Should the traditional players on Wall Street be running scared?
FOR CITADEL TO be referred to today as a hedge fund is something of a misnomer. From humble roots as a three-man convertible arbitrage shop in 1990, the firm now employs 1,100 people worldwide and has broadened into investment management, market-making and fund administration. Its latest foray has caused something of a stir on Wall Street.
Founder Ken Griffin is moving the firm into investment banking. It propels Citadel into a position above the smaller investment banking boutiques, but below the large established investment banks, filling some of the void left by Bear Stearns and Lehman Brothers. With the advantage of a clean slate to work with and no legacy to have to adapt in the new world of investment banking, Griffin is aiming to capture a corner of the market where there is, as yet, little competition.
Gerald Beeson, Citadel’s COO and 16-year veteran, says the aim was always to create a diversified business that could withstand market cycles. "Management has continually focused on finding new areas of business to expand its reach. There is a clear need for advisory and other services now, and many of the traditional players in that area are struggling," he says.
