Jefferies Group Inc. (JEF:US), the New York brokerage that specializes in mid-sized companies, agreed to buy Depfa First Albany Securities LLC to expand into municipal finance.
The purchase is expected to close in the first quarter, Jefferies said in a statement today. Terms weren’t disclosed.
Depfa First Albany, a unit of Dublin-based Depfa Bank Plc, has more than 70 employees and helped to sell more than $235 billion in financings during the past five years. Based in New York City, Depfa First Albany has 10 U.S. public finance offices.
“This acquisition offers Jefferies a unique opportunity to enter the municipal market in a comprehensive and high-quality way, with a cohesive team of experts,” Jefferies Chief Executive Officer Richard Handler said in the statement.
Kenneth Gibbs, chief executive officer of Depfa First Albany, will become president of the municipal securities division of Jefferies, which will conduct business as Jefferies First Albany Securities. The acquisition is Jefferies first since 2007 when it purchased Putnam Lovell and LongAcre Partners.
Depfa First Albany was the fifth-largest financial adviser to U.S. states and municipalities selling transportation bonds in 2008, with $2.2 billion in deals, according to data compiled by Thomson Reuters. New York City’s Municipal Water Finance Authority tapped the firm to be managing underwriter of a $375 million offering next week.
Depfa Bank, owned by Munich-based Hypo Real Estate Holdings AG, agreed to buy First Albany’s municipal capital-markets business for $12 million in March 2007. The bank also agreed to buy First Albany’s municipal bond inventory, valued at $150 million to $200 million, at the time.
Hypo Real Estate is selling the municipal bond unit after it was forced to seek a bailout when Depfa Bank was unable to get short-term funding in September as credit markets seized up. Hypo Real Estate required a 50 billion-euro lifeline on Oct. 5 in Germany’s biggest bailout since World War II when Depfa failed to get short-term funding.
Jefferies fell 19 cents, or 1.5 percent, to $12.33 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have dropped 35 percent over the past year.
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