Piper Jaffray Exits Euro Stocks

Europe's biotechs have long suffered from a lack of decent analyst coverage; now there's even less. Piper Jaffray's six-strong European-based analyst team (led by Sam Fazeli) got the chop last night, victims of a 'restructuring of European operations' made public today by the Minnesota-based investment bank and securities house.

The bank says it wants to instead focus on 'two areas of strength: distributing US and Asian securities to European institutional investors' and providing M&A advice to European-based clients. In other words, its European-focused investment research operation--across health care (biotech/medtech), IT, software and consumer--wasn't driving enough lucrative deals to justify its existence; indeed it was dragging the overall Euro operation into the red. "Our goal with this change is to return our European operation to profitability," declared chairman and CEO Andrew Duff in the release.

Perhaps the news isn't so much of a surprise: whatever one thinks about the quality of European stocks (no worse, given careful selection, than anywhere else, we'd argue), PJ never really made the full commitment to the region that other banks like Jefferies International have, and as such,"it was a question of either investing, or chopping," says one insider. "We only covered three sectors; you really need five or six to make it worthwhile," the source continues. PJ's US coverage universe is far wider.

No doubt Fazeli and his colleagues will find pastures new, if they haven't already. The companies they covered, though--especially smaller fry like Germany's MediGene, or Ark, Antisoma or Vernalis in the UK--won't likely see many fresh analysts knocking at their doors. Not the traditional kind, anyway, that live within investment banks--too many questions are being posed more widely within the financial sector about their internal ROI.

Life's not much rosier for Europe's private biotechs, either: we hear that VCs including Atlas Venture and Alta Partners have also decided to throw in the towel in Europe. Roll on government grants and corporate VC.

image by flickr user billselak used under a creative commons license.

Is an I-Banker’s Help Really Worth That Much?

We hear plenty of investment banker abuse.

“They always shop the same acquisition candidates.” “They promise you an IPO price to get your business – and then keep their trading clients happy by cutting it in half when the deal is about to close and you can’t back out.” “They take too long and charge too much for raising private money – if they ever raise it.”

So, when our advertising colleagues on the other side of our Chinese wall here at FDC/Windhover did a poll on the subject, we were surprised to find out that i-bankers were rather more liked than we expected. Between a quarter and a third of our respondents – 109 med device, biotech and pharma biz dev execs, and a smattering of VCs (along with a few consultants) – thought that when it came to bringing them M&A opportunities, structuring deals or raising money, i-bankers were either “very helpful” or “invaluable”. Only in “raising money” did an i-banker’s negatives outweigh their positives: 47% thought they were “not at all helpful”. (click chart to view larger)
Oddly enough, ibanks got best marks for something that, theoretically, our post-Spitzer ibankers are supposed to have nothing to do with. Our respondents love equity research – 55% found it very helpful or invaluable. I-bankers can no longer promise coverage for their clients – but those handy reports do make very nice leave-behinds on sales calls.


Image from flickr user Turkinator used under a creative commons license.