No Longer Business As Usual

A new breed of investment banker is aggressively pursuing corporate accounts and strategic alliances

decades. Roads need to be rebuilt; school buildings need overhauling; and stadiums and convention centers need upgrading.

As a result, some $280 billion in municipal bonds were brought to market last year, second only to a record $290 billion in new issues in 1993, according to Securities Data Co. of Newark, New Jersey. Meanwhile, the number of municipal bond deals in 1998 peaked at 14,367, topping the old record of 14,015 transactions in 1993. On a year-to-year basis, municipal bond issuance was up 30% in 1998.

No minority-owned firm did a better job of capitalizing on the increased volume in 1998 than Siebert Brandford Shank (No. 1 on the be investment bank list). SBS served as the lead manager of $2.5 billion in total deals last year and co-managed another $26.1 billion worth of bond offerings. As lead manager, or senior manager, an investment firm does everything from providing complex analysis and advisory work to structuring transactions and selling the lion’s share of the bonds in an offering. SBS’s largest deal last year was a nearly $300 million offering for Detroit public schools.

The firm also lead-managed five deals worth over $100 million — very large transactions considering the muni market is overwhelmingly a small-issue arena. Roughly 70% of all new muni offerings in 1998 were $10 million and under.

When SBS competes for business, issuers "are frequently surprised at the size and complexity of the deals that we’ve done" says president and CEO Suzanne Shank. "But we always try to come through and do a better job than our competition. That’s what we have to do to have staying power."

SBS employs 35 people, mostly bankers and sales professionals, in 10 offices across the U.S. The firm was founded in late 1996 and originally operated as a unit of Siebert & Co., which is owned by Muriel Siebert, who’s white. But in 1998, Shank and Chairman Napoleon Brandford III split off from Siebert & Co. and got approvals from securities regulators to operate SBS as a separate entity.

Though Siebert owns 49% of SBS and Shank and Brandford own 25.5% each for a combined 51% stake, SBS "is not a subsidiary" of Siebert & Co., Shank explains. "We’re now a separate company with a separate broker-dealer license."

She adds, "Muriel is an investor and we can call on her as needed in certain cases. But Napoleon and I basically run the firm," Shank says. "Our focus from day one was to have a majority black-owned firm that would be respected in the industry."

Like Shank, most muni players stress that their solid track record is what wins them contracts — not their status as minorities. "If the first card you play is, ‘I’m a minority so give me the business,’ that goes nowhere fast," says Arthur Powell, chairman of Powell Capital Markets Inc. in Roseland, New Jersey (No. 11 on the be investment bank list). However,

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