Huge insurance, growing banking
Prudential Securities is the financial services arm of Prudential Insurance, one of the largest insurance companies in the U.S. Along with the fifth-largest retail brokerage force in the U.S. with 6000 brokers, and a large mutual fund that oversees $76 billion, Prudential Securities includes a growing investment banking arm. Headquartered in New York, the company's I-banking practice targets eight industry groups: consumer, energy, health care, real estate, technology, international, internet, and media entertainment and communications. The firm touts this industry specialization as an advantage when it comes to competing against I-banking heavies. Additionally, Pru has four product groups: private equity and equity products, leveraged finance, mergers and acquisitions, and a financial services group.
In May 1999, the firm launched an online brokerage service, which charges customers $24.95 per trade, plus a fee based on the size of the account. In June 1999, Pru bought Vector Securities International, a full-service I-bank specializing in health care and life sciences. The firm continued their acquisition binge by purchasing Volpe Brown Whelan & Co., a San Francisco-based boutique firm that specialized in technology and health care firms.
Volpe had particpated in several high-profile deals, including co-managing the June 1999 IPO of Stamps.com, Inc. and the March 1999 IPO of About.com, Inc. The new unit was renamed Prudential Volpe Technolgy Group. At the time, Prudential Securities CEO Hardwick Simmons said "The Volpe Brown Whelan acquisition establishes us as a key player in the vital technology business."
The acquisition did not go as smoothly as hoped. Prudential purchased Volpe because the number of lead-managed Prudential IPOs had been dropping, while Volpe-led deals were on the rise. Prudential hoped to capture that momentum by securing the services of Volpe's team members. That strategy backfired when about 10% of Volpe's 200 staff members quit in January 2000, about a month after the acquisition. Observers speculated that the ex-Volpe employees were unhappy with the idea of working for a large firm such as Prudential. As a result, Prudential restructured the management of the Volpe unit. Former Volpe Brown Whelan CEO Thomas Volpe and partner Robert Whelan, who had been in charge of day-to-day operations at the new company, were moved to long-term strategy. James Feuille, Prudential Securities' head of investment banking, took over the day-to-day management of Prudential Volpe Technology Group.
We go way back
Prudential Securities traces its roots back to 1879 and a concern called Leopold Cahn & Co. Brokers and Investment Bankers. Shortly after its establishment, the firm brought Jules Bache on board, who in 1892 reorganized the company as J.S. Bache & Co. In 1981, the company (then called Bache Halsey Stuart Shields) was acquired by Prudential and called Prudential-Bache Securities. The firm shortened its name to Prudential Securities in 1991.
The firm's parent, Prudential Insurance, traces its long history back to the Prudential Friendly Society, founded in 1875. The next year, Prudential issued its first death claim - for $10 - and adopted the Rock of Gibraltar as its corporate symbol. Currently Prudential's business operations are organized into four business lines: individual and group insurance, investments and other financial services, health care, and real estate. Insurance is still Prudential's mainstay, however; more than 50 million people around the world have their own "piece of the rock." The company's image was tarnished in the early 1990s when it received a multimillion dollar fine for fraudulent sales practices, but its reputation has bounced back, thanks in part to its new CEO, Arthur Ryan, and a successful public relations campaign.
Prudential Securities visits college and B-school campuses for on-campus presentations and interviews. The firm's recruiting schedule for both analysts and associates can be found at its web site, located at www.prusec.com. Says one I-banking associate: "It's very competitive. They hire only the top graduates from half a dozen top schools and B-schools in the country." There are fewer I-banking analysts than associates, insiders say, reflecting the firm's emphasis on lean staffing.
The firm also offers summer positions for both undergraduates and business school students, although the number of summer analyst positions is reportedly small. (The firm posts summer analyst and associate recruiting schedules on its web site.) Says one former summer associate: "I was involved in several live transactions and had extensive client and senior management contact. I was impressed by the amount of responsibility I was given for the summer." Another summer associate complains about the "long hours" but lauds the "great opportunity to work with senior bankers." The summer associate program is quite structured; summer hires are assigned to a particular industry or product group. Says one insider: "Everybody puts down a couple of groups, and they try to match you up."
