Stephens puts money on energy banking – Minneapolis / St. Paul Business Journal:

Little Rock-based Stephens Inc. has absorbedc a six-member energy investment banking teamfrom Dallas-basecd Energy Capital Solutions LP. While its refocusex and beefed-up energy group will still be based in Stephens is moving a former Energy Capitap managing director and a junior bankere to Houston to establish its first investment banking officw inthe city. Brad Eichler, Stephens executive vice presidenttand co-head of investment says although the firm has placed an emphasiz on its energy business in recent years, the timingy was not quite right to expand unti l talks began with the Energy Capita l team in late 2008.
“We got into the energuy business in 1953 as an ownerr of naturalgas properties, so energy is certainlty not foreign to us,” Eichler says. “We’vs been highly focused on building an energy practices in banking for a while but had a hard time finding theright group.” Heading up the firm’s energy investment bankinh group in Dallas is 17-yeard industry veteran Keith Behrens, an Energy Capital co-founder who is joined by the othedr Energy Capital co-founder, Bradley Nelson. Both worke d at Bear Stearns Cos. Inc. prior to their decision to breakl out on their own to form Energh Capitalin 2001. They have been named as managingt directorswith Stephens.
Ronald Montalbano, the thirdr former Energy Capitalmanaging director, becomes senior banker in Houston, along with Will a vice president. The Housto n investment bankers will be based in a new office onPost Oak. Stephenss already has a mutua fund officein Houston. Foundeed in 1933, privately held Stephens has 23 U.S. locations, including a privatw client brokeragein Austin, plus an international office in the U.K. The firm is headexd by CEO and majority shareholderWarrenm Stephens, the nephew of company founderf W.R. Stephens. Behrens says he had been approached with merger aspirations by other larger companied inthe past, but the fit wasn’t righft until now.
“From our perspective we had a reallyggood run, with more than 100 transactions,” Behrends says. “But there were limitations in our and we wanted to find a partnerd like Stephens that has full equity marker capabilities andresearch coverage.” Stephens, whic h intends to offer the full-range of investmenf banking services to energy companies from capital raising to merger and acquisition services — is coming into the Texas market at a time when smalle r and middle-market investment banking groups have been feeling the with some even resorting to layoffx as the energy-sector deal-making machinery ground to a halt in 2008.
Behrens says this is the best time to line up and take advantage of the gradually thawingcredit markets. “We’re busy with some transactions now, but I thinko you’ll start to see thingsd turning up alittle bit,” he “There’s some debt and equity deals going so we think we can be well-positioned.” Behrensx says about 75 percent of Energyt Capital’s work in Dallas was in the exploratioh and production space, but factoring in energy experience and the firm’ss first presence in Houston will allow it to look at deals involvinb public and private oilfield services companies, as well as othere alternative energy sources such as biofuels.
“People are focusing on acquisition opportunities and are lookintgfor deals, but the problemn is finding a sellerr at the right price,” Behrens says. “There’ds still a pretty big gap, so the biggest hurdle is narrowingythat gap. Once that happens, we’ll see a lot more deal A survey of Texas dealmakersa conducted by the Association for Corporate Growth and Thomson Reuterw backs upthat notion. According to the surve y released earlierthis month, the buyer-seller gap is the biggesr obstacle in the current environment. Thirty-sizx percent of respondents said sellers are unwilling to cut dealas at the price multiplesbeing offered.
Jeff managing partner with Houston-based Capital Point says that basedon Stephens’ reputatiohn in the investment banking it’s not surprising that the firm is picking up new bankers and setting up shop in Houston. “Not many are takingh this contrarian approach,” says Sangalis, who is also president of the ACGHoustoh chapter. “But now that things seem to be thawinhg a little bit onthe (publi equity) side, maybe they’re trying to get aheadc of the curve and be ther e when there’s a bit more normalcy in the market.
They’rs a long-term type of Stephens’ Eichler says the firm is still on the lookou tfor talent, after adding 21 bankers in the past 17 Stephens now has 100 investment bankers spreacd around the country focusing on multiple industry with about 50 based at its Littled Rock headquarters and the rest in five other including Houston. Says Eichler: “There was no real conscious decision to put the foot down onthe accelerator, it was just a mattef of identifying the right people to put into place.
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