In a note to clients, Chishty confirmed that he will be joining Nomura as head of industrials investment banking, replacing Anthony Steains who last month left Lehman to join private equity firm The Blackstone Group. Chishty, who has led the industrials team at Citi for the past two years, said his new role will give him the opportunity to be ôsingularly focused on client needs and be much more hands-on with transactionsö. He added that he will be joining a firm that has been ôsignificantly strengthenedö through the recent acquisition of LehmanÆs Asia business and which has a ôdedicated focus on Asia and the needs of Asian clients in these volatile timesö.
Nomura, which is the biggest brokerage in Japan, bought LehmanÆs Asia-Pacific and European businesses after the 158-year-old Wall Street firm was forced to file for bankruptcy in September. The acquisitions were viewed as a way for the Japanese firm to kick-start its investment banking ambitions in Asia and to build on its existing businesses in London. Realising how important the Lehman staff is for these plans to work, Nomura offered generous compensation for those who agreed to stay on, but some still decided to jump ship. Uncertainty about the future at a bank that is still largely untested outside its home market and the difference in corporate cultures between a Wall Street firm and a Japanese investment bank are believed to be contributing reasons for the departures.
Thus, it must come as a relief to Nomura that it has been able to move quickly to replace some of the people who have left. Aside from Chishty, the bank has also hired Apurva Choudhary from J.P. Morgan to head its investment banking power team and is in the process of finalising a new addition to head the metals and mining team, according to a source.
James Chapman, who headed LehmanÆs power team, moved to Merrill Lynch to assume a similar role as head of Asia power investment banking a week after Nomura took over the business, taking five other members of his team with him. And a week later, Nomura lost a team of four natural resources bankers led by Jorge Martinez to UBS.
Lehman had about 3,000 staff in Asia-Pacific at the time of the takeover, including 1,300 in Tokyo, and of those about 2,600 have chosen to stay with Nomura. About half of the departures have come in Japan where there was a significant overlap between the Nomura and Lehman businesses, including a mass-defection of about 100 people from the equity sales and research divisions who were all hired by Barclays Capital.
Chishty referred to the Lehman bankers who have joined Nomura as a ôfirst class teamö, but a source said that he is expected to continue to build this team.
While Nomura may be a largely untested name within investment banking in the region, the expertise retained in the former Lehman Brothers franchise means that it will be hitting the ground running. And contrary to many of its major rivals, which are currently focused on cutting costs, both through the reduction of headcount and by downsizing or eliminating certain parts of their businesses, Nomura is in expansion mode. Despite a bigger-than-expected group net loss of Ñ72.9 billion ($785.6 million) for its fiscal second quarter (July-September), following a Ñ76.6 billion loss in the first quarter, it also has capital left to pursue the businesses that are likely to remain reasonably active through the financial crisis, such as mergers and acquisitions, restructurings and private products and placements. And small- and mid-cap companies are still quite desperate for capital, bankers say.
This is no doubt attractive for a banker at ChishtyÆs level û he became a managing director in 2004 û who will be able to play a bigger role in shaping the strategy at a smaller firm like Nomura than at a gigantic franchise like Citi. Similarly, he would also be able to focus on building relationships with clients as opposed to spending a lot of his time on internal issues, as he himself alluded to in his client note.
At Citi, Chishty has been involved in several of the regionÆs landmark M&A transactions, including Korean chaebol DoosanÆs $4.9 billion acquisition of Ingersoll Rand's Bobcat division in 2007. This was the largest outbound M&A deal from Korea ever and widely credited with encouraging a number of Korean companies to start thinking more actively about moving beyond their home boundaries.
Chishty will join Nomura in January after the customary gardening leave and will report to Glenn Schiffman, who was head of investment banking for Asia-Pacific at Lehman. Nomura hasnÆt confirmed whether senior staff such as Schiffman will retain their former titles. Given the lack of overlap within areas like capital markets and investment banking, it seems unlikely that Nomura will replace the top Lehman management within each division with its own people, however. On the contrary, the Japanese firm seems keen to make use of the talent it has acquired and late last week appointed LehmanÆs Sigurbjorn Thorkelsson as head of equity for Asia-Pacific including Japan, replacing Tomoyuki Teraguchi, who was head of equities for Asia ex-Japan at Nomura. Teraguchi will take up a new role as head of transition for Asia equities and will focus on driving the integration of the Lehman franchise into its own business.
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