-shuttered municipal group at UBS Securities.

The most senior individuals, joining the firm as managing directors, include prominent Los Angeles-based banker Frank Lauterbur and his colleague Jeffrey Bower, both of whom will work on the firm's infrastructure team. James Calpin joins in New York and Nancy Clawson in Chicago, both working on the transportation infrastructure team.

Working from a new Philadelphia office is veteran Ralph Saggiomo, who joins the infrastructure team, and Carol Rein, who will work on transportation infrastructure. H. Jay Bellwoar joins the higher education group in the new Philadelphia office.

Moelis & Co. - The ever-growing boutique bank hired former Fortress Investment Group managing director Greg Share, who will serve as a partner in the firm's private equity arm.

Share was a managing director at Fortress, and was involved in sourcing, structuring and overseeing PE investments at the asset management firm. Before that he was a vice president at Madison Dearborn Partners, and also put in a stint at Lazard Fréres & Co.

Morgan Joseph & Co. - The boutique added Michael Innes as a senior investment banker and Shiv Kapoor as a senior equity research analyst. Both join from Ferris, Baker Watts.

Innes will be part of Morgan Joseph's healthcare investment banking group, which is headed by Marc Cabrera. His healthcare clients include biotechnology and specialty pharmaceutical companies, specialty distributors, information technology firms and outsourced service providers. Prior to Ferris, Innes worked for Raymond James and First Union Securities.

Kapoor will cover biotechnology companies. Earlier in his career, he was a senior research analyst at Citigroup and Montgomery & Co.

Morgan Stanley - The investment bank named Michael Eck head of retail banking. He joined from Citigroup, where he was most recently chairman of consumer investment banking.

Eck's past clients include Walmart Stores, Barnes & Noble and Saks Inc. He has advised on transactions such as Istithmar's acquisition of Barneys New York, Kohlberg Kravis Roberts' purchase of Dollar General, Apax Partners' acquisition of Tommy Hilfiger and Sun Capital Partners' purchase of Kellwood.

Eck joined Citi in August 1993 and established the firm's global consumer investment banking group. Prior to his last position, he was head of retail banking. Eck was also a member of the Citi investment banking department's management and compensation committees.

One of Eck's former colleagues at Citi, Ian Sugarman, has accompanied him to Morgan Stanley as an executive director. Sugarman was part of Citi's M&A and consumer groups from May 2000 to June 2008.

Earlier in his career, Eck was a director in the retail group at Credit Suisse First Boston and a corporate lending officer at First Union.

Palamon Capital Partners - The European mid-market private equity firm has appointed Jonathan Heathcote as partner.

Heathcote had previously spent nine years at European Acquisition Capital, the private equity firm, where he was one of the core team members and a partner. Prior to joining European Acquisition Capital, he was a senior engagement manager at McKinsey & Company.

Heathcote joins Palamon's London based team, which is comprised 16 investment professionals from 10 different countries

Pali Capital - The broker dealer added CIT Group veteran Randal Stephenson as a senior managing director and head of its new corporate advisory group. Based out of New York, Stephenson will oversee the launch of Pali's M&A and corporate advisory practice.

Prior to joining CIT Group, where he headed the firm's mid-market M&A and distressed and special situations groups, Stephenson had been a co-founder and managing director of the M&A advisory group at Jefferies. He also had founded Merrill Lynch's mid-market M&A group.

Paul Capital Partners - The private equity firm promoted Ken Macleod to partner, it announced. Macleod, based in London, has worked on investments in Europe and Asia for Paul Capital Partners' healthcare fund. Macleod joined the PE shop four years ago.

Prior to his joining Paul Capital Partners, Macleod held senior management positions with Serono, Abbot Laboratories and Beecham Pharmaceuticals. He also was a venture partner at Schroder Venture Life Sciences.

Resilience Capital Partners - The private equity firm hired Michael Lundin and Michael Merriman as operating partners. Lundin is a former president and chief executive officer of Oglebay Norton Co. and Merriman is a former CEO of Lamson & Sessions.

Merriman was CEO of Lamson & Sessions until its sale to Thomas and Betts last year. Lamson & Sessions was a $560 million thermoplastic conduit fittings company. Previously, he also was CFO of American Greetings Corporation, a $2 billion greeting cards and party goods company. Prior to this, he was CEO of Royal Appliance Manufacturing Company, a manufacturer of vacuum products.

Prior to Lundin's position as president and CEO of Oglebay Norton Company, he was president and partner of Michigan Limestone Operations LP, a limestone mining and distribution company. In 2000, he arranged the sale of the company to Oglebay Norton.

In addition, David Blank, formerly of Morgan Stanley Capital Partners, joined the firm as an investment associate. While at Morgan Stanley, Blank focused on leveraged buyout and M&A for private equity clients. He was a captain and infantry officer in the 82nd Airborne Division of the United States Army and served in Germany, Iraq and Kosovo.

SL Capital Partners - Standard Life continues to build out its North American PE group, tapping Jamie Ebersole as a senior investment director, North America. Ebersole is joining from Allianz Private Equity Partners, where he headed the firm's New York office.

Ebersole will be working alongside Eric Albertson, the former BofA pro, who joined the firm in April. Together, they will manage $625 million of capital dedicated to US PE funds.

