Houlihan Lokey, the Los Angeles-based investment bank, is opening an office in Sydney just as Australian markets deal with falling commodity prices and growing economic uncertainty.
The bank, part owned by Japanese financial group Orix, has appointed industry veterans Nicholas Rowe, Oscar Ludwigson and David Tozer to lead a team of 10 people as it seeks a gradual expansion in the country.
“A [bank] like Houlihan speaks to us because it is client-focused rather than product-focused,” Ludwigson told FinanceAsia. “It’s almost a case of going back to the future and we think there will be a resurgence in institutions using this model.”
Houlihan will initially advise clients on corporate finance and restructuring matters but intends to eventually offer clients its full suite of products and services across corporate finance, financial restructuring, financial advisory services and strategic consulting.
Ludwigson and Rowe have worked together for more than 12 years and appear in no rush. “The market will decide how fast and which products we will introduce,” Ludwigson said.
Houlihan is setting up its Sydney office amid an uncertain period for Australia, which is attempting to lessen its reliance on commodities following the end of an extended resources boom.
ANZ in a research note said the drop in commodity prices would wipe about 1 percentage point off Australia's income growth in 2015, which in turn would cut about 0.3 percentage points from GDP growth.
“The resources sector has suffered in terms of valuations and so there is work to be done there but there are opportunities to be had,” Rowe told FinanceAsia. “There is no perfect timing. You would rather open shop in distressed times than in a bull market.”
The Australian stock market is up more than 17% since January 2010 and investment banking revenues have been steady, increasing from $2.01 billion in 2010 to $2.03 billion in 2014, according to Dealogic data.
Both sides of the coin should provide deal potential with corporate restructurings possible and also capital markets activity, although the market is somewhat crowded.
Houlihan will compete with other independent investment banks such as Greenhill, Lazard and Moelis, along with global banks such as Goldman Sachs, UBS and Macquarie.
Rowe, who started as managing director this week, was previously country head for CIMB Australia and has more than 26-years experience in investment banking and corporate restructurings.
He has also worked for ABN Amro, Credit Suisse First Boston and the Swiss Banking Corporation.
Ludwigson began his role as managing director in late December and has more than 16 years experience in investment banking.
Prior to joining Houlihan, he was head of investment banking for CIMB in Australia, advising on various transactions including Seek Limited on its US$582 million purchase of JobStreet online employment businesses in 2014.
Ludwigson has also worked for Royal Bank of Scotland and ABN Amro in Sydney and London, Credit Suisse First Boston in Melbourne and Citi in New York and Houston.
Tozer started his role as director at the end of December and has nine years investment banking experience, including a spell with ABN Amro in London.
“The management team we have assembled in Australia has decades of experience in both traditional corporate finance advisory as well as in restructuring and other special situations,” Scott Adelson, Houlihan co-president, said in a statement.
Lehman and Enron
Houlihan has offices in Beijing, Hong Kong and Tokyo but is primarily based in the US, where it specialises in M&A advisory on deals below $3 billion and in corporate restructurings.
It has advised on some of the world’s biggest corporate bankruptcies, including that of Lehman Brothers, Enron, WorldCom and General Motors.
The group also has offices across Europe and the Australian market could produce some intriguing deals as the fall in commodity prices works its way through markets.
“The Australian market is taking a breather. It’s an interesting time,” Ludwigson said.