CS/UBS Houston is officially closing

Official word went out this morning. I think the writing was on the wall for CS Houston for a while now, but they're not even keeping the UBS presence. Some will be reassigned to NYC from what I've heard. In my opinion it seems odd since what if UBS has a wealth management client who owns some west Texas energy projects or whatever and needs some M&A support, but I'm not calling the shots here.


Still plenty of energy deals left to do… many shops have been building out energy transition practices either organically in Houston or through partnerships with P&U and/or infra teams in New York.

Somebody needs to raise the capital for all of these new energy companies. Not to mention, traditional energy ain’t going anywhere just yet.


Still plenty of energy deals left to do… many shops have been building out energy transition practices either organically in Houston or through partnerships with P&U and/or infra teams in New York.

Somebody needs to raise the capital for all of these new energy companies. Not to mention, traditional energy ain't going anywhere just yet.

Jefferies just hired 3 MDs from Gugg (ex-Greentech) to build out the team in Houston. They were all based in SF but are relocating to Houston. 


What, if anything, does this foreshadow about the future of IB in Houston?

The number of houston banks will continue to shrink. Despite what some oblivious juniors here think - the deal flow is nowhere close to what it was 10 years ago. 

most people had projected UBS to close houston office before the CS deal. DB was first, then BMO

there was a large layoff at Lazard houston a month or two ago.

I would expect KeyBanc and Truist to be next - either closing the office or turning it into a P&U focused site. Baird has a small office in houston but nobody knows what they do. 

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I’m confused on why so many players are getting out of O&G…

All the super majors like chevron, exxon and shell have been recording record profits for the past couple years. Clearly there’s still money to be made right? Do you think it’s just because of the optics / ESG stuff that they don’t want the publicity?

I mean oil prices have dropped since last year but they’re still decently high enough for most wells to be profitable.

im not on the deal making side so I’m curious to folks who are - are you guys still seeing a lot of new dealmaking activity?

what kind of PV level asset IRR are you seeing players underwrite to? I’ve heard of some PE shops getting an unlevered IRR up to a PV 17 on some wells.


O&G activity is spotty and banks are taking a lot of heat on the ESG side for what is ultimately not a lot of return. Even if those majors are recording record profits, they are largely holding onto those or reinvesting - yes they've picked up some ~$5B deals but they're not out there singlehandedly holding up M&A activity for the 15+ banks that have a presence in Houston. And this is a record year or two but don't forget the decade of depressed activity prior to this... deal flow has been declining for years. Even the strongest M&A shops in Houston have had to reevaluate their strategy a bit.


Shale boom is dead. Client universe (companies and sponsors) in freefall. That hurts the bit players and non balance sheet banks. Some transition practices are popping up in Houston but the fees are minuscule today vs shale, and the large renewables players (solar/wind) have been covered out of NY for decades. Hopefully the long awaited boom in hydrogen, RNG, CCS etc pans out otherwise houston banks are just going to slip into oblivion 


It’s been said on this forum many times before, but M&A activity has slowed down massively given much of the consolidation in the space has already taken place. Balance sheet banks stand to benefit as lending will continue but the money to be made from M&A will be scarce, pushing out a lot of banks in the process


Also curious, know someone on their team. Hope they all land on their feet in the O&G scene.


Most of his team has either already left or I assume just got laid off. There was a big wave of voluntary departures over the past few months with people seeing the writing on the wall. The first big red flag was when Santangelo left (albeit NYC but still a crucial part of CS Energy) and then others followed. As far as Tim, there are a few rumors going around, either about other possible banks or energy PE.


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