The summer associate program is also reportedly diverting. Says one alum: "They did a lot of stuff, compared to other places. There were a couple of big dinners, a couple of baseball games, a couple drink events. It seemed to me from talking to my [I-banking] friends that we did a lot more than they did."
Working at Prudential, not usually thought of as a securities firm, has its ups and downs, insiders say. "The drawback is that Prudential is not a 'bulge bracket' firm and in many cases, when pitching a deal, you can't win against the likes of a Morgan Stanley, Goldman, or Merrill," explains one insider. "However, at Prudential, you will get much more exposure to clients, and senior management, and they will allow you to take responsibility up to the level of your capabilities." Another insider agrees, saying that "the deal teams are much leaner than at other firms. It's an associate, maybe an analyst, maybe an MD. Of course, at other firms, those deals might be a lot bigger."
Where are the firm's strengths? "Certainly their real estate group is the strongest. [Prudential] competes with Merrill for the most revenue generated in real estate," says one insider. "They do a lot of asset-backed stuff. They're also doing some of those music bonds, like those David Bowie revenue bonds." The addition of Volpe Brown Whelan & Co. gives Prudential also gives Prudential a formidable technolgy arm.
Collegial, low asshole quotient
The firm's modest ambitions and I-banking businesses are reflected in its culture, Pru insiders say. "Certainly, in a general way, the people are a little bit more laid-back," says one insider. "They love to say this - and their big credo is - they have a low asshole coefficient. From my experience there's a strong correlation between your arrogance level and where you are on the league tables. Goldman and Morgan - they do a lot of business and they are definitely not humble people." Reports another contact: "I think the way they're trying to sell the firm is, 'We're a middle-market firm, we're not trying to compete with the bulge bracket by buying bankers. We're going to stick to this and we're doing a good job and making a lot of money.' They want to sell that it's a collegial, cultivating atmosphere." To help promote this groovy feeling of togetherness, Prudential Securities CEO Hardwick "Wick" Simmons "speaks regularly over the firm's broadcast system to keep employees abreast of developments within the firm, and welcomes questions at these times."
Despite the emphasis on quality of life issues, Prudential has had trouble attracting and retaining women in I-banking, insiders report. "Pru is getting killed on women, they've got virtually none. They're looking to boost up women, which they should, because it's pretty bad," one contact reports. "The Street's notoriously bad, but Pru is especially bad. It's because the good women can go to Goldman, Morgan, and Merrill."
Prudential Securities bankers aren't slackers. Says one source: "It's a pretty hard-driving, determined organization." Hard-driving, of course, means long hours. One I-banking associate reports reports working "up to 110 hours per week." However, Prudential insiders on the whole are pleased with their hours. "Hours are low-end to middle for investment banking, meaning 70 hours a week or so, worse on occasion," reports one contact. The tradeoff for the somewhat kinder hours is that "pay is decent but not as good as Prudential thinks it is paying for the junior people." Another insider agrees: "Just as much not having the arrogance and the money, you're going to have a little more of a life at Pru than at a Merrill or a Morgan. You still get paid a good bit of money, and you don't work as much." And, shock of all shocks - "people definitely take some weekends off."
I-bankers with Prudential Securities enjoy perks like "lunch at the Downtown Club," "dinner at the 21 Club" and of course, "car rides and free dinners when working late." The niceties aren't confined to food and travel, either. Reports one insider: "I was given a window office as an associate. The working space was very good." The firm also provides a 401(k) plan with a 25 percent match of the first 3 percent of an employee's gross pay. Prudential employees also benefit from a retirement fund for which they are 100 percent vested after five years.
One New York Plaza1
Investment banking;Retail brokerage;Asset management
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