JPMorganChase Investment Banking Targets Smaller Clients

The banking giant is launching a small-cap investment banking (SCIB) business, expanding its mid-cap investment banking (MCIB) unit, according to a Wednesday (July 8) memo provided to PYMNTS.

The new business “broadens coverage for our smaller Commercial and Specialized Industries (C&SI) clients generally valued between $100 million and $500 million,” John Richert, head of MCIB and global head of business services investment banking, said in the memo.

The SCIB effort will be headed by Michael Flynn, who joins JPMorgan from G2 Capital Advisors, where he served as managing director, according to the memo.

Joining Flynn on the SCIB team are Managing Director Arash Farin, a veteran of Centerstone Capital, Sage Group, Goldman Sachs, Blackstone and Lehman Brothers; and Executive Director Jamie Eastham, who has spent more than 15 years at JPMorgan, most recently on its strategic financing solutions team, per the memo.

“Anchored in hubs across Atlanta, Chicago, Dallas, Los Angeles and New York, the team will initially focus on diversified industries, consumer and retail, and business services,” Richert said in the memo. “SCIB will collaborate closely with Commercial Banking, the Mid-Cap Financial Sponsors Group, Transaction Development and the private bank.”

In a Wednesday report by The Wall Street Journal, Richert said the bank sees smaller-company deals as a market where its chief rivals have yet to focus their resources. The aim is to expand relationships that JPMorgan has with smaller companies in spaces like commercial banking.

“Who else right now can sell a $100 million company and in the same day take SpaceX public?” he said, per the report, which noted that JPMorgan played a role in that SpaceX’s massive initial public offering in June.

Smaller-deal activity is increasing partly because many businesses were founded by baby boomers who are planning their successions, Richert said, per the report. This will lead to a surge in sale activity.

There has also been a wave of capital moving into low-market and middle-market private-equity funds, he said, according to the report.

Meanwhile, the PYMNTS Intelligence report “The Embedded Finance Scale Factor: How Firm Size Shapes Strategy, Technology and Partnership Decisions” showed that mid-market companies are among the businesses most invested in embedded finance.

Nearly 79% of companies with annual revenue between $250 million and $1 billion said they planned to upgrade their embedded finance capabilities within the next year, compared to 63% of firms bringing in more than $1 billion in yearly revenue.