You could call it speed-dating for bankers.
Members of Charlottes boutique investment banks cycled through meeting rooms at the uptown Ritz-Carlton during three days last month to connect with private equity firms from as far as New York and Los Angeles.
The investment banks goal: Find a good match that could lead to millions of dollars being invested in the small and midsized businesses they represent.
The event, at least the fourth of its kind in Charlotte over the last two years, highlights the growing importance of middle-market investment banking in the city. The sector helps small and midsized businesses raise capital or sell their companies. More than a dozen of these banks have set up shop in Charlotte, mostly in the last decade, with deal volume in 2012 likely exceeding $4 billion, said Don Millen, co-founder of Charlottes Dragonfly Capital.
The cluster of these boutique investment banks makes Charlotte one of the few cities in the country where such an event can take place, apart from banking centers like New York and Chicago. And over the past two years, private equity firms have come to Charlotte dozens at a time to take advantage of them.
You cant go to many other cities to get this concentration of quality, said Alex Kessel of Baird Capital Partners in Chicago, as he waited to mingle with bankers over cocktails after hours of meetings. Its surprising.
Many of these boutiques were founded by alumni of the citys two big banks or the pioneering investment bank Bowles Hollowell Conner & Co.. Its not New York or Chicago, but they find the financial infrastructure of Charlotte and its airport enough to manage a clientele that spans the country.
Its one of the few places where you dont have to take a cab or subway to work to do what we do for a living, said Tripp Davis of Charlottes 7 Mile Advisors, which was founded in 2008.
We all travel, we do business all over the world, said Millen, whose firm launched in 2000. This is where we choose to live.
The middle-market banks represent businesses looking to make deals ranging from $5 million to $250 million. Sometimes the private equity investors will buy a business outright. Other times they will provide a capital infusion for an expansion or other purpose.
Middle-market investment banks have drawn increased interest from the private equity world for at least a couple of reasons: Because of low interest rates, investors are allocating more capital to private equity funds, which provide higher returns. Those private equity funds are increasingly looking to put that capital into middle-market deals, which have remained steadier through the downturn than blockbuster mergers.
Bowles and banks
When Bowles Hollowell Conner formed in 1975, co-founded by Charlotte businessman Erskine Bowles, it was one of the first to focus on the middle market. At the time, little attention was paid to the sector: Only about 25 private equity firms targeted that range, compared with about 2,500 today, according to Mergers and Acquisitions magazine.
By the mid-1990s, the firm was completing about $3 billion in annual deals. Bowles Hollowell sold to First Union in 1998, and a few years later, its bankers began breaking off and forming their own firms.
The two big banks have spawned a lot of talent over the years, and that talent wanted to stay in Charlotte, said Eric Andreozzi of McColl Partners, a boutique investment bank co-founded by former Bank of America CEO Hugh McColl. Many of us decided to build our firms here. They were joined after the financial crisis by a number of midsized investment banks from out of state, like Lazard Ltd. and Robert W. Baird & Co.
Financial conference host Northstar held its first Heavy Hitters event in Charlotte last year to test the market after several years of holding an event in Atlanta. This year, for lack of space, Northstar had to turn away three private equity groups who wanted to come to Charlotte.
In all, 28 private equity firms from 18 cities descended on the meeting rooms of Ritz-Carlton uptown. The firms got one-on-one time with each of the 11 investment banks in attendance in rooms on different floors of the hotel.
That event came on the heels of the private equity conference that McColl Partners hosted in November, its second such event. More than 100 private equity groups and 54 private companies looking for capital came to the Ritz, along with other boutique investment banks, combining for more than 1,000 meetings that day.
There just arent many places in the U.S. -- or the world for that matter -- where you have such a concentration of high-quality, mid-market M&A investment bankers, Davis of 7 Mile Advisors said. A very significant portion of the nations deal flow comes through this city.
Dunn: 704-358-5235 Twitter: @andrew_dunn
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