Berenson Takes On Debt Capital Markets

In launching a debt capital markets platform, the New York investment bank Berenson & Co. LLC is seeking to capitalize on an anticipated increase in middle-market transactions as the deal market strengthens.

“We view this as a natural evolution, in terms of the firm’s capabilities,” said Christopher Johnson, a debt market specialist who joined the firm last August as vice chairman. Berenson, an M&A and restructuring adviser for 20 years, had long handled private placement of debt, Johnson told Buyouts, but by entering debt capital markets, the firm will be able to underwrite larger transactions.

Where its private placements of debt typically involved placements of less than $100 million of debt, the debt capital market platform will enable the firm to underwrite offerings of $100 million to $300 million, Johnson said. “This fits well with the enterprise value of our client base, which is middle market.”

About half of Berenson’s debt practice is sponsor finance, he said.

As the market recovers, Berenson also is seeking to take advantage of the void left by the departure of other prominent players in debt capital markets, such as the collapsed Bear Stearns Cos., which was acquired by JPMorgan Chase & Co. in March 2008 during the financial crisis and which Johnson said had trafficked in this size loan, or Jefferies & Co., which has refocused its debt underwriting on larger size deals.

Johnson has 26 years of investment banking experience. He was head of the Restructuring Advisory Group for the Americas at Deutsche Bank Securities. Before joining Deutsche Bank in 2001, he was with Merrill Lynch for 15 years, most recently as chairman and co-head of Global Leveraged Finance.

At Berenson’s debt capital markets practice, Johnson is joined by Jack Lucid, who joined the firm in February as managing director. Lucid most recently served as CEO and founding partner of Akarui Capital Partners LLC, which was established to invest in the U.S. non-investment grade fixed income market. Lucid has 20 years of experience, including a stint as managing director and head of Loan Capital Markets at Jefferies Finance LLC.

Lucid said he expects the market to be receptive to Berenson’s new offering. “There seems to be a tremendous amount of liquidity in the market right now,” he said. Lucid said. “People are starved for yield.”

Berenson has 220 investors interested in debt capital markets to which it plans to offer its underwritings, Johnson said. The firm serves public and private corporations, financial institutions, equity sponsors and entrepreneurs. “We’re an origination-oriented firm,” Johnson said. “We want to take those M&A dialogues and turn that into a financing dialogue.”