Bruce Wasserstein, the veteran banker who runs Lazard, is set this week to announce how the spoils of an initial public offering of the independent investment bank would be divided in an attempt to persuade partners to support a flotation as early as next year.
Mr Wasserstein, who has been pressing for an initial public offering for months, is thought to have secured agreements from rival banks interested in underwriting a possible Lazard IPO not to poach its staff for at least two years. He unveiled some details of the proposed IPO at a board meeting in New York on Friday. The board is thought to have discussed a possible valuation of more than $3bn (£1.7bn) and a timetable of filing documents with the Securities and Exchange Commission next month, ahead of floating next year.
For the plan to succeed, Mr Wasserstein must secure the backing of Michel David-Weill, the chairman of Lazard, as well as its Paris-based non-working partners. M. David-Weill is chairman of Eurazeo, a French investing group which holds a 16 per cent stake in Lazard.
This camp in effect controls six of the 11 seats on Lazard's board and has fallen out with Mr Wasserstein over the way he has run the 156-year-old investment bank since joining in 2002.
M. David-Weill has disputed Mr Wasserstein's upbeat assessment about Lazard's profits, asserting that the bank incurred a loss of $150m in 2003. In contrast, Mr Wasserstein calculated Lazard had made a $250m gain.
Mr Wasserstein is expected to lay out a plan to divide the windfall from an IPO in an uneven way among partners. He will also give details of the likely lock-ins which would be imposed on Lazard employees to discourage them from cashing in their shares and options and leaving the bank immediately after the IPO.
There is concern that Mr Wasserstein himself, as Lazard's second-biggest shareholder after M. David-Weill, would retain a particularly powerful role. Such a move would not be welcomed by many Lazard partners, who have supported his attempts to rationalise the bank's arcane structure after what was seen as a particularly undemocratic reign by M. David-Weill.
Lazard would not comment on the IPO. There are still many details that the various parties involved have to hammer out, which could scupper the plan. Among the issues that are yet to be settled is whether M. David-Weill, whose family has been involved with Lazard for more than 150 years, would be paid with proceeds from an IPO or insist on a buyout before a share sale. There could also be a disagreement about the price. M. David-Weill is expected to be offered a deal to buy out his stake at a premium to the IPO price, but it might not reflect his view that Lazard is worth close to $4bn.
If Lazard were to press ahead with a public offering, it would be the largest investment banking partnership to go public since Goldman Sachs' IPO in 1999, which raised $3.7bn. Earlier this year, Greenhill & Company, an investment boutique, became a public company, raising $87m. It now has a market value of about $735m.Reuse content