Boutiques Seek Permanent Capital Via IPOs
This article appears courtesy of Institutional Investor
Source: Corporate Financing Week
Part of the reason investment banking boutiques such as SG Cowen and Thomas Weisel are plotting IPOs are worries about having a source of permanent capital—a problem that plagues most private firms in the industry, according to Brad Hintz, an analyst at Bernstein Research and an ex-Lehman Brothers cfo.
"As partners leave you can delay the taking out of capital, but you can't stop it," said Hintz. The capital that leaves the firms serves the base for their operations, whether it's merchant banking or underwriting. "[When partners leave,] you have to pay out the capital and are constantly planning around your partnerships."
The analyst points to the recent IPO successes of Greenhill in May of last year, and to a lesser extent Lazard, in May of this year, which also may have prompted other shops to consider tapping the public markets.
Last week Thomas Weisel filed its S-1 and the week before SG Cowen announced plans to go public. W.R. Hambrecht has been rumored to be plotting an offering as well, but so far there has been no official word on an offering.