Stock Value
About Jefferies Financial Group
Jefferies Financial Group Inc. (Jefferies) operates as a global full-service investment banking and capital markets firm. The company’s largest subsidiary, Jefferies LLC, a U.S. broker-dealer, and its first international operating subsidiary, Jefferies International Limited, a U.K. broker-dealer. The company’s strategy focuses on continuing to build out its full-service investment banking business, enhancing its capital markets sales and trading businesses and further developing its Leucadia Asset Management alternative asset management platform.
Business Segments
The company operates through two business segments, Investment Banking and Capital Markets; and Asset Management.
Investment Banking and Capital Markets provides investment banking, capital markets and other related services to the company’s clients. The company provides underwriting and financial advisory services across most industry sectors in the Americas; Europe and the Middle East; and the Asia-Pacific. The company’s capital markets businesses operate across the spectrum of equities and fixed income products. Related services include prime brokerage, equity finance, research and strategy, corporate lending and real estate finance. Investment Banking and Capital Markets also includes its corporate lending joint venture (JFIN Parent LLC or Jefferies Finance) and its commercial real estate finance joint venture (Berkadia Commercial Holding LLC or Berkadia).
Asset Management provides alternate investment management services to investors globally. In addition, through the company’s asset management efforts, it often invests seed or additional strategic capital for its own account in the strategies offered by it and affiliated asset managers.
Investment Banking and Capital Market
Jefferies is one of the world’s leading full-service investment banking and capital markets firms. The company’s Investment Banking and Capital Markets segment focuses on Investment Banking, Equities and Fixed Income. The company primarily serves businesses and their owners, institutional investors, and government entities.
Investment Banking
The company provides its clients around the world with a full range of financial advisory, equity underwriting and debt underwriting services. The company’s services are enhanced by its relentless client focus, its differentiated insights and a flat and nimble operating structure.
The company’s investment banking professionals operate in the Americas, Europe and the Middle East and the Asia-Pacific, and are organized into industry, product and geographic coverage groups. The company’s industry coverage groups include Consumer; Energy and Power; Financial Services; Financial Sponsors; Healthcare; Industrials; Infrastructure; Municipal Finance; Real Estate, Gaming and Lodging; and Technology, Media and Telecom. The company’s product coverage groups include advisory (which includes mergers and acquisitions, sponsor coverage, private capital and restructuring and recapitalization expertise), equity underwriting and debt underwriting. The company’s geographic coverage groups include teams based in major cities in the United States, as well as London, Hong Kong, Amsterdam, Dubai, Frankfurt, Madrid, Melbourne, Milan, Mumbai, Paris, São Paulo, Singapore, Stockholm, Sydney, Tel Aviv, Tokyo, and Toronto. The company continues to invest in its investment banking division expanding its professional talent base and growing its international presence.
Advisory Services
The company provides mergers and acquisition, debt advisory and restructuring and private capital advisory services to companies, financial sponsors and government entities. In the mergers and acquisitions area, the company advises business owners, private equity firms and corporations on mergers and acquisitions, divestitures, cross-border transactions, strategic ventures and corporate defense activities. In the debt advisory and restructuring area, the company provides companies, bondholders, creditors and lenders a full range of both in-court and out-of-court advisory capabilities. As part of its private capital advisory business, the company advises financial sponsors and their investors on the creation and structuring of funds and fund offerings and primary and secondary capital raising. The company also advises large institutional investors on the sale of private equity limited partnership and co-investment interests.
Equity Underwriting
The company provides a broad range of equity financing capabilities and equity capital solutions to businesses and their owners. These capabilities include private placements of equity, initial public offerings, follow-on offerings, rights-offerings, at the market offerings, block trades, private placements, corporate derivatives and equity-linked products.
Debt Underwriting
The company provides a wide range of debt capital raising and acquisition financing capabilities to businesses, financial sponsors and government entities. The company focuses on structuring, underwriting and distributing public and private debt, including investment grade debt, high yield bonds, leveraged loans, municipal debt, mortgage-backed and other asset-backed securities, and help its clients access alternative and structured finance solutions that optimize terms and minimize risk.
Other Investment Banking Activities
Jefferies Finance, the company’s 50/50 joint venture with Massachusetts Mutual Life Insurance Company, structures, underwrites and syndicates primarily senior secured loans to corporate borrowers; and manages proprietary and third-party investments for both broadly syndicated and direct lending loans. Jefferies Finance conducts its operations primarily through two business lines, Leveraged Finance Arrangement and Portfolio and Asset Management. Loans are originated primarily through the company’s investment banking efforts and Jefferies Finance typically syndicates to third-party investors substantially all of its arranged volume through it. The Portfolio and Asset Management business line involves the management of a diversified portfolio of assets under management composed of portions of loans it has originated or arranged, as well as loan positions that it has purchased in the primary and secondary markets. Jefferies Credit Partners, together with its subsidiaries Apex Credit Partners and Jefferies Credit Management, serve as a private credit platform managing proprietary and third-party capital across comingled funds, business development companies, separately managed accounts and collateralized loan obligations. Additionally, Jefferies Credit Partners launched its first business development company in 2023. Jefferies Finance, Jefferies Credit Partners, Jefferies Credit Management and Apex Credit Partners are registered investment advisors.
