Morning Coffee: The elite French punk bankers everyone wants to hire. McKinsey consultants are no longer literally on the beach

Once upon a time, international bankers were major power players.  They could fly into capital cities across the developing world (and New York City) and tell the democratically elected authorities what to do.  They smoked big cigars, ate lavish dinners, and generally spoke French to other graduates of the École des Sciences Politiques when they talked shop.  These were the years of the “sovereign debt crisis”.

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By the 1990s, “the developing world” had changed its name to “emerging markets”, the Cold War was over and fashions had changed somewhat.  But governments still got into economic trouble, and consequently they still needed to hire bankers in the rarified field of “sovereign debt restructuring advisory”, a specialized area of banking that combines debt capital markets, law and a lot of political savvy.  It also required a great deal of diplomacy and relationship-building, as there’s no equivalent of Chapter 11 bankruptcy for countries, and so everything tended to have to be done through ad hoc committees, with plenty of potential for “creditor on creditor violence”.

This has historically been a niche business, albeit a profitable one, with Lazard holding dominant market share, Rothschild a creditable second place and everyone else basically not bothering too much with trying to get involved.  But now there’s some new competition.

When Centerview hired Matthieu Pigasse, the French veteran in the field, from Lazard in 2020, they got someone who not only has an encyclopedic knowledge of punk rock, a blue chip French client list, a strong media profile and allegedly a bit of a temper.  Like most of the French veterans in the field, Bloomberg notes that Pigasse is at home in both Paris and New York.  He's now building a sovereign advisory team of his own. So far he’s taken two others from Lazard and built up an 11-strong sovereign advisory team for Centerview.

This has brought a bit of competition into the industry; Centerview have already won some mandates in Africa.  They appear to be positioning themselves close to the governments of countries like Ecuador which, for a variety of economic, political and historical reasons, tend to be reliable repeat customers of the sovereign restructuring bankers.  Pigasse says that “we want to be the largest player” in the industry, “and we believe we can and we will”.

Houlihan Loukey have also decided to get into this space; six months ago they hired David-Alexandre Gadmer who graduated from a different elite French university but who was also an MD and partner at Lazard.  There’s also a growing number of boutique advisory firms, and although Moelis have apparently considered the opportunity and passed, it’s not unlikely that more banks will decide to push into sovereign advisory.

So it’s a hot hiring market, in a sense.  But probably not one worth making a pivot too if you fancy a change from a dead bonus pool like equity capital markets.  Although you don’t literally need to be French and a former Lazard alumni, you probably do need to have put in the hours honing your diplomatic contact book and specialist knowledge.  Lazard itself is now building up a more general geopolitical advisory practice – that might be a better place to aim for.

Elsewhere, McKinsey & Co consultants are really not happy at the prospect of being told to return to the office.  Both for the obvious reason – some of them have made lifestyle adaptations to remote working – and because when you’re a management consultant, the McKinsey office is the last place you want to be.  You want to be at the clients’ offices.

In fact, consultants historically used the slang term “on the beach” to describe people who weren’t staffed on an assignment and were consequently hanging round the office all day.  Being spared this minor humiliation was a significant intangible benefit to remote working.  According to senior partner Eric Kutcher, “Our approach will balance the best of in-person apprenticeship and connectivity with what we have learned over the past few years”, but it seems like it’s more likely to decisively disprove another old saying that “misery loves company”.

Meanwhile …

Although private equity firms themselves have been talking down the outlook, JPMorgan’s head of Americas capital markets, Keith Canton, is describing the IPO market for “sponsor-backed assets” as “very open”, citing four deals ready to price in the next couple of weeks. (Bloomberg)

Gurbir Grewal, the SEC’s director of enforcement, has announced he’s stepping down.  Given his role in doggedly pursuing fines against Wall Street firms for record-keeping breaches, it would be pretty funny (but spectacularly unwise) to send him a congratulatory text message from your work phone. (WSJ)

The trouble with being a small firm is that a single bad deal can knock you over.   In a longread profile of Bryant Riley and his eponymous investment bank, we see a story of a company that could have become a serious player in mid-market advisory, but which made a wrong call, got investigated by the regulators and is now fighting for its life. (LA Times)

Incredibly expensive Zegna sneakers! Tennis tickets! Personal house tidiers!  But apparently not Patagonia fleece vests any more, since Steve Cohen retired.  These are some of the current on-trend status symbols to conspicuously consume if you want your colleagues to think you did well in this year’s bonus round. (Business Insider)

The Hong Kong equities market has had such a long run of bad luck that brokers were hardly able to remember what good times looked like. But some very sharp market moves over the last two days left them scrambling to keep up and cancelling holidays to deal with the flood of orders and account openings. (Bloomberg)

Gen Z economist Kyla Scanlon doesn’t like being called an “influencer”, but since she makes TikTok videos, has a Substack and does sponsored content for crypto firms and coined the word “vibecession”, it’s hard to say what else she might be earning six figures from. (WSJ)

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