TORONTO BMO Capital Markets wants to lead more equity deals in the United States as it builds out capacity south of the border, a senior bank executive said in an interview.
BMO, the investment banking arm of Canada's fourth-largest lender, the Bank of Montreal (BMO.TO), hired a new managing director and head of U.S. equity capital markets last week, the latest in a hiring spree that added 400 U.S. positions since 2010 alone.
New hire Michael Cippoletti joined the bank from Morgan Stanley. He will quarterback a team of investment banking staff that BMO built up even as other global banks retreated in the face of the financial crisis.
"There is a great market opportunity for us, with many global dealers being in a general state of downsizing," said Darryl White, BMO global head of equity capital markets.
"Where we would be doing a handful of book-run deals in the United States a year (now), we would expect to do multiples of that," White told Reuters in an interview.
BMO is already one of the lead underwriters in Canada, regularly securing a spot in the top five with market share near 10 percent.
It has less than one percent of the market in the much larger and more competitive U.S. market, but White sees significant room for growth.
BMO is targeting seven U.S. sectors: energy, technology, healthcare, business services, financials, industrials, food and consumer, real estate and financial sponsors.
"Our message to issuers is: We can research your stock, trade your stock, bank you, we've got a strong balance sheet, we've got the equity distribution and structuring capabilities to get your deals done and we put you first," White said.
The big-gun hire of Cippoletti comes as confidence slowly returns to equity capital markets. The CBOE Volatility Index .VIX, a key barometer of sentiment, hit its lowest level in six months earlier this month and was at 19.62 on Monday.
Noting that deals are still getting done across sectors, White predicted a lot more financing activity in Canada and the United States, assuming conditions don't worsen and investors agree that Europe's woes can be decoupled from the North American economic recovery.
But trading volumes still lag historical averages, so there's room for demand to grow.
"When you look underneath in terms of how deep books are on offerings and how many investors, we are not yet seeing the depth that we need to see to really declare that this is a wide open market," White said. "Deals are oversubscribed, but barely."
(Reporting By Pav Jordan; Editing by Janet Guttsman)