Berkadia Commercial Mortgage Holding LLC is the company’s commercial real estate finance and investment sales joint venture with Berkshire Hathaway, Inc. Berkadia originates commercial real estate loans, primarily in respect of multifamily housing units, that are sold to U.S. government agencies or other investors shortly after the loans are funded with Berkadia retaining the mortgage servicing rights. For loans sold to Fannie Mae, Berkadia assumes a shared loss position throughout the term of each loan, with a maximum loss percentage of approximately one-third of the original principal balance. These loans provide interim financing to borrowers who intend to refinance the loan with longer-term loans from an eligible government agency or other third-party. Berkadia also provides services related to the acquisition and disposition of multifamily real estate projects, including brokerage services, asset review, market research, financial analysis and due diligence support and performs primary, master and special servicing functions.
Strategic Alliance with SMBC Group
The company has a strategic alliance with Sumitomo Mitsui Financial Group, Inc., Sumitomo Mitsui Banking Corporation (SMBC) and SMBC Nikko Securities Inc. (together referred to as SMBC Group) to collaborate on corporate and investment banking business opportunities, with an initial focus on leveraged finance and cross-border mergers and acquisitions involving Japanese companies.
In April 2023, the company announced a significant expansion of this alliance. This relationship provides the company with enhanced client capabilities and supports the continued growth of its global investment banking and capital markets business.
Equities
Equities Research, Capital Markets
The company provides its clients leading advisory and execution capabilities through equities research, sales and trading across global equities markets with key capabilities in cash equities, electronic trading, equity derivatives, convertibles and corporate access. The company delivers high touch services and act as agent, principal or market maker to provide clients with execution quality in varying liquidity situations—providing clients with bespoke insights and execution informed by its sector expertise. The company’s equities electronic trading business provides its clients with expertise and innovative electronic sales and trading solutions, including customizable algorithms. The company brings full a full-service coverage model and customized solutions in equity derivatives and its convertibles platform is a market leading franchise incorporating a cutting-edge asset class platform for pricing and analysis for all convertible securities.
The company’s equity research, sales and trading efforts are organized across the Americas, Europe and the Middle East and the Asia-Pacific and it continues to strengthen its global footprint throughout these regions. The company’s clients are primarily institutional market participants, such as mutual funds, hedge funds, investment advisors, pension and profit sharing plans, and insurance companies. Through its global research team and sales force, the company maintains relationships with its clients, distribute investment research and insights, trading ideas, market information and analyses across a range of industries and receive and execute client orders.
Prime Services
The company’s Prime Services business provides a full-service offering that include: financing, business consulting and capital introduction services, a robust technology platform, outsourced trading solutions for both start-up and existing managers, strategic content and thought leadership and other prime brokerage services. The company’s prime brokerage services in the U.S. provide hedge funds, money managers and registered investment advisors with execution, financing, clearing, financing, swaps, outsourced trading and reporting and administrative services. The company’s platform is fully self-clearing and provides global access to markets across the world. The company finances its clients’ securities positions through margin loans that are collateralized by securities, cash or other acceptable liquid collateral. The company also operates a matched book in equity and corporate bond securities, whereby it borrows and lends securities versus cash or liquid collateral and earn a net interest spread.
Wealth Management
The company provides tailored wealth management services designed to meet the needs of high net worth individuals, their families and their businesses, private equity and venture funds and small institutions. The company’s advisors provide access to all of its institutional execution capabilities and deliver other financial services. The company’s open architecture platform affords clients access to products and services from both its firm and from a variety of other major financial services institutions.
Fixed Income
Jefferies’ global fixed income platform provides clients with distinctive solutions, service, and execution. The company’s deep client relationships coupled with its strong core credit trading, research and origination capabilities, enable it to provide distinctive opportunities and value-added insights across its business. The company offers clients real-time event-driven ideas, outstanding high and low touch execution, and consistent, comprehensive liquidity across its expanding global platform. The company’s product capabilities include investment grade, high yield and distressed debt securities, the U.S. and European government and agency securities, municipal bonds, leveraged loans, emerging markets debt, and interest rate and credit index derivative products. In addition, the company has a strong securitized markets presence across trading and structuring, including asset-backed securities, collateralized loan obligations (CLOs), commercial mortgage-backed securities, European prime and non-conforming residential mortgage-backed securities, marketplace lending and the U.S. agency and non-agency residential mortgage-backed securities. Jefferies is also designated as a Primary Dealer for U.S. government securities, as well as designated in similar capacities for several European countries. Additionally, through the use of repurchase agreements, the company acts as an intermediary between borrowers and lenders of short-term funds and obtain funding for various of its inventory positions. The company’s strategists and economists provide ongoing commentary and analysis of the global fixed income markets, as well as providing ideas and analysis to clients across a variety of fixed income products.
