* Firm succumbs to weak markets, management squabbles
* Founder quit six weeks ago
* About 40 analysts, traders and salespeople affected
By Jed Horowitz
NEW YORK, July 12 (Reuters) – Pritchard Capital Partners, a
small investment bank specializing in the energy industry, has
folded due to a shortage of capital and conflicts between the
firm’s founders and stockholders.
The Louisiana-based company, which made about 65 percent of
its revenue from trading energy stocks and 35 percent from
raising capital for small to mid-sized oil-and-gas firms, shrunk
from more than 60 employees at its peak to about 20 when it
closed its doors at the end of June, according to Arthur
Pacheco, a partner at Petrous Inc., an Alberta, Canada group
that invested more than $3 million in Pritchard.
“Energy fell out of favor this year, equities continues to
be a terrible business and we had management issues,” said
Pacheco, a former equity sales and trading executive at Bear
Stearns Cos. and Cantor Fitzgerald. “If you’re not really well
capitalized you’re going to have problems getting through those
dry spells.”
The collapse of Pritchard, which generated about $12 million
of revenue and lost about $2 million in 2012, points to
continuing problems for large and small Wall Street firms that
depend on stock-trading commissions from hedge funds and other
institutional investors.
Trading commissions have slipped from about 15 cents a share
in the 1970s to less than a penny a share today over electronic
systems, and firms have been spending heavily on research,
trade-cost analyses and other services to differentiate
themselves from competitors.
At least thee other equity firms, Madison William and Co.,
Ticonderoga Securities and WJB Capital Group, closed since
December and others such as Gleacher & Co., Nomura Securities’
Instinet and the former Rodman & Renshaw Capital Group have
retrenched from equities.
Thomas Pritchard, who opened his eponymous boutique bank in
2000, left about six weeks ago with partner Kenneth Morris to
create an energy banking team at Imperial Capital, a Los
Angeles-based investment bank with a specialty in high-yield
debt trading.
“We were subject to the peaks and valleys of the business,
just like anyone else,” he said by phone from the sidelines of
a lacrosse game on Thursday. “Since 2008 things have been rough,
and the investment group didn’t want to support it anymore.”
Pritchard and his backers, who included a Texas oilman who
invested more than $3 million in the firm and a Kuwaiti
investor, pointed fingers at each other for failing to trim
expenses. Some insiders said Pritchard was paying himself too
much, while Pritchard said his board didn’t want to fire some
expensive salesmen and traders from big Wall Street firms who
wanted to work with larger companies.
The firm, which had seven offices throughout the U.S.,
cleared trades through Pritchard’s former employer Jefferies &
Co. Its analysts, who covered more than 100 oil and gas
production, oilfield services and exploration companies,
included William Conroy, Jeff Campbell and Stephen Berman.
(Reporting By Jed Horowitz; Editing by David Gregorio)