WR Lazard manages $1 billion bond issue - for New York City's water agency

Black Enterprise, August, 1993 by Wendy Pelle

The nation's third-largest black-owned investment banking firm, WR Lazard & Co., recently landed the biggest account in its eight-year history. Along with Smith Barney and PaineWebber, WR Lazard will senior manage the New York City Municipal Water Finance Authority's $1 billion revenue bond issue. The deal, affirming the New York-based firm's position as a major investment banking house, coincidentally came one week after its March reorganization.

In March, WR Lazard established a four-member executive committee to structure the firm to be more competitive in its investment banking, asset management, financial advisory and sales and trading businesses. Along with developing and implementing key marketing strategies over the next year, the committee will identify service and operational improvements, and new technologies and products.

"We will focus our resources and talent on developing customized solutions for select clients - not packaged products for the masses," says CEO Wardell R. Lazard. Fellow committee members will include Kenneth E. Glover, WR Lazard vice chairman and chief administrative officer; Thomas M. Mead, president of WR Lazard, Laidlaw and Mead, the company's broker dealer subsidiary; and Melvin Eubanks, vice chairman of WR Lazard, Laidlaw and Mead.

Although the investment firm's new growth strategy looks promising to the industry, the reorganization was not a factor in its selection as a senior manager of the New York City bond issue. WR Lazard already ranked 12th among all managers of new municipal bond issues during the first quarter of 1993.

Mark Page, New York City Municipal Water Finance Authority executive director, notes, "We have respect for their talent as financial advisers and we expect them to do the job." WR Lazard was co-financial adviser with First Boston for NYC's Municipal Water Finance Authority, then became the city's sole financial adviser last December.

The authority finances the capital needs for the water and sewer systems of New York City. Page says the authority expects to issue $350 million in bonds in fiscal year 1994 and $550 million in fiscal year 1995. "The authority may issue even more bonds if interest rates are favorable to refunding," he adds.

Money raised from the bond issue will be used for reconstruction and to build water and sewer infrastructure plants. Although it is difficult to calculate the potential profit for each of the three senior management firms, Page says, "They are expected to earn the same amount over time." Eight other investment banking firms, including Goldman Sachs and Bear Stearns, will co-manage the offering with them.

Vice chairman Glover believes that WR Lazard has found a good niche that will pay off in the future. "Being selected for this offering shows that we have developed an expertise in general obligation and infrastructure financing," he says.