NEW YORK (Reuters) - Investment bank Gleacher Partners is considering hiring a few restructuring professionals to take advantage of a possible rise in business in coming years as today's junk bond issuers become tomorrow's bankruptcy filers, one of its managing directors said on Wednesday.
Corporate bankruptcy filings are relatively infrequent these days, and low borrowing costs have fueled record junk bond issuance and huge leveraged-buyouts.
But economic cycles have not disappeared, and investment banks will likely be able to find a good deal of business in advising companies in bankruptcy over the next five years, said Mark Davis, managing director at Gleacher Partners.
"It's something we're looking very hard at," Davis said, speaking at the Reuters Investment Banking Summit in New York.
Smaller investment banks often have restructuring arms which can generate solid revenues when a slowing economy cuts into the merger advisory that is the bread and butter for many boutique firms.
Gleacher currently has eight partners.
Another business that Gleacher is considering entering is private equity investing, where returns can be solid now, Davis said.
The disadvantages of entering that business is that it can take a fair amount of time to raise money, and it can generate conflicts for investment banks that don't want to compete with their customers, Davis said.
Gleacher has an asset management business with a fund that invests in securities that are more senior to equity but subordinated to debt and a fund of hedge funds, and has about $1 billion under management now. Continued...
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