Broadpoint on the hunt for deals

Lee Fensterstock, CEO of Broadpoint Gleacher, speaks at the Reuters Global Finance Summit in New York, November18, 2009.

NEW YORK (Reuters) - Boutique investment bank Broadpoint Gleacher Securities Group BPSG.O is looking to expand and may consider a big acquisition, Chief Executive Lee Fensterstock said on Wednesday.

Broadpoint, which only in March acquired veteran banker Eric Gleacher's M&A shop Gleacher Partners, is looking to double in size over the next few years, and that means acquisitions and hires, Fensterstock told the Reuters Global Finance Summit in New York.

"I absolutely wouldn't rule anything out," he said when asked if he would consider buying a company similar in size to Broadpoint.

"If you do something big, it's a big opportunity but also potentially a big risk," he said. "You've got to find like-minded cultures and like-minded people."

"If we were able to magic that up, this is exactly the right time to do that," he added.

Broadpoint, launched in 2007 with the help of a $50 million private equity injection, now has annual revenue of $350 million and a market capitalization of more than $800 million.

EQUITY ACQUISITION TARGETED

The company has a large fixed income business and a comparatively small equity research, sales and trading unit, Fensterstock said.

"Our equity business is really too small," he said. Broadpoint is looking to acquire an equity firm of some kind in order to expand, Fensterstock explained.

"We've talked to lots of people," he added, but declined to comment on the progress of those talks or whether Broadpoint has specific targets in mind.

"We probably wouldn't want to do something that's not going to have sufficient scale," he said.

Shares in Broadpoint, which have more than doubled since the start of the year, slumped 17 percent to $6.45 when it reported a $19.1 million third-quarter profit last month, even though it beat analysts' expectations.

Broadpoint shares were trading on Wednesday at $6.49, down 29 cents or 4.3 percent.

Fensterstock said the slump might have been prompted by investors questioning the next step for Broadpoint, given its fixed income focus, particularly at a time when there is a lot of talk about the outlook for interest rates.

"Someone looking at a firm with a fixed income component would have to think, 'Gee, unless they can diversify, that's an issue there'," he said.

"The pressure is definitely on," he added.

Fensterstock believes, however, that there are significant gaps in the bank world into which Broadpoint can expand.

"There's just a big space that was occupied by these (banks) that are now gone," he said. "There's plenty of room for us to grow."