Five Questions with Steven Pierson, president of Lovell Minnick

  • Pierson, 49, joined Lovell Minnick in June
  • Pierson is former co-head of FIG Investment Banking at Credit Suisse
  • Financial services is a place for specialist PE firms: Pierson

Why are you joining a private equity firm?

I joined Lovell Minnick Partners earlier this month, where I’m president. I spent nearly three years at UBS, where I was most recently head of FIG Investment Banking Americas and global head of financial technology and services. Before that, I was vice chairman and co-head of FIG Investment Banking Americas at Credit Suisse.

I worked for Putnam Lovell from 1995 to the beginning of 2007. During the last few years, I was running the investment bank. I initiated the process and sold Putnam Lovell to Jefferies [in 2007]. I didn’t make the transition to Jefferies but joined Credit Suisse.

I’ve always had it in the back of my mind that private equity is something that I’d like to try. I feel I’ve got a great skill set from investment banking. I’ve worked with lots of sponsors. I’ve watched a number of other bankers make that transition successfully.

It’s less about me leaving banking than about working with Jeff Lovell again. Jeff hired me in 1995 to work for Putnam Lovell out of business school in 1995. I’ve known the two — Jeff Lovell and Jim Minnick — for 20-plus years. I’m ready to join Jeff and Jim to expand the network that I have to grow [Lovell Minnick] from here. We’re looking at other asset classes and other products down the road. To be clear, it will all be in financial services.

Not many PE firms do financial services anymore. Why?

Financial services is not a place you want to play as a generalist. It’s heavily regulated. It’s really a place for specialist firms. …

[If] you look at S&P 500 as a proxy for the economy. FIG is about 20 percent of the overall S&P. It’s one of the bigger verticals [of that index]. … Stone Point Capital is probably the largest focused on FIG. Lightyear, Aquiline, Lovell Minnick are the next tier. But you have some of the megafunds that focus on FIG as part of their verticals. …

What about banks and PE? We don’t see many recent deals there.

There have been a number of difficult deals in the bank space. It’s a really challenging space. For regulatory reasons it’s not one best held for PE businesses.

And fintech? Venture capital is a huge investor in fintech.

Everyone has their own definition of what fintech means. There are several different segments: global exchanges, brokers/capital markets players, custody clearing/fund administration, data analytics space, payment processing (merchant acquirers), financial tech software and IT services businesses.

Private equity, unlike venture capital, works with more mature businesses that have profitability. That’s not the case with many new fintech 2.0 businesses like block chain market lenders. Even new payments lenders don’t have profits. It’s a stage issue. Many of the companies are so young and it’s early in their life cycle that they haven’t reached profitability yet.

I would also note that this view of Fin Tech is highly, highly subjective.  There are many ways to slice and define the universe. …

[M&A generally is] picking up pretty well. Lots to take a look at these days.

What are you reading?

It’s a mix of fiction and non-fiction. I usually read a few books at same time. I just wrapped up Dead Wake by Erik Larson and Lamentation by C.J. Sansom recently. I’m just starting to read Thomas Jefferson and The Tripoli Pirates: The Forgotten War That Changed American History now.

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Photo of Steve Pierson courtesy of Lovell Minnick