With a growing number of California's best-known investment banks now controlled by East Coast banks, the smaller Van Kasper & Co. hopes to capture more business here by carving out a reputation as one of the West's leading investment banks.
In September, San Francisco-based Van Kasper agreed to a $100-million purchase by First Security Corp., a bank holding company in Salt Lake City. The deal is on track to close in January.
Joining with the bank would give Van Kasper the extra capital it needs to expand into new areas such as municipal bond underwriting, larger private placements, trusts and fixed-income securities, said F. Van Kasper, 61, the company founder who is still chairman and chief executive.
After leaving Merrill Lynch & Co., Van Kasper started the firm in 1978 with six employees. It has grown to 250 employees in nine offices and offers investment banking and brokerage services while managing about $2.2 billion. Kasper recently served on the board of directors of the National Assn. of Securities Dealers Regulation.
"Everyone is so busy. The person who is trying to solve their financial problems, they don't want six or seven banking relationships," Kasper said. "Our clients were asking us to do more for them, so it made a lot of sense for us to find a partner to do more."
According to CommScan, an investment banking research firm in New York, Van Kasper has participated in 33 deals this year, mostly as part of a team. The firm was lead manager in five of the initial and secondary stock deals, totaling about $100 million, CommScan said. As of last week, those stocks were down an average of 14%, according to CommScan.
In one of its most recent and successful deals, Van Kasper was lead manager for a $9.1-million secondary offering from Javelin Systems Inc., an Irvine developer of touch-screen point-of-sale computers for the retail and food industry.
Javelin, which went public in 1996 at $5 a share, sold its shares Oct. 29 at $6.75. As of last week, the stock had risen about 60% from the secondary offering price.
"We got good service and we had good chemistry with Van Kasper," said Horrace Hertz, chief financial officer with Javelin. "It was a risky time, but we felt our story was good enough to attract investors."
But some in the industry question whether Van Kasper could ever become a major player in financing the growth of small and medium-sized companies.
"Van Kasper is an interesting boutique in that you've got some good people with intelligent ideas--and then there are many things they do that are undistinguished," said one investment banking source.
Although the merger isn't final, Van Kasper is already expanding, particularly its financings through private capital and public stock offerings for small and medium-sized companies.
It recently hired Jay Sherwood as a managing director in its Los Angeles and Newport Beach offices. A former managing director with Cruttenden Roth in Irvine, Sherwood hopes to boost Van Kasper's corporate finance business among mid-sized businesses.
The firm added four people to its Los Angeles corporate finance department, bringing the number of bankers to 22. It also opened a three-person office in Phoenix and added three bankers.
"This [merger] is a deal made in heaven," said Bruce Emmeluth, managing director of corporate finance in the firm's Los Angeles office. "There's not much overlap, and culturally, these are two Western companies."
Van Kasper said his company has learned from recent acquisitions such as NationsBank's purchase of Montgomery Securities in San Francisco and BankBoston's purchase of Robertson Stephens & Co. in San Francisco. Montgomery founder Tom Weisel and a number of top executives recently left that firm after clashes with NationsBank executives.
"We're going to learn from others' mistakes," Van Kasper said. He has said he expects to stay with the merged company for at least four more years.
Can Van Kasper become a higher-profile player?
"Just watch us," Emmeluth said. "We've come a long way. When I joined in 1990 there were three people in corporate finance and research. Now there are 35. We have a much higher profile and will continue to grow."
In other California Dealin' news, three big high-tech offerings are slated to be priced this week.
E-Tek Dynamics Inc., a San Jose-based maker of telecommunications equipment, is expected to sell 6 million shares at $8 to $10 apiece through lead underwriter Goldman Sachs & Co. Another highly anticipated initial public offering is from Ticketmaster Online Citysearch Inc., a Pasadena-based provider of tickets and city guides on the Internet, which is expected to raise $63 million through lead underwriter NationsBanc Montgomery Securities. Also watch for a $30-million deal from San Francisco-based Xoom Inc., one of the fastest-growing direct marketing companies on the Internet and considered by many market watchers to be the next EBay-style blockbuster.
Debora Vrana can be reached by e-mail at email@example.com.
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At a Glance
Company: Van Kasper & Co.
CEO and founder: F. Van Kasper
Headquarters: San Francisco
Business: Investment banking
Year founded: 1978