Barclays Capital has staffed up from zero to just under 100 people in the last 10 months, building a leveraged platform and raising many an eyebrow in the process. As 2006 comes to a close, loan and bond players alike have been questioning what is next: When will the bank begin leading deals and when will it ever stop hiring?
| Joe McGrath |
The British bank first began trading loans in May, bonds in June/July and loan-only credit default swaps in October/November. It has been pitching business since the spring and has participated in a few deals, even landing the left spot on a recent bond offering for MGM. Joe McGrath, who along with Rick Van Zijl runs the business, said some of the infrastructure needs continue, but the forecast for 2007 is ahead of plan. He said some junior hires are still on the way. The bank's goal for the next three to five years is to be a top five global leveraged finance platform, McGrath said. Specifically in the U.S. in the next few years, it is to be a top seven or eight player in both bank debt and bonds and in five plus years to be a top five player in the U.S.
"I'm looking forward to '07 and '08, when we see our labors get paid back by virtue of revenue from the business," McGrath said. "I believe we've attacked the business the right way. We've been mindful of the credit cycle and responsible in terms of how it relates to our extension of credit. But for us, the fun part will be watching the team perform and get us to a steady state in the leveraged finance business."
The bank participated in HCA and just priced a bond offering for MGM and McGrath thinks there has been a good balance between sponsor and corporate business, despite the dominance of sponsored-deals recently. He explained that the sponsor business is an important piece of the puzzle for Barclays, not just for the business in the States, but because it's a strength for Barclays in Europe and building up the U.S. presence and a presence in Asia is critical for the bank's strategy. Van Zijl essentially spearheads the effort, working with Peter Glaser from Bank of America and Todd Ragland from Lehman Brothers, among others.
McGrath and Van Zijl, both Goldman Sachs alums, plucked staffers from several banks, although many came from their old stomping ground. "We took our goal of 50 to 60 people and ramped it up to over 80 people," McGrath said. "The idea was to build on the momentum we had early on. So we decided to push forward some of our hiring needs from year two and year three into year one."
Jeff Rowbottom from Goldman is running high-yield syndication; Tim Broadbent from JPMorgan is running the bank syndicate function, with Ian Palmer from CIBC World Markets working with him. Jason Moynihan from Lehman Brothers is running par loan trading; Drew Doscher from UBS is running the distressed trading business. Christopher Yanney, from Delaware Capital Management and GS before that, is running the high-yield trading business. Jeremy Vogelmann from Lehman Brothers is its loan-only credit default swap trader.