Lehman Brothers Holdings Inc is well-positioned to grow banking and capital-markets fees in the US but is hiring rapidly to take advantage of opportunities in Asia, particularly in India, an executive said on Wednesday.
Lehman employs about 16,190 bankers and traders in the US, where it forecasts that fees for Wall Street will grow at a compound annual rate of 7.3 percent between last year and 2010.
"We are about right" in terms of staffing and capabilities in the US, said David Goldfarb, Lehman's head of strategic partnerships, principal investing and risk at a conference sponsored by Merrill Lynch & Co.
Industry-wide fees are poised to grow 11.6 percent, however, in the Asia/Pacific nations, where the firm has only 3,337 employees.
"We are amazingly excited about India," Goldfarb said, noting that local companies want banking advice on acquisitions and capital-raising as well as capital-markets products such as derivatives and securitized assets.
"India is a full-service opportunity for us today," he said.
CAUTIOUS ON CHINA
He was more cautious about China, where the legal and regulatory climate is more complex and capital markets rudimentary.
"China is just a banking opportunity for us," Goldfarb said, noting that Lehman is competing on advising Chinese companies on cross-border acquisitions and capital raising.
Lehman also seeks to hire in Europe, where it employs about 6,000 people and believes fees will grow 8.8 percent annually for the securities industry through 2010.
However, its budget for next year is focused largely on building securitization, derivatives, leveraged lending, structured notes and banking capabilities in Asia, Goldfarb said.
Lehman Brothers -- which has been conservative about growing through acquisitions -- is looking for takeover candidates in Asia, he added.
The company's profits grew 23 percent in the first nine months of its fiscal year to US$3 billion from the same period last year.
Lehman's fiscal year ends in November.
Goldfarb also said that Lehman is bulking up its prime brokerage operations, which offer banking and bookkeeping services to hedge funds, and is holding its own in providing loans and advice to private-equity funds that are fueling 20 percent of worldwide corporate buyouts.
Goldfarb estimated that financial sponsors, or buyout firms, are sitting on US$136 billion of uninvested capital through funds they have raised.
Since they tend to buy companies with borrowed money -- which investment banks and commercial banks are eager to lend -- their purchasing power is likely six to seven times the amount in their coffers.
"We are building funding to meet their needs," said Goldfarb, who was previously Lehman's chief financial officer.