Hedge fund manager Citadel Investment Group Inc. is entering the investment banking business, hiring three former Merrill Lynch executives to spearhead the effort.
Todd Kaplan, who joined Citadel in March, will run the unit, reporting to Citadel Securities CEO Rohit DSouza. Reporting to Mr. Kaplan will be Brian Maier, head of industry groups, and Carl Mayer, head of leveraged finance. Citadel announced the appointments in a statement on May 1.
Citadels push into investment banking marks a fundamental shift. The company has made inroads into non-hedge fund businesses, including its highly successful options market-making unit, but this expansion marks its first major foray into a non-trading business.
The move appears calculated to take advantage of massive turmoil on Wall Street last year, when three of the nations top five investment banks (Bear Stearns, Lehman Brothers and Merrill Lynch) collapsed or were acquired, and the remaining two (Goldman Sachs and Morgan Stanley) remade themselves into commercial banks. Boutique investment banks are undergoing something of a renaissance, and Citadel is hoping to catch the trend.
I look forward to building our investment banking operation as we provide innovative products and services to a broad group of clients in an increasingly complex environment, Mr. Kaplan said in the statement.
Ann Saphir is a reporter at Crain's Chicago Business, a sister publication of Pensions & Investments