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Big bankers flock to Silicon Valley

Merrill Lynch is belatedly joining the ranks of big-house banking firms opening up shop in Silicon Valley.

Merrill Lynch is belatedly joining the ranks of big-house banking firms opening up shop in Silicon Valley after finding that a San Francisco shingle just doesn't cut it in wooing technology clients.

Merrill's technology investment banking group has opened an office in Palo Alto, California, that now will serve as the firm's headquarters. Despite the "bull's" slow entry into the Silicon Valley, the brokerage expects to charge ahead in financing deals.

"We have not been in this market as we should have been, so we've been somewhat of a late-comer," said Scott Ryles, managing director and head of Merrill's technology investment banking group. "But we're here now, and it's to show our commitment."

Ryles said that, although the investment house has had an office in San Francisco, it did not provide the same vantage point for spotting potential deals to take companies public, finance debt offerings, or arrange equity.

"We didn't lose any deals because we weren't down here, but it was more about the deals we didn't see," Ryles said. He added that Merrill's Silicon Valley office, the opening of which was formally announced yesterday, has increased its visibility among venture capitalists and technology companies since its quiet roll-out in September.

"People have noticed when my business card said Palo Alto and not San Francisco," he said. "It is a very tight-knit community here."

The investment house will now be joining firms like Deutsche Morgan Grenfell, which opened its Menlo Park, California, office in 1996, and also Morgan Stanley which also moved to the Silicon Valley recently.

Goldman Sachs, meanwhile, opened a satellite office for its San Francisco-based high-technology group a few months ago. Sachs currently is seeking larger space to transfer the group's headquarters to Silicon Valley, said Brad Koenig, managing director of the high technology group. He said that he expects to have the new headquarters up and running during the next year or two, given the region's tight real estate market.

"We have a very large and increasing base of clients that are in Silicon Valley, and many relationships in Menlo Park with venture capitalists," he said. "We want to be involved and want to embrace the community."

Koenig noted, however, that he did not consider his bank's move into the Silicon Valley as coming late in the game. "We were the first New York-based firm to open a San Francisco office in the '60s or '70s. We look at this as a 50-year presence," he said. "This is an evolution for us for having the Silicon Valley be a central focus for us."

Merrill plans to operate a group of 30 technology bankers worldwide from its headquarters, and expects that number to increase to 50 within 18 months, Herb Allison, president and chief operating officer, said at a reception last night to kick-off the new headquarters.

"The technology group is one of the largest groups for us and one day it will be the largest," Allison said. "High technology has one of the fastest growth rates nationwide."