Bulge-bracket execution, boutique focus: ideas behind Pritchard Capital, Global Hunter merger
Mikaila Adams, Associate Editor, OGFJ
A bulge-bracket structure with a boutique focus is the vision behind the combination of Pritchard Capital Partners and Global Hunter Securities into Pritchard Global Hunter Securities.
Pritchard Capital, an energy investment bank and institutional financial services firm, and Global Hunter Securities, a global investment bank, intend to join forces to create a full-service energy-focused investment bank.
As Pritchard Global Hunter Securities, the firm will offer a full range of investment-banking services targeted toward small- to mid-cap energy. The combination brings together two energy banks: Pritchard Capital, with a sales-and-trading and research base and an equity-focused investment-banking group; and Global Hunter Securities, whose investment bankers are experienced in structuring and distributing equity and debt securities for energy companies.
Strategies, opportunities in current economy
The deal comes at a time when current economics are forcing companies in all sectors to rethink strategies.
Thomas Pritchard, managing partner and founder of Pritchard Capital, said, “Our group went from boom to bust in about a six-month period. Different situations are evolving right now. There’s a real lack of available capital at a decent price so we’re focusing on restructures, primarily in the debt area.”
Equity has taken a backseat and people will raise debt when they can, he said. “You can see that in the investment banking circles outside of our firm. The debt market is going to thaw,” he said. At presstime, Petrohawk went to market with a $300M deal that turned into a $600M deal. The company expects net proceeds to be used to repay outstanding borrowings on its senior revolving credit facility.
When asked about the catalyst for getting the lending markets in full-swing again, Pritchard was cautious. “You’ve got to get a plan,” he said. Moving forward with transactions out of fear can backfire. “Read about how ill-fated the Bank of America and Merrill Lynch merger was. Those are two big competitors. The transaction is a laughing stock,” he said. He also warned against talk of nationalizing banks. “None of that talk is great for getting the lending markets going again,” he said. “There has to be a real coherent plan and it has to come out of Washington.”
In the meantime, companies are focusing on liquidity, and with this come opportunity. “We think there’s market share out there up for grabs; look for instance at Bank of America, CitiGroup, and Merrill Lynch,” he said. “There are also good people out there. You’re hearing stories about layoffs coming on the heels of the BofA/Merrill merger. We want to take the talent that’s out there and bring them into our fold,” he continued.
Getting knowledgeable people into the mix is part of the plan at Pritchard Global Hunter Securities. “We’re going from two to 12 investment bankers. That’s a big jump for us…for anybody,” said Pritchard.
As part of this transaction, Thomas Pritchard will become president and managing director of capital markets, and Daniel Conwill, CEO of Global Hunter Securities, will be CEO and head of investment banking at Pritchard Global Hunter Securities.
“We think there’s market share out there up for grabs; look for instance at Bank of America, CitiGroup, and Merrill Lynch. There are also good people out there. We want to take the talent that’s out there and bring them into our fold.” — Tom Pritchard, founder Pritchard Capital
Edward Lainfiesta, currently president of Global Hunter Securities, will become vice chairman of Pritchard Global Hunter Securities, and Todd Giustiniano, currently CFO of Pritchard Capital, will become CFO of the new entity.
Increased portfolio, greater presence
By combing the two companies, management believes it can achieve not only a larger focus on investment banking, but a more solid focus on the energy sector. The transaction increases Pritchard Capital’s exploration and production portfolio, while also expanding its investment-banking capabilities and presence in other energy verticals that include oilfield services and alternative energy.
Pritchard noted, “Together, we are building a preeminent energy investment bank, which will deliver bulge-bracket execution with a boutique focus.”
The goal, as Pritchard said, is to be “very hands on, with a knowledge-based focus of the industry rather than trying to be all things to all people.”
Financial terms of the transaction are not being disclosed. The combined companies will remain based in New Orleans, with offices in New York, Houston, Washington DC, Atlanta, and Newport Beach, Calif.
