CIBC Pushes Into German Market with Leveraged Hire

CIBC World Markets is on the move again in the European market, with the recent hire of Tim Zundel as executive director of leveraged finance. Zundel begins work Nov. 1.

Zundel, who moves from Deutsche Banc. Alex Brown's Frankfurt office as a director, will bring his expertise to CIBC to focus on German leveraged transactions.

That will be the next hot spot of European capital markets, said James Courtenay, managing director and head of the bank's European high yield arm. And the talent pool for German leveraged pros is fairly shallow.

"There really are very few good people [in that specialty]," Courtenay said.

Zundel will report to Christopher Rist, managing director and head of European acquisition finance and LBO sponsor coverage, who is himself a recent hire, having joined CIBC in April. Rist, in turn, reports to Courtenay.

CIBC is expecting Germany to see significant growth in leveraged deals stemming from various trends, Courtenay said.

First, there are a number major German conglomerates that are selling off non-core aspects of their businesses to focus on core assets and, ultimately, to concentrate on return on capital, Courtenay said. And many of those sales deals will involve a leveraged transaction.

Another underlying reason for the market's growth is the number of family businesses that were founded in the years immediately following World War II that are now facing succession issues. Many of them are expected to sell to outside buyers when the second generation decides it does not want to follow in Dad's footsteps.

Institutional investors have viewed Germany as an exciting potential market for the past several months on two fronts.

The telecom market, the second-biggest in the world after the U.S., is expected to see a boon from recent deregulation that should spawn a number of re-sellers that need capital requirements - similar to the U.S. market over the past three years.

And unlike the U.K. high yield market, which has been totally dominated by telecom, the industrial sector is drawing attention as well.

With an economy bigger than that of the U.K., it has a potentially bigger capital market and so far, it is not nearly as well funded. Consequently, there is considerable room for growth.

In 1996 and 1997, there was $6 billion spent in LBO investments in Germany, while in the U.K., there was $30 billion spent, Courtenay said.

CIBC has been gearing up for the European market in a big way; in fact, its goal is to be one of the top three high yield underwriters overseas. With a current stable of 25 pros in London, the bank is in the final stages of doubling its presence there. (HYR 03/15/99).

Rist's hiring came on the heels of Nicholas Guyard, who joined the firm to work with mid-sized banks in Europe to market CIBC's services to their existing clients.

And in May, Frank Ferrantelli joined the team as head the research effort. Ferrantelli, who came from the former BT Alex. Brown's London office, specializes in the telecom and media sectors.