WHEN Jeffrey A. McDermott left the Swiss financial giant UBS two years ago, he was one of three co-heads of investment banking, overseeing deal makers across a range of industries.
Now, Mr. McDermott, 50, leads Greentech Capital Advisors, a boutique investment bank he founded that is a fraction of UBS’s size, specializes in clean technology and has one $16.3 million deal under its belt.
Yet Mr. McDermott said he was confident he had made the right decision to leave the world of bulge-bracket firms.
Greentech is among several new start-up investment banks filling the vacuum created by the collapse and contraction of many major financial firms. As the credit crisis engulfed Lehman Brothers, Merrill Lynch and other major companies, many bankers found open arms at smaller shops.
Unlike other boutiques, Greentech is trying to set itself apart by being the first to focus solely on alternative-energy and clean-technology companies. Mr. McDermott acknowledged that his strategy had potential pitfalls, given the green industry’s reputation for modest booms and spectacular busts.
“We know we are early, and our greatest risk is being too early,” he said. “But we think it is ultimately going to be big.”
Setting up a boutique investment bank wasn’t Mr. McDermott’s first choice after leaving UBS. He initially joined with Michael Heisley, the billionaire who controls the Memphis Grizzlies basketball team, to set up Stony Lane Partners, a private equity firm, to invest in distressed assets. But those plans were felled by the credit squeeze.
So Mr. McDermott began researching alternative energy last summer, handing blank sheets of paper to his contacts in the field and asking them what they would like to see in a green-focused advisory shop.
By the end of the summer, Greentech had taken shape. And Mr. McDermott faced the task of persuading seasoned professionals to join his start-up, often walking away from the outsize bonuses and perquisites that come with working at a big institution. Then came the fall of Lehman Brothers, and as shockwaves reverberated throughout Wall Street, Mr. McDermott suddenly had a host of candidates with the experience and contacts his fledgling firm needed.
An early pickup was Michael J. Molnar, a former alternative-energy and coal analyst for Goldman Sachs who was laid off in November. Mr. Molnar, 35, ranked in Goldman’s top 5 percent of United States equity analysts in 2008, but he was let go, along with other equity analysts who had been covering companies in areas where business, and investor interest, were weak.
Click on the PDF link to view the full story
Share This Article