Jefferies & Co. has begun to build a senior lending and private placement capability by hiring Andrew Woolford and Neil Wessan from CIBC World Markets, as co-heads of a private placement group. The two will lead Jefferies plans to structure and distribute private debt securities and bank loans.
The investment bank expects to hire four bankers in the coming weeks to build out the team. Ray Minella, director of investment banking capital markets, told LMW last September that one of Jefferies' top priorities was building a senior bank lending arm to complement the other services the bank provides to its middle-market clients (LMW, 9/22).
Woolford and Wessan expect to hire one managing director and several mid-level bankers to focus on capital markets origination, sales and secondary trading. Potential candidates need a background in credit analysis but may have wide range of industry experience, including research, banking and the buyside. "A strong credit is what we're essentially selling [in these transactions] so we need individuals with a strong credit background as well as the personalities to be good salespeople," Woolford said.
The new group's target market will include public or private companies that are looking to raise $25-150 million in high-yield private offerings. Jefferies expects these transactions to include a variety of structures, including senior bank loans, senior secured and unsecured paper, preferred stock and mezzanine debt.
Wessan said middle-market companies have been underserved from a credit perspective. Many banking relationships with smaller companies were gobbled up during recent industry consolidation, he argued, pointing to the number of middle-market banks that were acquired by FleetBoston Financial, which entered into a merger agreement with Bank of America last October. As the financing market rebounds, many bulge bracket firms aren't pursuing mandates for smaller, middle-market transactions, Woolford said.
Wessan and Woolford believe the market opportunity for these transactions is significant. The demand for private high yield issues has increased over the last few years as the investor base has increased to include wider swathes of institutions including, banks, hedge funds, insurance companies, CDOs and CLOs, they said. Many of these institutions, such as banks, have pursued these smaller deals as a means of securing higher yields on their investments.
The two co-heads are already in discussions with several candidates and hope to make additional hiring announcements in next few weeks. Wessan explained his optimism by noting "Andy and I been in this field for 20 years each, and we have a fairly large network of bankers that we know who have already contacted us."