CHICAGO - Chicago-based Ziegler Capital Markets is seizing on business opportunities arising from the turmoil at Wall Street's investment banks, adding 17 professionals to its tax-exempt staff and pursuing business with larger hospitals that might feel neglected by their Wall Street bankers.
Ziegler - a boutique firm that specializes in health care, senior living, education, religious institutions, and renewable energy deals and has a high-yield niche - has hired 13 in its tax-exempt banking unit and another four in tax-exempt sales and trading this year.
That brings the firm's size overall to 341 nationally including 75 in tax-exempt public finance and another 17 institutional sales and trading desk professionals. The public finance hires include bankers, analysts, traders, sales professionals, and advisers.
The firm is still looking company-wide to hire an additional 12, including health care and senior living bankers, financial advisers, and sales and traders.
"We've invested heavily across all our businesses with the largest being in investment banking," said Ziegler president Tom Paprocki, who manages the firm's capital markets and wealth management businesses. "The dislocations in the marketplace present an opportunity for us to strengthen our benches."
With the wave of acquisitions and cutbacks at Wall Street banks leaving some veteran banking and other professionals without jobs, Paprocki said the firm hopes to draw from those in the market anxious over their futures.
"We are a boutique firm with a growth strategy and a pretty good destination for a banker with an entrepreneurial spirit that has gotten tired of the whims of a global bank," he said in an interview last week.
The firm's tight focus has always centered on what it sees as growth markets, expanding from its nonprofit health care base into for-profit health care and senior living over the years. Its high-yield niche has helped build its business.
"It's our ability to find the buyers," said Paprocki, who has been president for the last four years of his 11-year tenure there. He previously headed up sales and trading.
The firm ranked first last year among senior managers of senior living deals, a position its long held, with $3 billion managed in 77 deals. Ziegler captured 40% of the market share, although it is running second so far this year with $484 million in 26 deals. It ranked 12th among senior managers with $681 million in nine health care deals last year, according to Thomson Reuters.
The firm's high-yield credentials stem from 15 years of courting potential investors such as mutual fund buyers that manage high-yield funds. Because of the risks associated with unrated credits, the firm has always put a strong emphasis on research with its municipal team led by the veteran Ed Merrigan.
Aside from its headquarters in Chicago, the firm has offices in Florida and Arizona. Although its emphasis is on the Midwest, one of its largest clients - Adventist Health System - is located in Florida, and its senior living and energy client lists are national. It hopes to further expand its health care business at the national level, boosted by the additional staff.
Aside from its hiring spree, the firm has stayed busy meeting the need among many issuers to restructure auction-rate securities following that market's collapse in February and the need to restructure variable-rate debt that carried coverage from downgraded insurers.
Aside from maintaining personal contact with its clients, the firm has held industry conference calls on the turmoil. Last week, the firm hosted its annual senior living conference with more than 600 attendees in Lake George, New York.
The firm has added several new clients to its health care rolls and bankers have also used the opportunity to approach larger hospitals and systems with financing ideas.
"In some cases we were told we got to them with ideas on how to restructure before their regular bankers did," Paprocki said. Once the dust settles from auction-rate restructurings, the firm hopes its efforts will pay off. "I would expect 2009 to be a year where we will see some banking relationships move."
Given the increased cost for liquidity and market turmoil that continued last week with a spike in weekly variable-rate demand bond rates between 7% and 10% after money markets pulled their investments, Paprocki said he sees a return to "meat and potato" structures with a focus on analysis.
"When clients have gone through the problems we've had with auction-rate and volatility of variable-rate and problems with swaps, they start to look at just locking down a fixed rate," he said. "It may not be the lowest cost of debt but it's more stable."
Among the firm's more recent hires are Marcus Hamacher, vice president in private placements, from Bank of America; Peggy Wiengartz, director in health care finance, from Citi; Fred Koyen and Bruce Israel, both senior vice presidents in institutional sales and trading. Koyen came from Bank of America and Israel from RBC Capital Markets.
Also joining the firm were Kathleen Nelson, director, from Chicago's Planning and Development Department; Darren Jones, vice president in senior living finance; Toby Shea, senior vice president in senior living finance; Christopher Wray, vice president and trader; Bernie Gawley, vice president, senior HUD underwriter; Garrett Glawe, senior living finance analyst; Eric Anton, senior living finance analyst; and financial advisers Greg Szpalik, Brent Piekney, and Jacob Gelbart.