Morning Coffee: Andrea Orcel says 25% of M&A bankers won't make it. The man who declined Steve Schwarzman’s can’t-refuse job offer
Andrea Orcel, the president of the investment banking division at UBS, said that one in every four M&A advisory investment bankers doesn't work out and that he prefers to hire them through word-of-mouth referrals.
"It's not about the next quarter. It is about the next five to 10 years. It is by hiring 20, 30, 40 of the right bankers each year. When you hire that number, normally 25% don't work out; the other ones do,” he said.
“You need to attract the right people, give them time to embed with the culture and the place, give them time with the client to get them to agree they can deliver for them, and then get them to deliver. That takes time. It's not something you can do by saying ‘I'm hiring 300 people.’ It's one at a time. It is slow but critical, because it impacts so many of the other businesses," he added
In 4Q 2016, UBS cut 4% of headcount – 193 people – from the IBD, but Orcel is now looking to add between 20 and 40 bankers annually, according to Business Insider.
Orcel said that UBS has been improving its position in equities, claiming to “have more distribution than anyone else” and achieving similar success in research.
“As you rebuild your talent, and you spend the time with the clients, you build market share,” he said. “The US is a credit market, and we're doing well in credit, but in terms of weight, it's very small. We can increase, but it's not by much.”
Separately, who turns down a lucrative job offer from Steve Schwarzman? The former head of General Electric’s infrastructure business, Bill Woodburn, that’s who.
Impressed by the soft-sell recruitment approach of two former Credit Suisse bankers – the three talked about raising kids and collecting classic cars over dinner – the self-proclaimed “square-headed engineer” decided to decline the Blackstone offer, according to Bloomberg.
Instead, he became co-founder of private equity firm Global Infrastructure Partners with those two ex-CS bankers, Adebayo Ogunlesi and Matt Harris. Despite the fact that none of the three had any prior PE experience, he has not lived to regret that decision.
GIP’s returns are in the top quartile of private equity funds – for example, GIP II has delivered an average annual return of 24.2%. Even though competition in the infrastructure space is ramping up – with PE giants such as KKR, Blackstone and Brookfield Asset Management stepping into the fray – the co-founders have done well for themselves and appear to be on an upward trajectory.
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