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Sanders Morris Harris Sells Cap Markets Biz

Sanders Morris Harris Group will sell SMH Capital Markets to Siwanoy Capital.


Sanders Morris Harris Group will sell SMH Capital Markets, its capital markets business line, to Siwanoy Capital. Terms of the transaction were not disclosed.

The transaction, which is expected to close in the second quarter of 2009, will include the investment banking, fixed income and institutional equity departments of Sanders Morris Harris. The bidder, Siwanoy Capital, was formed by the senior management of the capital markets business and Pan Asia China Commerce Corp.

Following the transaction, Sanders Morris Harris will focus almost exclusively on wealth management and asset management. As of Sept. 30, 2008, the firm managed about $10.2 billion in client assets.

The firm said in August 2008 it would explore strategic alternatives for its capital markets unit, and would acquire smaller wealth management firms.

Not included in the sale is Concept Capital, a prime brokerage division, or Juda Group, based in Los Angeles. Sanders Morris Harris has said Concept Capital is expected to create a broker-dealer and become a stand-alone company. Sanders Morris Harris would retain a 50% ownership interest. On Tuesday, Concept Capital hired a former Citigroup executive, Robert E. Moore, as a managing director and head of global institutional trading and research.

Sanders Morris Harris also owns 76% of financial columnist Ric Edelman's Edelman Financial Center, which has $3.4 billion in assets under management.

William S. Sprague, chief executive of SMH Capital Markets, said he anticipates "broadening and improving the products and services that we offer our institutional and corporate clients."

In November 2008, SMH Capital acted as placement agent and financial advisor in the initial funding of WRM America Holdings, a specialty insurance holding company. In September 2008, Tarrytown, NY-based Aerolase hired SMH Capital to explore financing for the medical lasers manufacturer's expansion.

George L. Ball, chairman of Sanders Morris Harris, said, "Although we think both units have a strong future, we have been-and will be-focusing our resources on the wealth/asset management sector."

Sanders Morris Harris will keep a 20% interest in SMH Capital, although Pan Asia China Commerce Corp. will have an option to purchase that interest.

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