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By BENJAMIN MARK COLE

Contributing Reporter

Los Angeles has become a place of tremendous wealth in recent years, fueled by the entertainment-industry boom, international trade, appreciating real estate values and a historic bull run on Wall Street.

There are at least 50 Angelenos with a net worth exceeding $500 million, and more than 15,000 L.A. County residents live in homes with annual incomes in excess of $1 million.

Those fortunes are being made in everything from garments to aircraft to electronics to junk bonds.

But one thing Los Angeles doesn’t have: A large cadre of public companies.

L.A. County is home to 18 Fortune 500 companies and the city of L.A. has only seven, having recently lost Pacific Enterprises after it was merged into San Diego-based Sempra Energy.

By contrast, New York has 46 Fortune 500 companies, Chicago and Houston have 15 each, Atlanta and St Louis have 11 each, Dallas has nine, and Philadelphia, Pittsburgh and San Francisco have eight each.

L.A.’s population of Fortune 500 companies is likely to drop even further as Northrop Grumman Corp. pushes to be acquired by Bethesda, Md.-based Lockheed Martin Corp. Also to fall off the list soon is H.F. Ahmanson & Co., which agreed to be bought by Seattle-based Washington Mutual Inc. And just last week, there were rumors about Occidental Petroleum Corp. moving out.

True, Walt Disney Co. is based here in Burbank, as are a few other corporate giants, such as Atlantic Richfield Co. in downtown Los Angeles. But the field is small, and shrinking.

Why the weakness in public companies? Mostly because the Los Angeles economy has been more defined by industries that do not lend themselves to the public company mold.

Instead, L.A. is strong in real estate, heavy manufacturing and entertainment. It’s also famous for its reservoir of middle-market companies not household names or necessarily names a brokerage wants to take public with promises of huge future growth.

The phenomenon is especially seen in the entertainment industry. Hollywood is not known as a place to get a start-up company financed through venture capital, with an eye to launch an initial public offering.

“We are an entertainment-industry-driven town,” said Dick Israel, a Beverly Hills-based investment banker. “That’s not IPO country.”

Until the recent REIT boom, real estate was an industry that worked with banks and thrifts for financing, not Wall Street. But even working with Wall Street, real estate investment trusts are not hot start-ups, but established enterprises that go pubic to raise even more cash.

And with more than 650,000 Angelenos in manufacturing, Los Angeles has been a brawny, metal-bending town. That’s good for the economy, but not a place for buttoned-down Wall Streeters.

The companies that Wall Street and venture capitalists have been most enamored with of late, Internet-related and other high-tech ventures, continue to be concentrated in the Silicon Valley. Various Los Angeles business and political leaders have tried to dislodge the Bay Area’s high-tech dominance by coming up with catchy monikers to refer to L.A.’s tech industry. But they have thus far failed to come into widespread use.

“What were they trying to call us here? Silicon Valley South? Tech West? Tech Coast? A month later, nobody evens remembers what the so-called buzzwords were supposed to be,” said Israel. “They (Silicon Valley) got it, we don’t.”

That view is less true today than in years past, as L.A.’s high-tech industry and the amount of venture capital it attracts has been growing. Still, the Bay Area has a substantial edge where it really counts: in the number of high-tech-oriented brokerages, like BancAmerica Robertson Stephens, Nationsbanc Montgomery Securities and Hambrecht & Quist, that tend to bring companies public.

“It takes a lot more than just wealthy individuals to start up high-tech companies,” said Skip Victor, managing partner with Chanin Kirkland Messina LLC, a Westside investment banking shop. “In the Silicon Valley, you have 30 to 40 years of infrastructure. You have the lawyers, you have the bankers, you have the ‘mother’ companies, such as Hewlett-Packard, that spun off other companies. You have Stanford University.”

By contrast, Los Angeles is a sprawling metropolis of many industries, strong in everything from plastics to cardboard boxes to ball bearings to apparel to aerospace. “There’s a lot of middle-market companies out there. But there are not necessarily ones you can go public with,” said Victor.

Jim Upchurch, president of Libra Investments LLC in West Los Angeles, an investment banking shop, concurs with Victor. “Much of the market here is middle-market companies, and even micro-market, and those companies are more difficult to ‘bank,’ if you will,” said Upchurch.

Israel also noted that Los Angeles, by perhaps historical accident, became an investment-banking town for leveraged-buyout titans, such as Michael Milken, rather than high-tech hot shots. Milken, of course, established Drexel Burnham Lambert’s West Coast headquarters in Beverly Hills because he was born and raised here. Soon, there was a cottage industry of junk bond financiers in L.A., and to this day, there are spin-off firms, such as the West Coast offices of Donaldson Lufkin & Jenrette Securities Corp., or Libra Investments, or even parts of Jefferies Group Inc. The Drexel spin-offs have all been successful in mergers-and-acquisitions activity, in financing for mergers, and junk bonds, and private placements.

But they are not IPO types.

“Maybe we are just too close to San Francisco. That’s why we never got the high-tech companies, and the high-tech regional brokerages,” said Victor. “Go up there and ask them, ‘How come you don’t have Hollywood?’ I think it is just historical accident.”

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