By Joseph A. Giannone
NEW YORK (Reuters) - Former top UBS (UBSN.CH)AG investment banker Jeffrey McDermott and several other Wall Street veterans have launched a boutique advisory firm focused on alternative energy and "cleantech" companies.
The formation of Greentech Capital Advisors LLC represents two of the biggest trends in financial services these days. The New York firm becomes the latest in a legion of new niche firms taking advantage of the Wall Street shakeout and training its sights on fast-growing sectors of the economy.
McDermott told Reuters much of the credit goes to his 14- year-old-son, Dylan, who expressed an interest in following his father into investment banking. As McDermott described what he thought would be an even better opportunity for his son -- renewable energy and earth-friendly technologies -- they agreed he had described a pretty good business idea.
"I told him climate change is for real, that we'll use energy differently, that there is more awareness of the environment," McDermott recalled. "I decided I should look into this myself."
Since that session more than a year ago, McDermott has developed a business plan. This year he began recruiting the first partners for what is for now a 13-person firm.
McDermott, who started his banking career 25 years ago, was one of three global heads of UBS investment banking when he quit early in 2007. In July that year he joined a start-up private equity fund with turnaround expert Michael Heisley that would invest in distressed industrial companies.
The new firm, announced during a period of record M&A activity but rising default rates, intended to snap up debt selling at distressed prices. But the credit crunch took hold soon after and so the business was never launched.
McDermott expects Greentech can thrive by bringing together people typically divided at other banks, though coordinating talent from different teams and divisions could be difficult.
And though every bank has beefed up coverage of the dynamic green corner of the economy, McDermott said the playing field is fairly uncrowded.
"This is a very new sector. There is no (famed banker) Frank Quattrone, no dominant figures. And as firms retrench, these new sectors get less focus and attention," he said.
McDermott, who advised large industrial companies as a banker, sees the alternative energy and clean tech space as fertile ground for consolidation and expansion. The industry is also still in its early stages, with most firms having market values of less than $100 million.
"Over the next several years, there will be a lot of capital raising and a lot of M&A," he said.
Joining McDermott are Robert Schultz, former chief operating officer at Morgan Stanley's Morgan Stanley Fund Services, who will serve as Greentech's COO. Timothy Vincent, who leads the firm's project finance business, covered infrastructure clients for Goldman Sachs Group Inc and was formerly joint head of North America project finance for BNP Paribas.
Also joining are Michael Molnar from Goldman, lead equity research analyst on the U.S. alternative energy and coal sectors, and Craig Wellen, a veteran power and utility sector banker most recently working at Citigroup.
Andrew de Pass, founder of Citi's Sustainable Development Investments business, joined Greentech to build a private equity investing business.
(Editing by Gerald E. McCormick)
