When it makes sense to shun the bigger banks

David Hellier
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WHEN BP announced its recent share swap with the Russian oil group Rosneft there was a sharp intake of breath amongst corporate financiers working for the likes of Credit Suisse, Goldman Sachs and Bank of America Merrill Lynch. None of the bulge bracket firms were named as advisers to BP on the deal. Instead the mandate went to Philip Lambert, a banker who plied his trade at Kleinwort Benson before setting up his own Mayfair-based firm.

One person not surprised in the least by this is Mervyn Metcalf, whom I met yesterday to discuss the latest goings on in the market.

Metcalf, now managing director of boutique investment bank Global Leisure Partners, argues that it is easier to build client relationships at a smaller focused bank. “The relationship tends to be more personal in a boutique and consequently is often deeper and stronger.”

Metcalf, who has advised clients such as the Guardian, Liberty and Stonegate Pub Company (backed by TDR) , says that building relationships at the bigger banks can sometimes be tricky. “So many people felt that they had to be included in a meeting that it became difficult to achieve a rapport with a client.”

The former Merrill banker is advising the bookmaker BetFred in its bid for government bookmaker the Tote. (“A whole load of big banks would have loved to have been on that deal,” he says). It’s a process that is now in the final round ?– with six potential bidders through to the final round – where BetFred is thought to be along with rival bids including one from Martin Broughton, the former BA and Liverpool football club chairman. There’s also competition from favourites Gala Coral.

Meanwhile, the abandonment of the recent London offering for the Russian coking coal firm Koks was a blow for all advisers, namely UBS (Pavel Ilive), VTB Capital (Alex Metherell) and Citi’s Steve Kale. But let’s not assume it means curtains for the London listing of Nord Gold, the gold unit of Russian steel group Severstal. “The roadshow is ongoing and the pricing is due on Friday,” said one adviser yesterday, still hopeful the group can raise up to £900m. Advisers point to the fact that Nord Gold is somewhat gold-plated; it’s the first Russian float to qualify for a premium listing under the UKLA’s listing rules and its primary listing is in London rather than Moscow. If all goes to plan, advisers at Morgan Stanley, Credit Suisse and Troika Dialog should be knocking back the vodkas by the weekend.