Asset Management
Under the Leucadia Asset Management (LAM) umbrella, the company manages and provides services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes. LAM offers institutional clients an innovative range of investment strategies through its directly owned and affiliated managers and offers investors opportunities to invest alongside the company.
The company’s products are offered to pension funds, insurance companies, sovereign wealth funds, and other institutional investors globally. The investment products under LAM range from multi-manager products to niche equity long/short strategies to credit strategies, among other strategies. The company offers its affiliated asset managers access to capital, robust operational infrastructure and global marketing and distribution. The company often invests seed or additional strategic capital for its own account in the strategies offered by it and associated third-party asset managers in which it has an interest. The company continues to expand its asset management efforts and establish further strategic relationships to expand its offerings.
Merchant Banking
The company’s legacy merchant banking portfolio, managed by the co-heads of Asset Management, includes Stratos Group International, LLC (Stratos), provider of online foreign exchange trading services; OpNet S.p.A. (OpNet), a fixed wireless broadband service provider in Italy, which also owns 59.3% of Tessellis S.p.A. (Tessellis), a telecommunications company publicly listed on the Italian stock exchange; HomeFed LLC (HomeFed), 100% (real estate); investments in certain public equity securities; and other investments in private companies and asset management funds.
Regulation
As a publicly traded company and through its investment bank and investment management businesses in the U.S., the company is subject to the jurisdiction of the Securities and Exchange Commission (SEC). In the U.S., the SEC is the federal agency responsible for the administration of federal securities laws, and the Commodity Futures Trading Commission (CFTC), which is the federal agency responsible for the administration of laws relating to commodity interests (including futures, commodity options and swaps). In addition, the Financial Industry Regulatory Authority, Inc. (FINRA) and the National Futures Association (NFA) are self-regulatory organizations (SROs) that are actively involved in the regulation of the company’s financial services businesses (securities businesses in the case of FINRA and commodities/futures businesses in the case of the NFA). Broker-dealers that conduct securities activities involving municipal securities are also subject to regulation by the Municipal Securities Rulemaking Board (MSRB). In addition to federal regulation, the company is subject to state securities regulations in each state and U.S. territory in which it conducts securities or investment advisory activities. The designated examining authority under the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act) for Jefferies LLC’s activities as a broker-dealer is FINRA, and the designated self-regulatory organization under the U.S. Commodity Exchange Act for Jefferies LLC’s non-clearing FCM activities is the NFA.
Jefferies Financial Services, Inc. (JFSI), one of the company’s subsidiaries, is registered with the CFTC as a swap dealer and registered with the SEC as an SBS dealer and is required to comply with the SEC and CFTC capital rules for SBS dealers and swap dealers, respectively. Further, as an OTC derivatives dealer, JFSI is subject to compliance with the SEC’s net capital requirements.
Since the company’s Wealth Management division makes recommendations to retail customers, it is required to comply with the obligations imposed under Reg BI and applicable state laws.
The investment activities of the company’s investment management businesses are also subject to regulation under the Securities Exchange Act of 1934, as amended, the Securities Act of 1933, as amended, the Investment Company Act of 1940, as amended (the Investment Company Act) and various other statutes, as well as the laws of the fifty states and the rules of various United States and non-United States securities exchanges and self-regulatory organizations, including laws governing trading on inside information, market manipulation and a broad number of technical requirements (e.g., options and futures position limits, execution requirements and reporting obligations) and market regulation policies in the United States and globally. Pursuant to systemic risk reporting requirements adopted by the SEC, the company's affiliated registered investment advisers with private investment fund clients are required to report certain information about their investment funds to the SEC.
The company is an active participant in the international capital markets and provide investment banking services internationally, primarily in Europe and the Middle East and the Asia-Pacific. As in the U.S., the company’s international subsidiaries are subject to extensive regulations proposed, promulgated and enforced by, among other regulatory bodies, the European Commission and European Supervisory Authorities (including the European Banking Authority and European Securities and Market Authority), the U.K. Financial Conduct Authority, German Federal Financial Supervisory Authority (BaFin), Canadian Investment Regulatory Organization, Hong Kong Securities and Futures Commission, the Japan Financial Services Agency, the Monetary Authority of Singapore and the Australian Securities and Investments Commission. Jefferies LLC has elected to compute its minimum net capital requirement in accordance with the Alternative Net Capital Requirement as permitted by the Net Capital Rule, which provides that a broker-dealer shall not permit its net capital, as defined, to be less than the greater of 2% of its aggregate debit balances (primarily customer-related receivables) or $250,000 ($1.5 million for prime brokers). Jefferies LLC is a dually registered broker-dealer and FCM and is required to maintain net capital in excess of the greater of the SEC or CFTC minimum financial requirements. As a broker-dealer, Jefferies LLC is subject to the SEC’s Uniform Net Capital Rule 15c3-1 (the Net Capital Rule), which specifies the minimum level of net capital a broker-dealer must maintain and also requires that a significant part of a broker-dealer's assets be kept in relatively liquid form.
History
The company was founded in 1962. It was incorporated in 1968. It was formerly known as Leucadia National Corporation and changed its name to Jefferies Financial Group Inc. in 2018.