Stonebridge Associates - The Boston boutique added Grant Grava as senior vice president. Grava will focus on middle-market deals in sectors such as technology, media and healthcare services.

He was most recently part of the M&A group at Jefferies & Co. Prior to Jefferies, Grava was a vice president at SG Cowen, an associate on Prudential Securities' media and telecommunications banking team and a Coopers & Lybrand corporate finance consultant in Latvia.

UBS - The Swiss bank announced Matthew French has started as head of restructuring for Europe, the Middle East and Africa.

French was most recently a restructuring partner at London-based law firm Lovells, where he spent eight years. He will lead a team of six professionals at UBS. Prior to Lovells, French was a partner at Wilde Sapte. He joined the firm, now Denton Wilde Sapte, in 1989, and graduated from Churchill College at the University of Cambridge.

Jefferies & Co. -

The bank appointed Bill Parkerson as head of US chemicals investment banking. He joins from Banc of America Securities, where he was most recently head of chemicals banking. Parkerson, whose career spans more than 17 years, also worked for Goldman Sachs and Credit Suisse First Boston.

Jefferies' industrial banking group closely collaborates with the firm's cleantech and aerospace and defense practices. The industrial division also covers sectors such as autos and transportation, electrical equipment, flow control, metals, paper and forest products, packaging, security, diversified industrials, capital goods and building products.

In the past, Parkerson represented chemicals companies and financial sponsors such as DuPont, Koch Industries, Celanese, The Blackstone Group and CVC Capital Partners.

E2open - After a little less than a year as a senior adviser at Blackstone Group, Mark Woodward has transitioned back into corporate life after he was named the CEO of E2open Inc., a provider of multi-enterprise on-demand solutions for supply and demand chains, procurement and B2B integration. He will also serve as a member on the company's board of directors.

Before joining Blackstone in September of last year, Woodward had served as president and CEO of Serena Software. At Serena, Woodward showed a flare for M&A, overseeing a number of key strategic acquisitions. He also took the company private in a deal worth $1.3 billion. Before joining Serena, he put in stints at Live Picture, McAfee Associates and Legent Corp.

Sagent Advisors -

The firm tapped Abid Rizvi as a managing director and Scott Moses as a principal. They will join Sagent's consumer and retail group in New York.

Rizvi was most recently a managing director in the consumer products division at Merrill Lynch. At Sagent, he will focus on food and beverage companies. During his tenure at Merrill, Rizvi also served as a senior member of the corporate finance team. His past mandates include advising on the sale of Otis Spunkmeyer to IAWS. Prior to Merrill, he was part of the corporate finance advisory group at McKinsey & Co.

Moses, meanwhile, will lead Sagent's specialty retail and food-and-drug advisory teams. At JPMorgan, he was an executive director in charge of the food-and-drug retail M&A practice. Moses has worked on such deals as Ahold's sale of US Foodservice to Kohlberg Kravis Roberts and Clayton, Dubilier & Rice. Before JPMorgan, he was a member of Citigroup's consumer team and Dresdner Kleinwort Wasserstein's retail group.

DLJ Merchant Banking -

Credit Suisse appointed Nicole Arnaboldi as chairman of the bank's private equity affiliate. She will maintain her current role as co-head of the Swiss bank's illiquid alternatives business.

The former head of DLJ Merchant Banking, Steven Rattner, retired from Credit Suisse to spend more time with his family.

DLJ senior partners Colin Taylor, Ed Johnson, Susan Schnabel and Kamil Salame will report to Arnaboldi, who will serve as chairman of the division's investment committee. They will also comprise DLJ MBP's management committee.

Arnaboldi, also a member of the management committee of Credit Suisse Asset Management, joined the Swiss bank via its November 2000 acquisition of Donaldson, Lufkin & Jenrette, where she was a managing director in the merchant banking group. She started at DLJ as an associate in 1985.

Houlihan Lokey Howard & Zukin -

The mid-market investment bank named Michael Hsieh as a senior vice president in its financial restructuring group. He previously put in stints at Piper Jaffray & Co. and CIBC World Markets. At CIBC, Hsieh also served as a member of the firm's leveraged finance group. Before that, he worked in the M&A group at Dean Witter Reynolds.

Hsieh's past mandates include financial restructurings, recapitalizations and exchange offers, with work on both company- and creditor-side transactions.

Lincoln International -

The middle-market bank brought on Tetsuya Fujii as a managing director to head its new office in Tokyo. The branch is the firm's ninth office in total and its sixth overseas.

Fujii was most recently a senior vice president in Lehman Brothers' M&A group. Earlier in his career, he was a director on Deutsche Bank's M&A team, acting head of Japanese M&A at Credit Suisse First Boston and vice president of US corporate finance at the Long Term Credit Bank of Japan (LTCB).

While at LTCB, Fujii worked with Jim Lawson, now Lincoln co-chairman, and Rob Barr, Lincoln's president for North America.

Meanwhile, John Herrmann, Lincoln's vice chairman for North America, will take on added responsibilities as chairman of the firm's Japanese business. He will work closely with the Tokyo office but remain based in New York. (c) 2008 Mergers and Acquisitions Journal and SourceMedia, Inc. All Rights Reserved.

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September 12, 2008