Credit Suisse Group AG (NYSE: CS) rose over 0.49% in pre trading session on Tuesday as the firm is marketing its First Boston investment banking unit to investors as a “super boutique,” with revenue expected to rise to as much as $3.5 billion as the embattled lender seeks to raise funds for the revamped business, according to a company document obtained by Reuters.
The marketing presentation, which has not previously been disclosed, reveals that the Swiss bank is betting on an aggressive recovery at CS First Boston (CSFB) after revenue fell 69% in 2022.
In a January sales pitch to investors, the bank stated that it hopes to exceed the $2.5 billion net revenue target it set for the unit only last October, assuming the business will be independent and a “normalized market environment.”
The bank also explains in greater detail why the restructured division will have a competitive advantage in a crowded investment banking market. According to the presentation, CSFB would be a “super boutique,” more focused than large banks but broader than advisory firms that do not offer services like financing.
The pitch to investors comes after the deals market experienced a significant slowdown last year, affecting many Wall Street firms, with bankers forecasting a slow start to the year.
The marketing presentation, which includes detailed terms for the Swiss bank’s $500 million capital raise, reveals for the first time that the funds will be raised through a five-year exchangeable debt security paying 6% annual interest.
The funds will be raised by the parent company, Credit Suisse, and investors will be required to convert their notes into shares of CSFB if the company is spun off or goes public.
According to a source familiar with the situation, the bank intends to list CSFB in 2024 or 2025. Credit Suisse did not respond to requests for comment for this article.
Last October, Credit Suisse began a restructuring of the bank, which has suffered billions of dollars in losses as a result of a series of scandals and is now on its third CEO in three years.
It intends to divest riskier assets and concentrate on more profitable businesses like wealth management. One major component of the restructuring is the establishment of CSFB, which resurrects the First Boston brand, which Credit Suisse acquired in 1988.
The company intends to operate as an independent capital markets and advisory bank based in New York. Michael Klein, a veteran dealmaker, has stepped down from the Credit Suisse board of directors to become CEO. CEO Ulrich Koerner announced the overhaul in October, saying the bank already had a $500 million commitment from an investor but did not name them. Reuters could not understand why Credit Suisse was seeking additional investors for the capital raise when it already had a commitment for the entire amount.
