Oppenheimer Signals Commitment to Market By Taking on More Talent

Armed with a strong balance sheet and little exposure to subprime mortgages, broker-dealer Oppenheimer & Co. is affirming its commitment to the U.S. public finance market by selectively hiring bankers, traders, and salesmen at a time when many firms in the industry are pulling back.

The new hires are intended to compliment the firm's already strong brokerage business, and the increased focus on the banking side is expected to provide additional supply for the firm's retail clients.

For the remainder of 2008, Bonnie Siegal, managing director and head of Oppenheimer's health care, Northeast, and New England practices, said deals in the pipeline could increase the firm's volume 10 fold, while acknowledging that some of those deals could be rolled over into 2009.

On most of the upcoming deals the firm will be the sole manager, which it can do because of its strong distribution network, Siegal said.

In less than six years, Oppenheimer's revenue and assets under management have tripled, while the broker-dealer has steered clear of subprime mortgage exposure, Siegal said. In January, Oppenheimer announced a plan to purchase a portion of the U.S. capital markets business from CIBC World Markets.

The strong balance sheet has allowed the firm to build its municipal business, hiring around the country. It also gives the firm the ability to write primary market deals of $2 billion or more, according to Siegal.

"Unlike many of our competitors, we have been affirming our commitment to municipal finance both in banking, sales, and trading," she said. "We see this as an opportune time."

In the last 14 months, Oppenheimer has hired 10 public finance bankers across sectors and geographic regions, including three in the northeast, three in the southwest, two in Chicago, and one each in Minneapolis and Atlanta, according to Siegal. It has also added an advisory derivatives practice.

"We've added people where we think we can get good people to distinguish us," Siegal said. "We are selectively looking to add some more bankers."

Oppenheimer has also beefed up its sales and trading operations, hiring two salesmen from A. G. Edwards & Sons Inc., two salesmen and one institutional trader from Stern, Agee & Leach Inc., and another salesmen from M. R. Beal & Co., according to Bob Davis, head of sales, trading, and underwriting for Oppenheimer.

The new hires, and three more salesmen that Davis expects to hire in the coming months, will help bolster Oppenheimer's already strong brokerage network. With about 1,300 financial advisers, it has one of the ten largest distribution networks in the country. The firm maintains 89 offices in 21 states.

Oppenheimer has long been known for its retail network. Each time it has bought out a smaller firm over the years, it has kept the trading desks intact, and it now operates nine regional desks in places like Providence, .and Kansas City, Mo.

"Servicing high net worth customers and municipalities is a regional business," Davis said. "Each of those places tends to be unique."

In the past, Oppenheimer has not had the strong public finance banking business to compliment its distribution network. In 2005, it ranked 35th nationally among senior managers, writing 96 deals for total par volume of $1.2 billion. In 2006, it ranked 49th nationally, and in 2007 it ranked 55th. So far this year, Oppenheimer ranks 60th among senior managers, writing 10 deals for a total of $136.4 million.

However, Siegal said she is still building the department and expects to move up the rankings when the deals slated this year are priced. At the same time, she said the firm will pick its spots and will not try to be an expert in every sector. The firm will look to specialize in health care and higher education deals, economic development transactions and alternative energy deals.

"I think we've been a leader in story credits," Siegal said.

In 2007, Oppenheimer sole-managed a $180 million Kansas City Redevelopment District deal and just recently, the firm senior managed a $60 million Massachusetts Health and Educational Facilities Authority deal. In the last five years, Oppenheimer has senior managed 18 alternative energy deals.

 

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