How did the deal with Lehman Brothers come about?
Glenn Willis: We have worked with Lehman Brothers on a number of structured transactions over the past four years, so it wasnÆt a new relationship. We have grown to understand and respect each other and over time it became apparent that it made sense for both parties to make the relationship more formal.
The idea that Grange might be bought by a bigger global firm has been discussed in the market for some years. Why did you eventually settle on Lehman Brothers?
LetÆs not forget that this is a two-way deal. The tie-up is just as important to LehmanÆs global banking strategy as it is to our ambitions of becoming the next major presence in the Australian market. Over the years we have been approached by a number of different suitors but the deal with Lehman Brothers made sense because we werenÆt merging with a bank that already had a large business in Australia. Lehmans had identified Australia as one of the most important markets in the world where they werenÆt a significant player.
So does that mean you will continue to run the business?
Yes. I will stay on as managing director and Tony Berg will remain chairman. In fact, the entire management team is staying on. We will also bring in a new senior executive in the form of Ben Harding who is currently working for Lehman in Japan. He will become our chief operating officer. We spent a lot of time considering this new appointment and chose Ben because of his deep understanding of LehmanÆs business and product offering. His background is in equities so he will help to build out this business for us in Australia.
What was Lehmans doing in Australia prior to the deal?
They had a very small presence. They have a remote membership on the Australian stock exchange but havenÆt had a local office. However, Lehman has been active in the fixed-income markets here, working on structured deals with firms like ours.
So where are the synergies?
Well, there isnÆt a lot of overlap locally which is why the deal made sense to both parties. Our business in Australia is with domestic clients and mostly on the fixed-income side, with a focus on high-yield and structured products. We only moved into equities, corporate advisory and asset management over recent years. Lehman will create many opportunities for us in terms of client reach, product development and deal execution. Interestingly, we have very similar histories. Lehman Brothers also began as a global fixed-income player and then expanded into equities, corporate advisory and asset management. I know this sounds like a throw away line, but we really do have a strong cultural fit.
What expertise will you be drawing on immediately?
We want to be able to offer our clients more investment opportunities, so this will involve importing some of LehmanÆs product knowledge and structuring capabilities. We have a large investor base in Australia and more and more they are looking to invest overseas. So now, through Lehmans, we will be able to give them these opportunities. We will also leverage off the powerful equities research base that they have globally.
What products will you focus on first?
We will combine our knowledge to come up with more structured credit and fixed-income opportunities. On the fund management side, we will be bringing the suite of Lehman funds to Australian institutional investors. We also want to build out our corporate finance activities, particularly in the area of hybrid equity.
Who will be your main competitors?
All of the other large investment banks in the market. But our strategy is to ensure that we are always offering a better, more sophisticated offering than our peers. That is how we have been able to differentiate ourselves in the past and grow from a small firm. The same strong client focus will continue to be part of our culture.
So what about the brand? Will the bank be called Lehman Brothers?
At this stage, the business will continue to be called Grange Securities. One day we expect it to become Lehman Brothers Australia, but we wonÆt make this switch until the time is right. Lehman is a quality name and will gain quick acceptance down here.
When do you expect the merger to be finalised?
We said it would be closed by the end of February and we are on track.
¬ Haymarket Media Limited. All rights reserved.
