Sutro, Tucker Anthony Plan to Go Public


Investment banks Sutro & Co. and Tucker Anthony Inc. are planning to go public with a first-time stock offering of about $100 million, said sources close to the situation.

The two small but longtime regional brokerage firms are expected to file documents with the Securities and Exchange Commission by the end of the first quarter and have hired investment banking firm Donaldson, Lufkin & Jenrette, sources said.

Sutro, based in San Francisco, and Tucker Anthony, based in Boston, were purchased from John Hancock Mutual Life Insurance Co. in 1996 by an investor group led by corporate buyout specialist Thomas H. Lee for about $180 million.


The two privately held firms are part of a holding company called Freedom Securities, which also owns a Boston asset management firm named Freedom Capital Management. Freedom Securities, with about 1,700 employees in its three units, will be the entity filing to go public, sources said.

The offering is an attempt to capitalize on the wave of consolidations and acquisitions sweeping the investment banking arena. As the regulatory walls restricting commercial banks’ involvement in the securities industry crumble, banks are increasingly paying record high prices for regional brokerage firms such as Montgomery Securities, which was bought by NationsBank Corp. last year.

Proceeds from the initial public offering, or IPO, will be used to repay the debts that Freedom’s managers and investors incurred when they bought the firm from John Hancock, sources said. Lee, who lives in Boston, owns about 50% of Freedom Securities.

Lee bought and sold the information services unit of TRW in Orange County for a quick profit and is also known for reaping profits of more than $800 million for investors when he sold control of Snapple Beverage Corp. to Quaker Oats Co. for $1.74 billion in 1994. Lee said Tuesday he would not comment on whether Freedom would go public.

Another nonemployee investor in Freedom is SCP Private Equity Partners, a fund sponsored by Safeguard Scientifics of Wayne, Pa.

Becoming public companies would give Sutro and Tucker the liquidity and flexibility each needs to expand and strengthen current operations. Being publicly traded could make the firms more attractive to another buyer, some sources said. The companies might also get a better price in the public markets than the entities would from a bank or other investment bank, some speculated.


“They can get a higher price in the public markets,” said one person familiar with the firms. “Public investors will see the shares as a way for them to ride this investment banking consolidation wave.”

Sutro was founded during the California Gold Rush era by German immigrant brothers Gustav and Charles Sutro. Started in 1858 as a tobacco and gold-weighing company, Sutro evolved into a full-service investment firm and was one of the original underwriters of bonds for San Francisco’s cable cars.

Sutro--better known now for its broker network that sells securities to individual investors--has 650 employees in 19 offices in California, Arizona, Nevada and Colorado. It has a significant presence in Los Angeles, where its corporate finance arm is based.

Tucker Anthony is a 105-year-old firm that specializes in health care, financial services and technology financings. Both firms have municipal bond divisions.