FBR & Co. added 29 professionals from Lazard Capital Markets LLC, the closely held brokerage that said earlier this year it was exploring strategic alternatives.
Among those hired in the “negotiated transaction” are six senior research analysts, six sales traders, three position traders and four institutional sales people, Arlington, Virginia-based FBR said today in a statement. The investment bank will begin coverage of the health-care industry and add to its technology, media and telecommunications and consumer groups, according to the statement.
“This new team is expected to contribute to our ability to maintain our current industry-leading revenue per person,” Richard J. Hendrix, FBR’s chief executive officer, said in the statement. “This addition can be supported by our existing infrastructure and does not come with any associated goodwill or other direct capital costs.”
Lazard Capital, which was spun out of Lazard Ltd. in 2005 and is owned by current and former employees of that firm, said in May it was exploring options including a sale, a joint venture, seeking a partner to inject capital or selling a minority stake. At the time, New York-based Lazard Capital employed about 200 people.
Shannon Small, a spokeswoman for FBR, declined to comment on the terms of the deal. Scott Sunshine, a spokesman for Lazard Capital, said the brokerage wasn’t sold and that it “continues to service its clients across all product lines.”
Brokerages are facing pressure to change ownership structures and strategies as commissions get squeezed. Firms registered with the Financial Industry Regulatory Authority dropped 14 percent to 4,207 in September from 2008, according to the regulator’s website. Money managers are trading less and doing more of it electronically, and customers have resisted paying for investment recommendations.
Lazard Capital, led by CEO William Buchanan, dismissed six senior research analysts in December, people familiar with the matter said at the time. The firm had more than $1 billion in assets and about $73 million of equity at the end of 2012, according to regulatory filings. Hamilton, Bermuda-based Lazard Ltd., the largest independent merger adviser, has a separate capital markets advisory business.
Lazard Capital provides research, sales and trading, along with underwriting for equities, fixed-income and convertible securities, according to its website.
When Lazard Freres & Co. became publicly traded in 2005, the asset-management and advisory operations became Lazard Ltd. Its alternative-asset and capital markets businesses were folded into a shell company owned by management called LFCM Holdings LLC, according to regulatory filings. Lazard Capital is a wholly owned subsidiary of LFCM.