Markets: Banking on small-cap success

Swiss investment bank Credit Suisse and First NZ Capital are joining to produce a small-cap focused joint venture.

Credit Suisse and First NZ Capital, which have had a strategic alliance for more than two decades, will begin a joint venture later this year that will provide stock research coverage and investment banking services for Australian industrial companies with market values of less than $2 billion.

The venture, that will work out of Credit Suisse’s Sydney and Melbourne offices, will initially employ about 10 people, half of them research analysts and the remainder investment bankers, Scott St John, chief executive of First NZ told Markets Spectator.  

“We expect to grow those numbers,” says St John. “We will bring a greater degree of focus than a very, very large organisation can deliver as we will eat, live and breathe this space.”

The analysts and bankers at the joint venture will cover companies that are not property, mining, or oil and gas producers.

St John and Credit Suisse’ Australian chief executive Rob Stewart, both 49 years of age, have known each other since 1991 when they both worked on a deal together. First NZ, about 50-years-old, has had a strategic alliance with Credit Suisse since 2002 when its staff bought back the firm from the Swiss investment bank.

“There is a high level of trust between the two organisations,” says St John.

First NZ has about 30 per cent share of the secondary trading on the New Zealand Stock Exchange. Credit Suisse, as of June 7, was ranked No.4 in announced Australian mergers and acquisitions as well as equity capital markets deals in 2013, according to Dealogic.

“We’re targeting what we see as a gap in the market,” says Credit Suisse’s Stewart. “Small caps is an attractive opportunity and will help us build and bigger and better business.”

Credit Suisse employs as many as 400 people in Australia. First NZ has about 150 staff.