Jefferies finishes 2012 on a high, but it is tough out there

 
David Hellier
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There’s been anything but a gradual winding down towards the Christmas break for many of those who ply their trade at the London offices of Jefferies.

Whilst for many rivals Christmas is truly coming early, with some executives already off for a touch of winter sun, many of the Jefferies teams are still much in action.

In the past few weeks Jefferies has advised on a number of money-raising deals for property groups. In conjunction with Dexion Capital it has just advised on an IPO that raised £228m for Starwood European Real Estate Finance.

In recent weeks the US bank also raised £62m for Blue Capital Global Reinsurance Fund and £207m in November for Sherborne Investors, Edward Bramson’s Guernsey-based equity vehicle.

Yesterday afternoon mining analysts were invited down to Jefferies’ headquarters alongside the River Thames to discuss the next moves in First Quantum’s hostile bid for rival copper miner Inmet. First Quantum has increased its bid to £3.2bn, an amount that may still not be sufficient to win the deal.

It might not be the biggest deal of the year but it is another sign that Jefferies is becoming a force in the mining sector, working on this occasion alongside Goldman Sachs and RBC.

2012 has been a big year for Jefferies in London, where it employs around 900 people. Earlier it acquired the broking firm Hoare Govett from the part-government owned bank RBS and the following few months have involved spending much time integrating the two businesses.

Although one or two clients have been lost in the move, many of the others have stayed remarkably loyal; those that do stay look like they’ll be sticking with a firm that might be going places.

In a reminder, though, of how tough conditions are in investment banking, there was news yesterday that one of the Mayfair-based financial boutiques, Fairfax, had gone into administration.

Both at the large end, where Credit Suisse recently downgraded its Moscow office, and at the smaller end, investment banking is hurting, with capacity in most parts of the business still exceeding demand.

Fairfax was launched in 2006 by Stefan Allesch-Taylor and by Rolly Crawford, formerly of Collins Stewart. It built up a decent enough name for itself but always found it difficult to make profits in an overcrowded market-place.

Malcolm Cohen, BDO business restructuring partner, said yesterday: “Unfortunately the company was affected by a significant reduction in revenues due to the on-going difficulties with the economic climate. The joint administrators have taken steps to enable any remaining clients to transfer their assets, stocks or funds to other brokers following the closure of the business.”

All Fairfax’s employees have been made redundant.

There is a wide array of advisers in the small to mid-cap sector in the City, fighting over the same kind of deals, some of which are not always terribly lucrative in the first place.

These include Panmure Gordon, Investec, Canaccord, Seymour Pierce, Daniel Stewart, Peel Hunt, Finncap, Arden, Oriel Securities and Cenkos, to name but a few.

According to one source, the Financial Services Authority has put five brokers on daily reporting watch, where their finances are being looked at regularly.

Something tells me the competition will only intensify in 2013. Let’s hope the deal flow improves too.

Allister Heath is away
david.hellier@cityam.com