Cantor Fitzgerald, a private investment bank growing by leaps and bounds, for the first time said it is considering going public as it accelerates expansion plans in a world without rivals such as Bear Stearns and Lehman Brothers.
"Could Cantor Fitzgerald become a public company? Sure," Chief Executive Howard Lutnick said at the Reuters Global Finance Summit in New York on Monday.
"You know we're not wrestling with (that option) today because we just raised $500 million. The next step will be, what's our next move? We'll have lots of opportunities. Going public is just one of them," he said.
Cantor is a closely held partnership known as one of the world's largest brokers of bonds between securities dealers. It survived the deaths of 658 of the firm's 960 New York employees in the Sept. 11, 2001, attack on the World Trade Center.
Under Lutnick, Cantor has thrived, expanding into institutional bond trading, building up equities and investing in a number of new businesses.
The firm, now based on the lower floors of a nondescript building in midtown Manhattan, recently sold $500 million of debt in a private placement to give it $1.5 billion of capital.
Lutnick said Cantor does not need to raise new money at the moment, but acknowledged its hiring and expansion ambitions are now greater than ever.
That, he said, could lead to an initial public offering in the future.
"I think it's a matter of opportunity, of use of capital, of where the debt capital markets are," he said.
Lutnick previously resisted talk of taking the partnership public and inviting the scrutiny that comes with listed stock.
Cantor last year merged its listed Internet bond broker affiliate, eSpeed Inc, with interdealer bond brokerage BGC Partners, which does business now as BGC.
SUPER-EXPANSION
In the meantime, Cantor is getting a lot bigger. The 3,800-employee firm could be considered the country's largest investment bank, Lutnick said, after Goldman Sachs and Morgan Stanley became bank holding companies last fall.
He said he expects to add about 40 more bankers and traders this year, and another 100 in the 2010 first quarter -- just for starters.
"It would not surprise me if we hire 200 to 400 professionals, and of course all the support staff that goes with them, annually for as far as I can see going forward," Lutnick said.
Specifically, he said he wanted to bulk up in investment banking and have 40 to 50 people in real estate loan workouts, up from 16 or 17 now. The firm is also building up prime brokerage services for mid-sized hedge funds, fulfilling a long-time objective.
Cantor also is growing "across the board" in fixed income and in equities trading and sales. Lutnick also envisions pooling client money and then serving as an agent to make commercial real estate loans.
For years, Cantor was way down the list of Wall Street firms, far behind industry giants like Goldman Sachs and Morgan Stanley.
Since the turmoil of 2008, the field is less crowded and balance sheets are no longer deployed so willingly by banks eager to win business. This benefits a smaller firm like Cantor.
"These opportunities are available to us because the concept of competing for credit is over," he said. "We are the most successful investment bank in America now. It's a different world now."
On the other end of the spectrum, Lutnick predicted a wave of small and start-up trading firms born from the wreckage of last year's financial crisis would disappear just as quickly.
He said the number of resumes coming into Cantor has tripled in the past six weeks compared with earlier this year, with many job-seekers eager to leave smaller firms that do not have the same cache as a big bank.
"I think you're going to see hundreds of these new broker-dealers die. The people who are really good are going to leave the places that do not have scale, that do not have capital and that do not have the capacity to commit," he said.
(Reporting by Joseph A. Giannone; editing by John Wallace)
