BMO Brings in Chicago's McGough to Launch Health Care Unit

CHICAGO - Chicago-based BMO Capital Markets, the investment banking arm of the Bank of Montreal, has hired veteran Chicago-based banker Brian McGough to launch a public finance health care business.

The firm said it plans to hire several more senior bankers under McGough to expand its work in the health care sector.

McGough joins the firm after a roughly one-year stint at Fifth Third Securities Inc. Before that he worked at RBC Capital Markets Inc., the former Banc One Capital Markets Inc., and JPMorgan.

BMO's decision to expand into the tax-exempt health care sector comes after a busy 2008 in which the firm acquired Chicago-based broker-dealer Griffin, Kubik, Stephens & Thompson Inc. and hired a handful of municipal salesmen and traders from the former LaSalle Financial Services.

McGough will work under Jim Kubik, managing director of BMO's public finance department.

"Brian McGough is a significant add to our staff and will be building out our health care initiative," Kubik said in a statement. "BMO has had a presence in the corporate health care sector, and with Brian's experience in public finance, we believe that we will have quick traction and attract additional key health care executives."

BMO has a total of 75 professionals, including salesmen, traders, bankers, and staff, working in four public finance offices in Chicago, Geneva, Ill., Monticello, Ill., and Milwaukee

As one of its first health care deals since McGough joined the firm in December, BMO will act as senior manager on a tranche of debt planned to sell Wednesday by the Illinois Finance Authority for University of Chicago Hospitals. JPMorgan is the other senior manager. The floating-rate transaction includes a letter of credit from BMO - the bank's first such financing for a nonprofit health-care issuer, McGough said.

"BMO has a strong balance sheet that we can make available to health care systems," he said. "We'll be involved in capital raising through the tax-exempt and taxable debt markets, as well as credit products, mergers and acquisitions, and strategic and capital planning."

BMO is currently rated Aa1 for its long-term obligations and Prime-1 for its short-term obligations, according to Moody's Investors Service. Moody's assigned its Aaa/VMIG 1 rating to the tranche of the upcoming issue backed by the BMO letter of credit and the tranche backed by a letter of credit from Wells Fargo Bank.

Standard & Poor's assigned a AAA/A-1 to the BMO-backed portion of the upcoming deal and a AAA/A1-plus to the portion backed by Wells Fargo.

The firm's nonprofit health care business will complement its existing corporate health care business headquartered in New York. "Our plans are to expand across the country," McGough said.

Overall among senior managers, BMO ranked 23d nationally last year with $2.1 billion in par amount, up from 38th in 2007, according to Thomson Reuters. The firm ranked 12th in the Midwest and eighth in Illinois last year.

BMO's expansion into health care comes at a delicate time for the sector, as many issuers continue to struggle to access the debt market in the wake of last year's credit crunch and collapsed auction-rate market. McGough predicts a somewhat tighter credit environment in the coming year but said the market is already beginning to see the return of investor interest.

"It's going to continue to be a difficult environment for health care providers to meet their strategic objectives and fund their capital plans probably through the latter half of 2009," McGough said. "But we are seeing more signs of investors having interest in health care financings."

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Healthcare industry
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