The one percent behemoth


Hiter Harris, co-founder of Richmond, Virginia-based middle market investment bank Harris Williams, has high hopes for his firm's merger with the much larger PNC Financial Services Group: the deal may allow his firm to crack the one-percent barrier.

?We're the largest in the middle market, says Harris. ?But we have less than one percent of the market share of deals less than $500 million.

Last month PNC, the ninth largest bank in the US, announced it would acquire Harris Williams, founded in 1991 by Harris and Chris Williams. The bank has roughly 200,000 commercial banking customers, and ?a good number of them are in the middle market says Harris, who anticipates new clients from this population.

Commenting on the proposed merger, an executive at a rival middle market investment bank said Harris Williams?has become more and more dominant in the middle market. I don't like competing against them.?

The banker wondered, however, if the merger would pressure Harris Williams into pursuing larger and larger deals. Harris dismisses this prediction. ? The bottom line is, almost everything will stay the same.?

He says his firm will focus on roughly the same sized deals it always has – those with enterprise values of less than $500 million. But it will do more of them. ?I wouldn't be surprised to see us hiring more aggressively, says Harris.

Harris Williams currently employs 110 people in Richmond, Boston and San Francisco.

Prior to co-founding Harris Williams, both Harris and Williams worked at Bowles Hollowell Conner, a previously dominant middle-market investment bank that is now part of Bank of America.

Private equity firms remain a major focus of Harris Williams – the firm has an awe-inspiring database of more than 2,000 equity groups. In other words, don't expect auctions in the middle market to go away.

BlackRock hires new CFO
BlackRock, a publicly traded investment management company, has hired Steven Buller as chief financial officer. He replaces Paul Audet, who will oversee BlackRock's $80 billion cash management business. Buller was a partner and co-director of global asset management services at Ernst & Young. He served as Ernst & Young's liaison with the SEC. BlackRock is majority owned by PNC Financial Services Group. Earlier this year, BlackRock acquired SSRM Holdings, the holding company of State Street Research and Management and State Street Realty. The transaction added US equity, alternative investment and real estate equity management capabilities, and it expands the scale and scope of BlackRock's open-end mutual funds and distribution capabilities.

3i portfolio ?exempt from IAS 27?
A spokesperson for London-listed private equity firm 3i said it had agreed with its auditor Ernst& Young that applying the IAS 27 accounting standard to its portfolio companies in order to produce consolidated accounts was unnecessary. However, the spokesman added that the firm would be applying IAS 27 to the group as a whole. The standard became mandatory for listed companies at the start of this year and optional for non-listed firms. IAS 27 forms part of the ?Improvements to International Accounting Standards? drawn up by the London-based International Accounting Standards Board. It stipulates that companies prepare consolidated accounts, meaning that financial information relating to a parent company and all its subsidiaries will have to be presented as if the group were one single entity. The European Private Equity and Venture Capital Association has lobbied for an exemption for private equity firms on the basis that meshing together the accounts of private equity funds' underlying portfolio companies into a homogenous entity would be misleading for investors in those funds. It argued that such accounting would fail to reflect that companies in a private equity portfolio of direct investments are typically at different stages of development. However, as yet, no exemption has been won.

Two placement groups join forces
Capstone Partners and Palomar Capital Advisors, two placement agencies targeting the US and Europe, respectively, have merged to form Capstone Palomar Partners and provide global private equity fund placement services, the new firm announced. The two firms have worked together informally since 2003. Capstone is led by Richard Bowman and based in Dallas. Palomar is led by Rolf Winzeler and based in Zurich. The new firm includes twelve distribution principals and a total of 20 staff members. Capstone Palomar has additional offices in Geneva and Amsterdam.

Helix hires IR pro to head US fundraising
Placement agency Helix Associates has appointed Philip Kemp as a managing director of the firm's US fundraising business. Kemp was formerly charged with investor relations for New York-based Ripplewood Holdings, which also has an operation in Japan. Prior to joining Ripplewood, led by founder Tim Collins, Kemp was a New York-based director of investor relations for London-based alternative investment house Doughty Hanson. Founded in 1993 by Lord Charles Cecil, Helix Associates is based in the UK but was recently acquired by US financial services conglomerate Jeffries Group.