Now that ABN Amro, the Dutch banking conglomerate, has acquired the experienced upstream energy team of ING Bank in Houston and New York, it will extend its well-known international large-cap oil, gas and power expertise further into the range of midsize U.S. independents. This builds upon the many E&P and oilfield service sector deals closed by the same group when it was part of Prudential Securities. The group joined ING last year for what turned out to be just a few months. The Amsterdam-based bank provides wholesale and commercial lending, investment banking and equity research in eight major industries, including oil and gas and power. "The convergence theme is the center of the fairway for us, and we have been active with the large, integrated E&P companies, but now we are implementing a new oil and gas strategy that incorporates the mid-caps-companies in excess of $750 million but under $1 billion [that will likely grow]," explains Peter D. Gaw, executive vice president and managing director for integrated energy. "The market perception in oil and gas is that we handle only large-caps but we aim to change that. For example, we are talking to a large independent now to see what research it needs, what level of capital is required, what ideas we can bring them." Gaw, who will head the new Houston energy team, recently relocated from Chicago, where for 17 years he headed the bank's power and utilities group. In January, ABN merged its oil, gas and power groups. The bank has co-led or participated in all six of the convergence-related initial public offerings of the past year, including being the co-lead manager on Reliant Resources Inc.'s recent IPO. It also co-led the US$4.3-billion privatization of Brazil's Petrobras in August 2000, the largest global oil and gas offering of that year and the largest ever Latin American offering in any industry. Last December it comanaged Spinnaker Exploration's $157-million secondary offering. The same team members that were at Prudential previously also represented General Electric's interest in Weatherford Global Compression in the acquisition of the latter by Universal Compression (NYSE: UCO) earlier this year. "When we had the opportunity to acquire the old Prudential Securities-ING energy group, including Sandy Vaughan and Peter Gaw, that was a wonderful thing that brought us the expertise and relationships we needed in U.S. energy," says Tim Eggar, global vice chairman of corporate finance. Visiting the new team in Houston recently, the former U.K. energy minister took time for a brief chat with Oil and Gas Investor about worldwide trends that affect energy banking, and ABN's role. "Clearly, there are many crossborder opportunities today. We see a relationship between the opportunities in emerging markets and the need for more independents to grow internationally. A lot of them have sort of dabbled internationally but I think in the future, they will commit to do much more. Some have had difficulty devising and sticking to international strategies and we think we can help. Then too, a lot of the national oil companies prefer not to work with a major, so that is an opportunity for independents as well." The firm's international client base also is looking at assets and corporate opportunities in North America. "We have the balance sheet capability, alongside investment banking capability and research, to help them," Eggar says. He was formerly chief executive of Monument Oil & Gas before it merged into Lasmo. As energy minister under Prime Minister John Major from 1992-96, he was in the government vanguard that oversaw natural gas deregulation in the U.K. In previous government roles under Margaret Thatcher, he oversaw the privatization of British Coal and British Gas as well. As deregulation and privatization go hand in hand, the bank intends to capitalize on them for its clients. Eggar has sat on both sides of the table as a government minister and as the head of an oil and gas company. "I keep being fingered on the California problem because California modeled its electric deregulation on that of the U.K. But we told them at the time that taking the British model entirely was not applicable, what with the caps they were planning and so on," says Eggar. Noted analyst Gene Nowak in New York will provide ABN Amro energy-group macroviews and cover the integrated oils. Also in New York, Matt Conlon covers service and supply firms, as does Steven Gengaro. Jim Whipkey in Houston covers the independents. Paul Patterson recently joined from CS First Boston to cover the power sector, from New York. In addition to the bank's strengths in facilitating international mergers and acquisitions for U.S. independents, equity underwriting will play a major role. "ABN was the fifth-largest equity lead manager worldwide in 2000, yet we did that without a meaningful presence in the U.S. until we bought ING," notes industry veteran Vaughan, a senior member of the Houston energy team. "I find that amazing." At present, ABN Amro has been engaged by the Czech Republic to privatize its gas industry, which is a key link between supplies from Russia's Gazprom and consumers in the rest of Europe. The bank has a 175-year history of financing international trade. It is now the fifth largest bank in Europe and one of the largest foreign banks in the U.S., with $110 billion in committed bank facilities to clients in several industries, including energy. At December 2000, assets totaled about EUR 543 billion. ABN Amro provides commercial banking for consumers and companies, investment banking and private client asset management.