Last Friday, JMP Group (NYSE:JMP) became the latest boutique investment bank to go public. The company's stock rose 11.8% to $12.30, but the valuation is far from a bargain for investors.

Founded in the heady days of 1999, JMP wanted to be a next-generation powerhouse like Montgomery Securities or Hambrecht & Quist. However, a couple of years later, a wrenching bear market killed off many investment banks.

JMP realized that it needed to build a diversified platform, so the company expanded its sector coverage into business, consumer, and financial services, health care, real estate, and technology. The platform also offers M&A advising, institutional brokerage services, public offerings, and research for middle-market companies, among other features. JMP's broadened approach has worked quite well, and revenue has surged 340% over the last five years to $86.8 million.

With $61 million in IPO proceeds, JMP can now expand its asset management business. It currently has five hedge funds, two funds of hedge funds, and a real estate investment trust. As alternative asset managers like Fortress Investment Group (NYSE:FIG) have demonstrated, these can be highly lucrative businesses.

While this is all great, JMP still trades at a steep multiple of 47 times earnings. Keep in mind that the multiples of other boutiques like Greenhill (NYSE:GHL) and Thomas Weisel Partners (NASDAQ:TWPG) range from 20 to 25 times earnings. Valuations and volatility are typically high for recent IPOs, so despite JMP's diversified business model and a solid team, it's probably best for Foolish investors to wait on this one.

For further Foolishness:

Do you agree? Disagree? Be the first to rate JMP in Motley Fool CAPS, our new investing tool that harnesses the intelligence of the community.

Fool contributor Tom Taulli does not own shares mentioned in this article. He is currently ranked 1,610 out of 28,402 in CAPS. He is the author of The Complete M&A Handbook. The Fool has a disclosure policy.