Recapitalizing Greenwich Capital team in new venture

 

The former heads of Greenwich Capital Markets have bought a controlling stake in CRT Capital Inc. with plans to build the investment sales and trading company into one of the five largest primary dealers.

Along with Ron Kripalani, former Greenwich Capital co-CEOs Ben Carpenter and Jay Levine led a buyout of Stamford-based CRT, and the company has since hired 30 sales and trading professionals, giving it 130 employees in all.

Kripalani is CEO of CRT, having previously had the same role at Countrywide Capital Markets, a subsidiary of Countrywide Financial Corp., between 2000 and 2008.

Carpenter and Levine led Greenwich Capital in 2000 when the investment strategist and parent National Westminster plc were bought out by Royal Bank of Scotland. Levine is now CEO of Horsham, Pa.-based Capmark Financial Group Inc.

RBS moved its Greenwich Capital operation this year from Greenwich to a new office building in Stamford along with units previously based in New York City.

Formerly known as Credit Research and Trading L.L.C. and founded 20 years ago, CRT focuses on high-yield and convertible securities, distressed assets and debt in emerging markets. The company plans to focus initially on mortgage- and asset-backed securities, and U.S. Treasuries, and recently hired a team of eight Treasuries analysts who previously worked for RBS Greenwich Capital.

“Starting in 1776, it took the United States 220 years to accumulate a federal deficit of $5 trillion, and over the next three years alone the deficit is projected to grow an additional $5 trillion,” Carpenter said, in a prepared statement. “As soon as the huge issuance of U.S. Treasuries needed to fund the stimulus programs subsides ”“ even more issuance will then be needed to fund the looming deficits from the inevitable surge in entitlement expenditures driven by demographics in the United States.”

Area observers have noted a mini-wave of independent financial companies started by Wall Street and hedge-fund managers who took buyouts or otherwise lost their jobs.

“Over the past two years the credit crisis has weakened every major Wall Street firm beyond everyone”™s imagination, and the ability for smaller firms to attract the industry”™s best producers and support personnel has never been better,” Carpenter said. “It is CRT”™s goal to become the employer of choice in these sales and trading businesses for top professionals who want an entrepreneurial and fun environment where they will be treated with respect and paid objectively for their contributions ”¦ This is exactly the platform that Greenwich Capital uniquely provided to its employees and clients for over 25 years and this is the platform that CRT is very quickly becoming.”

At the same time, companies are building up for the next business cycle amid uncertainty over what new rules the Obama administration and Congress may impose in an effort to ward off any future bust of the scale of the credit market collapse of the past year.

“There is a historic opportunity in these markets to provide clients with value-added sales and trading advice and execution due to the enormous amount of mortgage- and asset-backed paper outstanding and the current market dislocations that are certain to continue for many years to come,” Kripalani said.