WSW/1stjc/mark2nd

We got it from the horse's mouth: Torrance-based Imperial Credit Industries Inc. (ICII) will take a 49 percent equity stake in Beverly Hills-based brokerage Dabney/Resnick/Imperial LLC despite some high-level departures at Dabney.

"I have every intention of going ahead with the transaction," said H. Wayne Snavely, chairman of the powerhouse diversified lender.

As it stands, Snavely has extended Dabney/Resnick a loan, convertible into equity (ownership). He plans to convert, he said.

Some doubts were recently raised about Snavely's intentions with the departures of co-founding partner Neil Dabney and chief operating officer Murray Feinbaum. Don Peterson, hired on to boost stock underwriting, left after a few weeks.

But Snavely met two weeks ago with remaining partner Judy Resnick, and says he is not daunted in fact, he sees in the making a regional securities dynasty, from high-yield paper, to convertible subordinated debt, to initial public offerings.

Snavely already has some ideas in mind: Last week he announced that ICII called "icky" by stock traders has agreed to buy the Boca Raton, Fla.-based Auto Marketing Network Inc., a auto finance outfit, in a stock swap. AMN will generate about $500 million in loans a year by the end of 1998, said Snavely.

ICII can flow securitized auto loans, and other plebeian paper through Dabney/Resnick giving the brokerage steady, if not exactly exciting, business. "They (Dabney/Resnick) won't handle all of it, but they'll certainly get a share," Snavely said.

But he sees the biggest future in Dabney/Resnick as the premier underwriter of Southern California companies.

"There's a void now in the market. We can bring capital to the table to give Dabney credibility, and even provide funding for bridge (short-term) loans to (Dabney) clients," said Snavely.

Bridge loans are important clients know almost every deal can get done eventually, given enough work and negotiations on terms, and bridge financing gets the money to clients in the meantime. It's a big-league competitive advantage in this market for Dabney/Resnick.

In charge of Dabney/Resnick's equity and research operations is John Merriman, who says he will try to underwrite three to six IPOs this year.

The firm also has strengths in privately placing debt, said Rick Bloom, managing director at the brokerage, who we met last week while visiting the brokerage.

"You know, some companies have this idea they have to work with a bank, or do an IPO," said Bloom. "But we have strengths in placing private debt. Many companies could borrow, and not have to give up the company (by issuing equity). There are a range of options out there," said Bloom.

If nothing else, Dabney/Resnick has been busy: Bloom had tombstones of 27 mid-sized transactions in which Dabney/Resnick had played a participating or lead role in the past two years, most in the $6 million-to-$100 million range.

Co-founding partner Judy Resnick, meanwhile, says recent staff and partner turnovers were more idiosyncratic than serious, and that the shop is running better than ever.

"Every company has turnover. We probably have less than the industry norm," she said.

As of last week, she has Snavely's vote.

Why not L.A.?

The question is on the minds of many these days: Why hasn't Los Angeles evolved high-tech or bio-tech industries in conjunction with our top universities and the venture capital community.

San Diego has done it, and so has the Bay Area.

"We have Cal Tech, UCLA, USC," notes Steven Kriegsman, of the West Los Angeles-based Kriegsman Group, a boutique investment banker heavily involved in the medical industry.

He might also have mentioned Cal Poly Pomona and the Claremont Colleges, Occidental, or other learning centers.

One could argue that Silicon Valley, and the attendant high-tech growth, is up north because of the constellation of education and investment bankers up there that is not, but could be, reproduced down here.

Kriegsman speculated that Los Angeles is seen by others as a "Hollywood" town, without other viable industries for venture capitalists to finance.

Perhaps entrepreneurs should take note: Kriegsman said he would be interested in helping along any alliances between our universities and financiers.

Smart management

It's time for a tip of the hat to Ken Shaffer, chief investment officer of the $20 billion-in-assets L.A. County employees' pension fund, formally known as LACERA.

About a year back, we asked Shaffer why he wasn't hot for real estate investment trusts (REITs), and was instead buying office buildings whole. He said he thought REITs were charging too much for the underlying assets.

We recently received a report from PaineWebber, which states that the average office building REIT is trading at 62 percent above the value of the underlying assets.

That means if the stock market capitalization on a REIT stock is $162 million, the office buildings in the REIT would sell for $100 million, if sold off.

"That's one large premium to pay for liquidity," he said. It's hard to argue against him.

By the way, Shaffer is looking to place two, $250 million chunks of money with high-yield bond managers, and is seeking applicants now.

Another Shafferism: He has been gently pushing the big pension hoard into "passive" or "index" funds. Such funds are made up of a broad mix of stocks, and are designed to mirror market moves. There is no active management in such funds, or frequent buying and selling of stock.

The track record in index funds is about the same as managed funds but management costs are lower, noted Shaffer.

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