Dutch Finance Giant Alive, Well in Its Downtown Digs.

A couple weeks back I reported that ING Barings had virtually shut down its L.A. investment banking operations. As it turns out, that's not correct.

True, the Dutch financial giant no longer keeps a corporate finance group doing general investment banking in downtown Los Angeles. At its peak, that banking shop employed nine professionals under managing director Mark Vidergauz.

But that operation was effectively closed in May, and Vidergauz is now with Westside venture shop Sage Group LLC.

ING Barings, however, still operates a merchant banking operation with five professionals in downtown L.A., led by Mike Adler, and has another four professionals led by Loring Guessous involved in media finance. Additionally, Bill Metzler heads up investment banking in the retail sector for ING Barings, an operation also located downtown.

Adler's merchant banking group is primarily a loan shop, although he said it does take equity "kickers" when the situation merits. "We'll do between $200 million and $700 million a year," said the eight-year veteran of ING Barings, referring to loans extended.

While Adler and his colleagues will lend to any qualified middle-market company, they particularly like to work with growth firms that may be en route to an initial public offering or merger with a public company.

"In that way, we can help create a company that may consider a corporate offering, which ING can also handle," Adler said.

Under Guessous, ING Barings has been active in local media finance, broadly defined to include the entertainment, broadcast, cable, interactive, publishing and advertising sectors. Guessous does a lot of private placement of equity. "We will work with small-cap to large-cap companies," she said.

ING Barings worldwide keeps a stable of 14 high-yield or equity analysts devoted to the media sector, and Guessous said they provide the back-up to her investment banking and private placement efforts. When appropriate, she will also invest ING Barings capital directly with a client.

Due to client confidentiality, Guessous declined to specify any deals or clients, or to estimate the dollar volume of transactions she handles in a year. "(ING Barings) has had an office in Los Angeles for 20 years," she said. "We have established a real core group of professionals."

At its North American headquarters in New York, ING Barings spokeswoman Jessica Oppenheim said there are no plans to replace the now-defunct ING Barings corporate finance group in Los Angeles.

New Role

The name Massoud Entekhabi is nearly synonymous with the L.A. venture capital scene, thanks to his 20 years as a leading VC adviser and consultant for PricewaterhouseCoopers. (The last 10 were spent in the CPA giant's Woodland Hills office.)

During that time, you couldn't really hold an official growth capital seminar in Los Angeles unless Entekhabi was somewhere on the dais.

But two decades has proved enough for Entekhabi to fill the role of adviser. In July he will say goodbye to PricewaterhouseCoopers and move on to Santa Monica to take a direct stake in the VC business.

There, he will partner with and open a West Coast office for TL Ventures, an $800 million operation with offices in Wayne, Pa., and Austin, Texas. Like many in VC-land, the 47-year-old Entekhabi says he will seek out early stage investment opportunities in tech, especially Internet infrastructure firms. But he also is looking for biotech and medical technology plays.

Despite the meltdown of the dot-com IPO market, Entekhabi believes the VC market is still great. "There are a lot of good investments out there and a lot of money to invest," he says. "Some of the crazy valuations are down, but that only makes it better for investors."

Entekhabi, who has spent a professional lifetime billing clients by the hour, now will have to look to hit home runs in investing. Does he welcome the change?

"I always was more of a builder and adviser than simple professional," he said. "This transition, after 20 years in the industry, makes sense."

TL Ventures bills itself as one of the most active VC outfits in the nation, having funded nearly 70 startups. Additionally, CalPERS, the huge state employee pension fund, is an investor in TL Ventures.

And word on the Street is that TL Ventures is raising a new fund.

IOU Future

With federal government IOUs becoming scarce, the world is changing for bond managers, says Jeff Rollert, investment manager and principal at ALM Advisers in Pasadena, a bond-oriented money management shop.

For some bond managers, the post-World War II era was pretty easy. The federal government ran deficits and issued bonds by the tens and hundreds of billions a year. A bond manager could buy Treasuries - considered to have no credit risk - and clip coupons, said Rollert.

"You really didn't have to do a whole lot of credit analysis on the federal government," he said.

But times and fiscal temperaments change. The federal government is now running surpluses and projected by the Congressional Budget Office to do so for years ahead. Meanwhile, many state and local governments are mandated to maintain balanced budgets.

Result? Risk-free bonds are getting scarce.

"The government market is not as deep as it used to be," he said. "And it may get shallower."

What's a bond manager to do? Old-fashioned research and better credit guarantees may be the wave of the future. "Many bond managers are going to have to learn how to do credit analysis," Rollert predicted.

And some big changes may occur in the country's bankruptcy system. Now, when a company declares Chapter 11, just who gets what is essentially decided by a judge, after extended arguments by lawyers and other professionals. "That's not a situation creditors like," said Rollert.

Others have complained that the U.S. bankruptcy court system hasn't attracted the nation's top-flight judges. As a result, bond-holding groups and bond managers may lobby for more-predictable scheduling and results in court, said Rollert.

Bond insurance, anyone?

Contributing columnist Benjamin Mark Cole writes about the local investment community for the Los Angeles Business Journal.