Hobbs’ Leviathan: Brit Takes Mergermarket to New York

On Jan. 27, Caspar Hobbs launched the New York division of his financial mediacompany, Mergermarket, duringacatered partyatSoho House, the private members’ club in the meatpacking district.

Swilling champagne and cocktails in the clubhouse of choice for News Corporation moguls Col Allan and Rupert Murdoch, the 34-year-old Mr. Hobbs, a former major in the British military, drilled the troops, saying that his company would become the main source for breaking news on mergers and acquisitions for New York’s investment bankers and the leveraged-buyout firms who orchestrate the deals that generate millions in fees for their firms.

“We’re not interested in scooping The Wall Street Journal by 24 hours; it’s just not of any use to our subscribers. What we want to do is get information that is six months to a year ahead of everyone else,” Mr. Hobbs said in an interview a few days before the launch party. “Because what is 24 hours to an investment banker? The answer is: a done deal. They need information months before it gets reported in the mainstream media.”

Since 2000, Mr. Hobbs’ firm has grown by more than 100 percent each year, and today, though the company remains privately held, Mr. Hobbs said it generates more than $10 million in revenue and turns a profit. Mr. Hobbs added that he has already built a high-profile readership that includes Wall Street stalwarts Lehman Brothers, Lazard and Goldman Sachs, with subscriptions ranging from $20,000 to $250,000. With the launch of the New York bureau, he hopes that more Wall Street firms will sign up for his Web site, which will report on the United States’ $1 trillion mergers-and-acquisitions market.

Wearing an ocean blue suit and smart yellow tie, and with short cropped hair and a rounded frame, Mr. Hobbs could pass for a retired footballer. He spoke in an affable English patter about how his four-year-old company will report breaking stories that pertain to the fast-paced market for corporate mergers and acquisitions. While online financial-media companies such as Bloomberg, Thomson and consumer-oriented Web sites MarketWatch.com and TheStreet.com offer broad-based financial and investing news, Mergermarket’s niche will be pure deal-making among companies and the banks that broker the deals. In that sense, they are a unique service and won’t compete directly with the larger financial-reporting Web sites.

Still, Mr. Hobbs is girding for battle. Raised in Africa, his father ran East Africa Breweries and was also an executive in the gold industry, taking posts in South Africa and Dubai. After attending boarding school in England, Mr. Hobbs entered the British Army and soon rose through the ranks serving in the Middle East and Northern Ireland.

“In Northern Ireland, we had the odd explosion and the odd shootings. It was a very dirty kind of war. But it was quite fun soldiering. And you felt you were doing something right-stopping two populations from ripping each other’s hearts out,” he said.

In 1996, he married a lawyer from Scotland and left the Army to attend the elite business school INSEAD, in France. After graduation, he moved to London and entered the media, working for a year at the Financial News , but he soon decided that he didn’t want to toil as a reporter and launched his own media company with his partner, Charlie Welch, a former reporter for Newsweek International who is now editor in chief at Mergermarket, and Gawn Rowan Hamilton, a former financial adviser. The three raised more than $5 million in private funding from investors and, to launch in New York, the company spent $1.7 million. Mergermarket now has bureaus in London, New York and Milan.

When not working with clients and investors, Mr. Hobbs retires to his house outside of London; on holidays in Switzerland, he enjoys the extreme luge-like sport called the Cresta Run, in which participants fly down an icy track head-first on a sled.

“It’s quite entertainingly dangerous, because you can fall out of the sled. And I’m very good at falling out of it. I’m a very bad rider; I’m very nearly the biggest faller on the track.”

Nor is this masculine approach absent from his view of the kind of journalism he wants for Mergermarket.

“It’s not flowery journalism, in the sense it’s very quick,” he said. “Our reporting is about getting as much information that will be useful to a banker [as we can] in a short space of time.”

To run the New York bureau, Mr. Hobbs hired Josh Kosman, a former senior reporter at Bruce Wasserstein’s Daily Deal , as Mergermarket’s New York editor in chief. The company currently has 17 reporters on staff and 12 freelancers across the country scouring industry sources and local trade publications for potential deals.

Last week, Mergermarket’s Web site broke the news that Cinemark, a national movie-theater chain with 3,000 screens, intended to sell its $2 billion in assets. The day after Mergermarket ran the piece on Jan. 13, Daily Variety picked up the story.

Merge Lane

The New York launch of Mr. Hobbs’ London-based financial-media company comes at a time when some analysts talk of a return to the vertiginous bull market of the late 1990’s. His muscular approach to news won’t likely pass unnoticed by the mainstream media: Moguls on a quest for corporate empire make great characters for the day-two story in The New York Times .

