Author: Phillip Eade
Bear Stearns’ international expansion continues apace, and in Andy Clapham, the bank now has on its books one of Europe’s leading experts in securitization.
Clapham has as much experience in securitization as just about anyone outside the US. It was he, you may remember, who in 1996 kick-started the collateralized loan obligations (CLO) market in Europe with the Rose deal. This raised $5 billion against NatWest’s portfolio of 300 corporate loans and won the Euromoney deal of the year award. It has since been copied by countless other banks.
Rose gave this easy-going Englishman a reputation for innovation that he has held on to ever since. “He’s someone who looks at things in new ways,” says one former colleague, “and he’s prepared to take risks to develop new structures.” Another adds: “He’s one of the most creative people in the market from a structuring prospective. And he’s a master at seeing opportunities within regulatory environments. He’s also a very well-rounded, nice guy, not all arrogant or hard-nosed. He’s great to work for, demanding yet relaxed.”
While at NatWest, Clapham was also involved in the creation of the sub-prime mortgage market, and he later made waves with the £1 billion acquisition and subsequent securitization of student loans from the British government – another first in Europe – and a similar £1 billion deal involving housing association loans. Throughout this NatWest was consistently either number one or number two in the asset-backed league tables.
In 1999, Clapham left to go travelling for six months and on his return was snapped up by Nikko Securities to become head of principal investments. Here his job was to acquire companies and portfolios whose assets and financing could be restructured using securitization. He led the acquisition of £550 million of Powell Duffryn, a ports and engineering business, using asset-backed financing techniques, and the purchase of the National Mortgage Bank from the Bank of England, before accepting the offer from Bear Stearns.
Clapham, 36, grew up in Stoke-on-Trent and remains a loyal fan of Stoke City. the local football club. As a pupil at Trentham Comprehensive he played for the city schoolboy football team. “I was a midfield hacker,” he recalls.
Towards the end of his degree in mechanical engineering at Nottingham University he decided that although he wanted a career that involved “structuring”, he also wanted to be well paid. “I realised quite quickly that this didn’t apply to engineering,” he recalls. “For some reason you tend to get rather more for structuring bonds.”
He joined NatWest as a graduate trainee in 1986 and proceeded to spend spells at branches in such places as Cheltenham and Swindon. Besides giving him an earthier perspective than most investment bankers, seeing the retail side was also very helpful given that in future he would spend a lot of time securitizing retail products.
In 1989, he joined the structured products group, and the following year he went to the newly formed securitization and receivables financing group.
Although it had been around in the US for some time, securitization was then very new in Europe. Clapham and his colleagues at NatWest were seen as pioneers on account of deals such as Lothbury Funding in 1992, which securitized £300 million of NatWest’s mortgage portfolio, and the Residential Properties Securities transaction for the Bank of Ireland in 1993, which was the first deal in Europe to use a senior/subordinated structure. “That now seems very basic,” he says, “but in those days it was a very new market.”
Clapham was made managing director of the securitization and principal finance group at NatWest in 1996, overseeing a group that now included 50 professionals across the UK, Europe and Tokyo, responsible for originating, executing and distributing asset-backed deals.
His job now is to carry on performing his magic at Bear Stearns, a firm that has a well-established reputation for innovation in structured finance in the US, and is now looking to expand its activities in Europe.
Clapham has brought with him Scott Dickens and Adam Wilton from Nikko, and has also hired Stephen Murray from Moody’s Investors Service. His team will focus on principal business and higher margin agency securitizations.
