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In total, the 3,000-person firm has increased its head count by ~850 people in 2 years.
Now it’s buying Prudential Bache’s global commodities group from Prudential Financial Inc. for $430 million.
The new name of the
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unit: Jefferies Bache, according to the Wall Street Journal. It will be led by Patrice Blanc, whom the firm hired last year. Blanc used to be the CEO of Newedge.As of now, Jefferies doesn’t come close to competing with Goldman Sachs or Morgan Stanley.
Take for example when Jefferies hired Sean George from Deutsche. It was said that the firm “must have thrown the kitchen sink at him” to get him to move, possibly implying that otherwise he would never consider moving to Jefferies because it’s a step down.
Clearly, Jefferies is making aggressive moves to expand.
Today it also announced a $500 million stock offering, meaning that the firm is looking to raise equity, possibly to expand even more.
Prudential Bache could be Jefferies’ break into trading futures and OTC swaps in energy, metals and agricultural markets.
NASDAQ has a good explanation of what Jefferies is up to. The main points:
- It’s compensating senior people the same or better than at other Wall Street firms. “Handler, a former junk bond trader at Drexel Burnham Lambert, was granted $47.3 million in compensation in 2010.” For comparison, Jamie Dimon got $20.8 million.
- They are not competitive with the big boys yet. “They put up pretty good M&A total numbers, but it’s not because they are getting all of the big deals in a space. They are getting boutique-size deals across all of the major spaces,” said Jeff Harte, an analyst at Sandler O’Neill + Partners.
- It has one big advantage: it’s not a bank holding company like Goldman, Morgan Stanley, and the rest. “It isn’t a bank holding company and, thus, isn’t bound by the same regulatory requirements.”
- It wants to be the Solomon Brothers of the 2010s. “In many ways, you could look at Jefferies and say it’s to the banks of today what Salomon Brothers was to the banks of the 1980s–a smaller player, much more agile and under a somewhat different regulatory regime that gives it advantages,” said Sanford C. Bernstein analyst Brad Hintz.
It will be fun to watch what Jefferies does next, and how well it works.