But other analysts have been more pessimistic, seeing more hot air than oxygen in the leading economic indicators, and predict that the election-year bubble we’re in now may yet burst. It’s happened before. Indeed, Mergermarket’s rise harks back to the financial-media companies of the last bull market, firms such as TheStreet.com, MarketWatch.com and TheDeal.com, which expanded rapidly and now are trying to rebound after three years of staff reductions and advertising downturns following the market peak in 2000.

But the start of 2004 seems to be an opportune time for mergers and acquisitions. Last week, J.P. Morgan Chase bought retail banking powerhouse Bank One in a $58 billion deal, the most recent merger in a smattering of high-profile deals that have included NBC’s $43 billion merger with beleaguered media conglomerate Vivendi Universal and, most recently, Mr. Wasserstein’s $55 million stealth grab for New York magazine.

And mergers and acquisitions don’t appear likely to abate in the very near future: In 2003, corporate profits started burning a hole in Wall Street’s pockets, soaring 25 percent to $1.1 trillion in the third quarter, according to figures from the Federal Bureau of Economic Analysis.

“Particularly with the Iraq war, a lot of the decision-making just stopped,” said Brian Nottage, an economist covering the macro economy and financial markets for Economy.com, an independent research group. “The preconditions are in place to increase merger activity. Then the question arises: What industries are going to be targeted?”

Even with financial experts cautiously optimistic about the strength of deal-making in 2004, Mr. Hobbs said he will avoid the hubris of the previous generation of entrepreneurs who vowed to become overnight moguls.

“Is there going to be an increase in mergers and acquisitions in 2004? I think there is. But I don’t think it will be as dramatic on either side of the Atlantic as people think,” he said.

“We’ve been terribly old-fashioned in the way we’ve run this business, in that we believe businesses should make a profit. As soon as Mergermarket has done that, we’ll launch other businesses.” And he knows that when there’s money around, business people are never content to stand still.

“There are a lot of very acquisitive companies out there,” he said.

As bankers find their confidence after three years of layoffs and falling stock prices, Mr. Hobbs wants to become the bard of the next bull market. He said he plans to publish a ranking list of the most successful Wall Street investment bankers with an annual awards ceremony, making stars out of the rainmakers.

“One of the things we do that is always a little contentious is, we league-table individual bankers. Nobody has ever ranked individual investment bankers by the volume and value of what they do,” Mr. Hobbs said. “It allows executives who are planning deals to see who the real stars are.”

A 90’s Appetite

On Dec. 30, Mergermarket moved into its 4,000-square-foot office at 28th Street and Fifth Avenue after several months renting temporary space on East 11th Street.

But when he and company executives come to New York on business, they stay in the company’s rented three-bedroom loft on Clinton Street on the Lower East Side (more fodder for The New York Times ‘ assertion that the Lower East Side is the new “It” place), loading up their expense accounts with bills from Wylie Dufresne’s burgeoning restaurant empire there.

And while Mr. Hobbs enjoys the city’s hip downtown lifestyle as his company grows, the most pressing question for financial experts is whether the splashy launch of a financial-media company such as Mergermarket represents the current strength in the city’s economy or a nostalgia for the late 1990’s, when New York was awash in Internet start-ups and small-time banking impresarios without the cash to match their ambitions.

But Mr. Hobbs may have found one of the few niches that is already seeing the money flow back in. Some financial-industry experts said the improving stock market is driving companies to increase their research and technology spending on services such as Mergermarket.

“Companies now have more money to devote to research. You will probably see people subscribing to these types of services in larger numbers than before,” said Raj Dhinsa, a senior analyst at Jupiter Research. “Especially when it comes to the investment community, they don’t want to be behind the curve when it comes to information.” Some of the survivors of the Internet bust say their companies are poised for a resurgence.

“Why not do it on the Internet? For anything that has a real-time tinge to it, real-time value, you can’t beat the Internet,” said Larry Kramer, the chief executive of MarketWatch.com.

But as we learned not so long ago, being based in the Internet business isn’t enough to guarantee success.

“The success of Mergermarket will come down to the quality of their content,” said Jeffrey Dearth, a partner at DeSilva and Phillips, a media investment bank. “If someone can aggregate information for my market, or investment banks that concentrate in niches, then that’s a viable model. These bankers will pay for it.”

Hobbs’ Leviathan: Brit Takes Mergermarket to New York