Evidently Size Does Matter for UBS Brokerage Unit
Banks like private clients because most of these individuals don’t know very much and are therefore quite easy to stick with high-fee products that line the pockets of the financial advisor and the firm. So it’s not hard to understand why UBS, which is trying desperately to overcome a bad case of penis envy towards it larger peers Merrill and Smith Barney, opted to drop $500 million to acquire Piper Jaffray’s 842 brokers. We gather that many of the Piper brokers live in a large town called Minneapolis. Ever heard of it?
UBS Buying Piper Brokerage Unit [Wall Street Journal]
Goldman’s “Long-Term Greedy” Strategy
In a world in which Goldman increasingly makes its profits by wisely investing its own capital, the firm may be starting to view its investment banking business as one giant marketing exercise not designed to make any money. That’s what some people are taking away from the firm’s decision to sell $2.1 billion of stock in a secondary offering for Google for just $1 million in fees. “Goldman is doing it from the point of view that this is a powerful new company that could be doing more deals in the future,” said Sanford C. Bernstein analyst Brad Hintz. “Goldman may have decided to do the deal to be associated with Google,” echoes Jay Ritter, a finance professor at the University of Florida.
Loss Leader-Like Sales [Bloomberg]
Goldman Goes Retail, Literally
In another demonstration of its appetite for private prop deals, Goldman Sachs took a controlling interest in German department store chain KarstadtQuelle for a cool $3.7 billion. The investment in the Essen-based KarstadtQuelle, which has 122 department stores and commands a 40 percent market share in Germany, was made through the Whitehall real estate fund. According to The Times, principal investments made up just $695 million in revenue in Q1, less than seven percent of total receipts.
GS Invests in German Store Chain [NY Times]
MS Tumbles in Deal Rankings
It looks like the mass exodus from 1221 Avenue of the Americas 1585 Broadway may be putting a dent in Morgan Stanley’s ability to get deals done. After finishing second in the M&A rankings last year, the white shoe bank has dropped to seventh place to date in 2006. CEO John Mack whines “No Fair!” in reference to the massive ATT/BellSouth deal that generated ginormous fees for just about everyone but Morgan.
MS Says Falling M&A Not a Trend [Bloomberg]
