Greenhill shares soar first day following IPO

Oakland Tribune, May 7, 2004 by Brett Cole, Bloomberg News

Robert Greenhill's stock is up. Way up.

Shares of Greenhill & Co., the investment bank and asset management company that raised $87.5 million in an initial public offering Wednesday, rose as much as 16 percent on the first day of trading. The stock rose $2 to $19.50 at 12:58 p.m. in New York Stock Exchange composite trading after earlier reaching $20.35.

More than 2.7 million shares traded as investors clamored to buy into a company founded in 1996 by a pioneer who led Morgan Stanley into the merger advisory business and who has gained a reputation as one of the industry's top investment bankers. Greenhill last year advised on 20 transactions worth $15.2 billion including hair-care products maker Wella AG's 6.3 billion euro ($7.6 billion) sale to Procter & Gamble Co.

"Would I like to invest with Bob Greenhill? Damn right I would," said Brad Hintz, the Sanford Bernstein & Co. analyst who worked with Greenhill at Morgan Stanley. "This man has a green thumb. Everything he touches turns to money." Hintz was Morgan Stanley's treasurer.

Greenhill and members of his family own 26 percent of the New York- based firm. That stake is now worth $136.5 million based on the company's market value of $525 million and the IPO price of $17.50. Greenhill & Co. Co-Presidents Scott Bok and Simon Borrows each have stakes worth $38.3 million based on their 7.3 percent shareholdings.

Greenhill, 67, began his Wall Street career at Morgan Stanley in 1962, joining the firm the same year as his fellow Harvard Business School classmate Richard Fisher.

Greenhill left the securities firm in 1993 to become chief executive of Smith Barney. Three years later, he started his own investment bank.

Among the risks for investors in the company is how long Greenhill intends to remain at the helm. He turns 68 next month. Greenhill will be able to sell his stake of 7.9 million shares two years after the IPO, Barron's reported.

Greenhill & Co. also said in its Securities and Exchange Commission filing that it advises a "limited number of clients" that account for most of its revenue. It said losing one client or transaction could cause a "significant" impact on its operations. Greenhill declined to comment for this article through spokesman Jeffrey Taufield of Kekst & Co.

Frederick Whittemore, an advisory director at Morgan Stanley who voted for Greenhill to become a partner at the firm, said investors shouldn't worry about Greenhill's future plans.

"I don't see him retiring. I see him working another five to 10 years," said Whittemore. "He wants to prove his firm works. He's one of the smartest and most aggressively talented bankers in the last 20 to 30 years."

Greenhill & Co., with 107 employees, ranks 39th this year with six merger transactions worth $2.94 billion, Bloomberg data shows.

Last year, the company ranked No. 22 in global mergers, higher than Mizuho Financial Group Inc., Japan's biggest bank by assets, and Wachovia Corp., the fourth-biggest U.S. bank. Greenhill advised Bethlehem Steel Corp. on its $1.6 billion sale to Wilbur Ross's International Steel Group Inc.

In 2003, Greenhill & Co. had a profit of $45.4 million on revenue of $126.7 million. More than 95 percent of the company's revenue came from financial advisory work.

Greenhill was paid $18.9 million last year.