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November 1, 2000

The Piper Axe

By Peter Chapman

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When Mike Lanigan advertised on Thomson Financial's AutEx one day recently to sell 100,000 shares of MDT, he didn't have an order. The U.S. Bancorp Piper Jaffray block trader wasn't betting on a downturn in the stock either. His purpose was simply to let the buyside know that Piper Jaffray was a power in Medtronic, a New York Stock Exchange-listed company.

That's the Minneapolis investment bank's equity trading strategy in a nutshell. Trade a select group of stocks every day, order or no order. At all times, put the Piper Jaffray name in front of the buyside. Win more of its business.

"Whenever any institution in the country wants to buy or sell Medtronic I want them to automatically associate that name with Piper Jaffray," said Tony Cecin, head of equity trading and a senior managing director at Piper. "I want them to think it doesn't make sense for them to go elsewhere because we are so dominant in that name."

That's the message Piper Jaffray hopes to send to its institutional clients. But it is also the message its bankers want to send to their clients and prospects. And, at Piper, banking is the endgame. If Piper's bankers can boast about the aftermarket trading prowess of Cecin's department they can compete more effectively for underwriting mandates.

"Our goal is to be the number one investment bank to growth companies," said Paul Karos, head of equity capital markets and a senior managing director. Karos, who's Cecin's boss, added, "To do that the buyside must view Piper Jaffray as one of the top firms in research and trading. It's crucial that we increase our market share with the buyside."

Piper has already won a can-do reputation in Silicon Valley among technology companies mulling a public offering and the venture capitalists that back them, according to Karos.

Winning over the three groups - the buyside, venture capitalists and issuers - is a key part of Piper's master plan to transform itself from a regional broker dealer to a national investment banking powerhouse specializing in technology and healthcare.

The process began five years ago with a decision to create a technology-banking infrastructure from scratch. Piper spent heavily to hire analysts, bankers, salespeople and traders. Still considered the new kid on the technology block, it faces stiff competition from such West Coast rivals as Robertson Stephens, Bank of America Securities, Thomas Weisel Partners and Chase H&Q.

But, since 1999, it has rapidly climbed up the underwriting league tables. It closed 98 IPOs and secondaries last year and has done a similar number so far this year. That compares to between 35 and 45 in each of the prior four years. Based on this year's numbers it's ranked tenth by New York-based deal-tracker CommScan. Based on its backlog, or deals registered with the Securities and Exchange Commission but not yet completed, it's ranked fifth with 34 deals in the works.