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Jefferies third-quarter profit misses expectations as M&A sputters

Published 09/27/2023, 04:20 PM
Updated 09/28/2023, 11:07 AM
© Reuters. FILE PHOTO: People walk outside of Jefferies Financial Group offices in Manhattan, New York, U.S., December 8, 2021. REUTERS/Eduardo Munoz/File Photo

By Niket Nishant and Lananh Nguyen

(Reuters) -Jefferies Financial Group reported a smaller-than-expected third-quarter profit on Wednesday as lingering economic uncertainty kept dealmaking in check, but the firm said it was hiring more managing directors for next year.

It forecast a more "normal" investment banking environment in 2024. The biggest hit to earnings came from the asset management unit, where revenue plummeted 97% from last year, which had included results from units Jefferies has since shed.

But market conditions are beginning to improve, the bank said, bolstering the view that deals are starting to pick up pace after the Federal Reserve signaled it is nearing the end of its tightening cycle.

Investment banking revenue was $644.6 million, about 2% lower than last year but nearly 28% higher than the prior quarter.

"The markets are thawing out and beginning to warm a bit," Jefferies President Brian Friedman said in an interview.

"The market for the services we provide has pretty good demand across the board - it needs to be translated into transactions," he said, citing recent initial public offerings and a pickup in merger discussions.

Jefferies said it expects around 360 managing directors in its investment banking franchise at the beginning of 2024, up from the 299 that it started this year with.

"As long as I've been involved in running investment banking firms, the opportunity to hire and grow is best in downturns," Friedman said.

"One needs to have the fortitude and the commitment to make the moves that are available in more challenging moments."

The company has opened offices in Israel and Brazil and beefed up investment banking presence in Dubai and India, Friedman said. It also plans to expand into Canada before the end of the year.

The bank's results are often viewed as a prelude to earnings at Wall Street titans such as JPMorgan Chase (NYSE:JPM), Goldman Sachs Group (NYSE:GS) and Morgan Stanley.

Jefferies' profit slumped 74% to $51.4 million, or 22 cents per share, for the three months ended Aug. 31, compared to analysts' average estimate of 33 cents per share, according to LSEG data.

Here is a look at the new investment banking MDs in financial year 2023:

Role Executive Previous



Executive John Miller Barclays

Co-Chair of



Banking and



Chairman of Ron Eliasek Bank of

TMT Banking America

MD, tech Jon Credit

team Gegenheimer Suisse

Global Head Stas JPMorgan

of Byhovsky


IT Banking

Vice Rich Siegel Barclays



MD, Sam Jackson Barclays


Vice Mark Hudson (NYSE:HUD) Barclays





EMEA Head of Gavriel Barclays

Consumer Lambert

Retail and


Co-Head of


Energy David Guggenheim

Transition Dolezal,

Banking team Kyle Baker

and Jeff


Financial Evan Barclays

Services Rothenberg,

Group Kurt

banking Kohlmeyer

capabilities and Mike


International expansion:

Role Previous

Region Executive organization

Europe & Head of Igor De UBS

UK France Limur




Europe & Vice Sam Dean Barclays

UK Chairman of



Europe & Co-Heads, Glenn Rothschild

UK EMEA Cronin and Lazard (NYSE:LAZ),

Restructuri and David respectively

ng group Burlison

Europe & Country Andrea Credit Suisse

UK Head, Italy Donzelli

APAC Head of SEA Amrit Credit Suisse

M&A Kolluru

APAC Vice Rizal Credit Suisse

Chairman, Gozali

SEA and

Head of


APAC Co-Head of Rehan Credit Suisse

Asia IB Anwer

APAC Head of Felicity Credit Suisse

Asia ECM Chan




APAC Private Dennis HI

capital Kwan Transformatio

advisory nal Fund

Australi Vice Dominic Macquarie

a Chairman Meagher


Australi Vice Mark Morgan

a Chairman of Burmeiste Stanley

Australia r



Australi Head of Julian Gresham

a Infrastruct Babich

ure Banking

Australi Lead, ECM Mike Macquarie

a Syndicate Johnson

LATAM Lead, Alejandro JPMorgan

Brazil Guevara

© Reuters. FILE PHOTO: People walk outside of Jefferies Financial Group offices in Manhattan, New York, U.S., December 8, 2021. REUTERS/Eduardo Munoz/File Photo



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