Guy Hands has hammered a few more nails into the coffin of the fast declining leveraged finance profession.
With bankers barely able (or quite simply totally unable) to fund their own writedowns, and another $200bn of LBO debt still in the pipeline, the Wall St Journal says Hands told a gathering of private equity types in Munich that funds are taking it upon themselves to hire their very own debt bankers to approach liquidity sources in the Middle East and Asia (AKA sovereign wealth funds) directly.
It doesn’t bode well for the average leveraged finance type, who’s already gagging for a deal or two in 2008. Redundancies have been restricted in the area so far (with the exception of CIBC), and headhunters say bonuses were surprisingly good, but the future doesn’t look bright.
“With a couple of exceptions, banks tried to make a positive statement to their people with regards to bonuses, but that was back in January,” says Bruce Lock at Kinsey Allen. “Since then the market has got a lot worse – there may be cuts anyway.”
Funds not hiring either
There has been some hiring in leveraged finance in 2008. Earlier this month ING, for example, announced it had hired David Ryba from Commerzbank to work on Eastern European deals.
Barclays Bank, Royal Bank of Scotland and Commerz itself are also said to be recruiting. “Most investment bankers won’t touch these places with a barge pole,” rues another headhunter.
For leveraged financiers who find themselves wasting away in the deal desert, there’s always the all-new debt financing teams of funds themselves to try for openings.
However, these teams may not be quite as new as Hands would have it. William Allen, a managing director and debt financing specialist at Houlihan Lokey, says everywhere from CVC to Bridgepoint and 3i already employ debt financing teams, many of them staffed by ex-bankers who saw the light and moved across before it was too late.
Nor does it appear that these and other funds will necessarily be hiring. “We already have our own debt department,” says the chief investment officer of one major European fund. “There’s no chance of us picking up leveraged finance people from investment banks – we’ll just make those we’ve already got work harder.”