After long struggle, Lebenthal sells stake to South Street Securities

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Alexandra Lebenthal has sold a 49% stake in Lebenthal & Co., an iconic firm in in the municipal market, to South Street Securities.

The sale comes as the firm has struggled to grow, shuttering a wealth management unit last summer that failed to take off despite some early high profile hires. Lebenthal said in an interview last summer that the unit was unable to attract top wirehouse advisers in a highly competitive and costly recruiting environment.

South Street will also acquire 100% ownership interests in the firm's asset management and family office units, according to a press release. Lebenthal & Co. will continue to operate as a woman-owned firm. Other terms of the transaction weren't disclosed.

South Street was a surprise buyer, as it is an entirely institutional business, but Lebenthal said there were many reasons it is a good fit.

"The CEO Jim Tabacchi is a really solid guy who has built a strong business," she said. "He has been through ups and downs and despite that has kept the business going, there are also significant people on the board of directors and other people involved in the business, it's always good to have people with all of that expertise and experience."

Lebenthal also said she "is not going anywhere" and will still be involved with the 51% ownership, and that the name of the company will be retained as well.

"South Street's business model, conservative approach and operational focus are consistent with our culture," she said. "We believe this combination with South Street will enable us to better serve our valued clients, and we look forward to this next chapter of our long history."


Lebenthal is the third generation of her family to head the business started by her grandparents, Louis and Sayra, in 1925. Her father, Jim Lebenthal, made the company famous with his ads extolling municipal bonds. She boosted the company to a leader among Wall Street women/minority-owned firms after relaunching the Lebenthal brand after a prior sale in 2007 and subsequent growth and expansion.

Municipal experts said the sale is a sign of the challenges faced by smaller firms operating as spreads narrowed in the low interest rate environment over the last few years. The transaction came after reports in the Wall Street Journal and other outlets that Ms. Lebenthal was pursuing a sale as part of an effort to resolve a dispute over a $1 million loan from former Bear Stearns chairman Jimmy Cayne.

John Mousseau, director of fixed income at Cumberland Advisors, said the firm was a victim of "bad timing" in a market plagued by tight spreads and increasing competition.

"The people who worked there were great and I always got tremendous service as a client," Mousseau said. "That does not always translate into the bottom line and the state of the markets the main reason."

In June of 2014, Ms. Lebenthal announced the firm would exit municipal public finance and shutter its underwriting and institutional sales business to focus solely on municipal retail sales and building its wealth management division.

The move out of public finance, which resulted in the loss of 200 institutional accounts as well as 15 employees, gave Lebenthal an opportunity to go back to its roots and cater to high-net-worth sales to retail individual accounts, Ms. Lebenthal told The Bond Buyer in June, 2014.

She said that is where the iconic New York firm has inherent strength and experience.

The 2014 consolidation came years after she first sold the firm in 2001 to Advest. The Lebenthal name disappeared a few years later, when Advest was acquired by Merrill Lynch. In 2007, she bought the name back and relaunched the firm.

Lebenthal & Co. had ventured into the municipal underwriting business in 2011.

In the two years following that, the firm opened offices in Chicago and Los Angeles, doubled the revenue generated by its public finance business, and qualified for more senior-managed deals, Ms. Lebenthal has previously said.

Ms. Lebenthal said competition for a shrinking pool of business led to the decision to exit municipal underwriting.

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