| NEW YORK, March 13
NEW YORK, March 13 Dealmaking in the industrials
space, which covers manufacturers, their component makers,
aerospace and defense companies as well as transportation
providers, doesn't always grab the headlines the way media or
consumer mergers do.
Nevertheless, the sector makes up a big chunk of deal action
globally, generating the third-biggest fees for investment
banks, after financials and energy.
Barclays, which traditionally hasn't been among the
top Wall Street banks covering the industry, has made big
strides in recent years, helped by its renewed focus on the
biggest sub-sectors within industrials, key hires, and its
corporate finance capability to support the manufacturing
sector's capital-intensive requirements.
So far in 2013, Barclays ranks second in the global
industrials league tables with $8.9 billion worth of deals,
according to Thomson Reuters data as of March 13, compared with
No. 8 in 2012 and No. 13 as recently as 2010.
In one of the most high-profile industrial deals this year,
Barclays advised US Airways Group on its merger with AMR
Corp, the bankrupt parent of American Airlines. The assignment
made Barclays the only bulge bracket Wall Street firm to land a
coveted advisory role in the tie-up.
That came on the heels of other major industrials deals
Barclays had worked on over the past few months. In November,
the bank advised General Motors Co on its $4.2 billion
deal to buy Ally Financial's European and Latin American auto
Barclays was also one of the banks advising aerospace parts
maker Avio SpA on its $4.3 billion sale to General Electric
Co in December.
"Historically, if you think of industry verticals where we
had a particular core competency, industrials would not have
been one of them," said John Miller, head of Barclays' global
industrials group based in New York.
"Now, the needle is being moved in a material way," he said.
Barclays' industry-leading private equity business, which
ranked second behind JPMorgan Chase in 2012, was another
boost to its industrials business as buyout firms, on the back
of ample capital and cheap financing, were on the prowl for
Private equity firms struck $42.3 billion worth of deals in
the industrials sector last year, compared with $25.9 billion
worth of deals in 2011, according to Thomson Reuters data.
When Miller, who also runs Barclays' financial sponsors
group, was asked to take on industrials in 2010, he brought in
consulting firms to conduct a 100-day "clinical analysis" on the
group's various industry segments.
The goal was to define which areas within the broader
industrials sector yielded the most business, and to come up
with a plan for Barclays to boost share in those key areas.
Capital goods, autos, transportation and building products
account for roughly 70 percent of industrials deal volumes.
While that analysis was underway, Miller and the senior
leadership of Barclays also determined that the bank needed to
hire deal advisers at the most senior level to complement its
balance sheet and risk management capabilities.
As part of that effort, Barclays hired Larry Hamdan, a vice
chairman of global M&A at Credit Suisse, as executive
chairman of M&A and head of industrial M&A in 2010. Barclays
also hired Reid Marsh from Citi as chairman of the global
"I was looking for an opportunity at a bank that had a real
resolve to grow and expand its business," said Hamdan, a key
Barclays banker on the US Airways deal, along with Josh Connor
and Ben Metzger.
"Most banks in this environment are not focusing on growth
and it was exciting to be part of a team where there was a real
commitment at the top to grow and gain market share," he said.
Under Skip McGee, chief executive of corporate and
investment banking in the Americas, the bank has successfully
married Lehman's M&A expertise with Barclays' corporate finance
capabilities to provide a seamless suite of products to clients.
That strategy has already yielded results for Barclays,
particularly in the energy and private equity sectors, which
already top Wall Street league tables.
And Miller is determined to replicate the success of his
private equity group in industrials.
"If you are driving to become a top five market-share player
in investment banking overall, it was acknowledged early on that
we weren't going to get to the promised land if we didn't have a
top five industrials business, full stop," Miller said.
"There is still wood to chop, but we're seeing tremendous