Lazard profit hike on M&A dealmaking

A SURGE in mergers and acquisitions fuelled a 33 per cent increase in quarterly pre-tax profit at boutique US investment bank Lazard, it said yesterday.

Lazard, which advises the world’s biggest companies on multi-billion dollar takeovers and asset sales, said its second quarter profit before tax jumped to $89.2m (£54.4m) from $67.1m in the same period in 2010.

Its revenues rose 12 per cent to $491.8m, but its overall $0.48 earnings per share came in narrowly below analysts’ consensus expectations for $0.49.

Lazard chief executive Kenneth Jacobs said it had “invested strategically” in both its financial advisory and asset management divisions, including by hiring new staff.

He said the business was “well positioned, as the need for independent strategic advice and superior investment solutions continues to increase.”

A string of blockbuster M&A deals propelled revenues in its M&A and strategic advisory business up 21 per cent to $200.9m.

Deals Lazard worked on in the second quarter included Vodafone’s $11.3bn sale of its stake in French telecoms operator SFR; the $29bn merger between Express Scripts and Medco Health; and the UK government’s sale of the Tote to Betfred.

But it cut its compensation ratio to 58.5 per cent in the first half of 2010, from 60 per cent in the first half of 2010, as Lazard said it aimed to raise the ratio at a slower rate than its revenue growth.

Its asset management arm also had a healthy quarer, with operating revenuesup 27 per cent to a second-quarter record of $237.7m, it said.

That was largely thanks to a 32 per cent rise in its management fees, which went up 32 per cent compared with 2010. In contrast, its incentive fees halved to $6.3m in the period as it said these were usually recorded in the fourth quarter of the year.

Lazard’s New York-listed shares closed up 1.2 per cent at $35.11.