NEW YORK (Reuters) - Dahlman Rose & Co, an investment bank focusing on natural resource-linked companies, replaced its chief executive and fired more than 10 percent of its staff this week amid a broader Wall Street slowdown, its new CEO said.
Kim Fennebresque, a veteran investment banker who has been chief executive since June 2011, retired on Monday and was replaced by the firm’s equity sales and trading head Robert Meier. The New York-based firm, which trades stocks for institutional investors and raises capital for corporations, fired 15 people from its staff of about 130 as trading volumes and commissions continue to drop.
“This has been another rough year, and we still had a decent amount of fat on us,” Meier, who joined the company in December from Gleacher & Co GLCH.O to run equity sales and trading, said in an interview.
Dahlman Rose, whose revenue has plunged from some $60 million annually during its peak years, is struggling with high expenses due to guaranteed deals to sales staff and analysts, said a former executive who asked for anonymity.
Bigger banks are cutting back too. Nomura Holdings (8604.T) on Thursday said it was revamping its global equities business as part of an effort to trim $1 billion of costs, Deutsche Bank (DBKGn.DE) this week announced layoffs in stock trading operations and several smaller firms in the U.S. have shuttered their operations this year.
Dahlman Rose is particularly vulnerable because it grew rapidly in recent years ahead of a worldwide decline in commodities prices affecting the companies it follows.
It financed its growth by selling a minority stake to private equity firm Lovell Minnick in 2010 for $40 million. The firm’s salespeople, marketers, analysts and traders ballooned from under 50 to more than 200 by the summer of 2011.
In April, Lovell Minnick increased its investment and now owns a majority stake, according to Meier.
Management turmoil, however, followed the expansion. Ernie Dahlman and Simon Rose, who founded the firm in 2004, were each forced out in the summer of 2011 following arguments among themselves and disagreements with Fennebresque about strategic direction, said two people close to the company. The firm’s former president, research head and head of sales and trading also left late last year.
Fennebresque did not return calls for comment, and Dahlman and Rose could not be reached for comment. In a June 2011 press release that did not mention Dahlman, the company said Rose was retiring at age 41.
Dahlman Rose covers more than 270 companies, primarily in energy exploration, oilfield services , offshore drilling and metals and mining, and has customer relations with more than 1,200 asset managers, according to its website.
“They like our industries and are committed to seeing us through these hard times,” Meier said, adding that the private equity firm is particularly interested in expanding the firm’s investment banking business. It now has fewer than 20 bankers advising on acquisitions and raising capital for corporate clients.
Spencer Hoffman, a Lovell Minnick managing director who sits on Dahlman Rose’s board, did not return a call for comment.
In spite of lower banking and trading revenue this year, the company has a loyal following from investors, according to Meier and several competitors who asked for anonymity. “We are down this year, but it’s down well less than the decline in the overall commission pool on Wall Street,” Meier said.
This week’s cuts included two marketing people, mining company analyst Anthony Young, a mergers banker, a trader and several salespeople, Meier said.
Reporting By Jed Horowitz; Editing by Tim Dobbyn