Pan-European banks, including Mediobanca and Deutsche Bank, seek senior dealmaker bench strength through high profile acquisitions.
Overview
Current market
We are seeing
- M&A activity in the Brokers/Corporate Finance vertical heats up:
- Mergers of equals (e.g., FinnCap & Cenkos Securities and Redburn & Atlantic Equities)
- Acquisitions (e.g., Houlihan Lokey's acquisition of Oakley Advisory and Marex's acquisition of ED&F Man Capital Markets)
- Partnerships (e.g., Société Générale's cash equity and equity research JV with AllianceBernstein)
- Access to public markets (e.g., ThinkMarkets' de-SPAC into FG Acquisition Corporation)
- Pan-European banks seek to bolster:
- Financial advisory capabilities (e.g., Mediobanca Group's acquisition of Arma Partners)
- Securities brokerage capabilities (e.g., Deutsche Bank's acquisition of Numis)
- Mounting competition from:
- Online trading platforms (e.g., Funderbream, eToro and Lightyear all successfully raised growth capital in the previous 12 months)
- Crypto trading venues (e.g., Amber Technologies, 21.co and Bitlevex all successfully raised growth capital in the previous 12 months)
Key drivers/challenges
- Trade consolidators target organic growth aimed at:
- Acquiring specialist sub-sector capability (e.g., Mediobanca's acquisition of Arma Partners and Houlihan Lokey's acquisition of Oakley Advisory)
- Extending geographic reach (e.g., Noor Capital's acquisition of House of Borse and Chimera's acquisition of 55.9% of Beltone)
- Senior dealmaker bench strength (e.g., Deutsche Bank's acquisition of Numis)
- Future-proofing in anticipation of rebound in M&A and IPO activity
- Financial advisory boutiques seek shelter in numbers amidst harsh market conditions (e.g., FinnCap & Cenkos Securities merger)
Trends to watch
- Appetite for:
- DIY stockbroking to remain strong (e.g., Fenbushi Capital US's investment in Amber Technologies)
- Crypto trading unlikely to diminish, notwithstanding established bank sentiment (e.g., HSBC, Nationwide and NatWest have all imposed limits on customer crypto purchases)
- Market consolidation amongst online brokers as high interest rates make debt funding less attractive for financial sponsors
Our M&A forecast
Market consolidation to continue, improving the NIM environment stocks war chests of pan-European investment banks. Fintech funding slowdown is likely to lead to consolidation across online securities and digital asset trading platforms.
Other financial services—Publicly reported deals & situations
High investor appetite
Deal highlight:
White & Case advised Mediobanca on its acquisition of a controlling interest in Arma Partners and US Arma Partners to create a leading digital economy franchise within Mediobanca's CIB division.
Private equity:
- VentureWave (Online trading): Participation in US$40 million Venture funding round in Funderbeam (May 2023)
- ION Group and Softbank Vision 2 Fund (Online trading): Participation in US$250 million Venture funding round in eToro (March 2023)
- Permira (Equity research): Acquisition of majority equity stake in Acuity Knowledge Partners (January 2023)
- Fenbushi Capital US (Crypto trading): Participation in US$300 million Series C funding round for Amber Technologies (December 2022)
- Apax Partners (Online broker): Acquisition of undisclosed minority stake in Pandat Finance (September 2022)
Strategic investors:
- Mediobanca Group (Financial advisory): Acquisition of Arma Partners (May 2023)
- Deutsche Bank (Broking and financial advisory): Acquisition of Numis (April 2023)
Foreign investors:
- Noor Capital (CFD broker): Acquisition of House of Borse (March 2023)
- Chimera Investment (Broking and Financial Advisory): Acquisition of 55.9% of Beltone (August 2022)
De-SPACs:
- ThinkMarkets (Online trading): De-SPAC by FG Acquisition Corporation (May 2023)
Market consolidation to achieve economies of scale & scope
Deal drought raises stakes for boutiques. The slowest start to dealmaking in a decade is expected to unleash further consolidation across the investment banking industry as more boutiques and brokers are picked off by bigger players. Financial Times (June 2023)
Acquisitions:
- Investec Bank (Financial advisory): Acquisition of 60% of Capitalmind Group (June 2023)
- Delta Capita (Decentralised finance): Acquisition of SETL's capital markets business (April 2023)
- Bakkt Holdings (Crypto trading): Acquisition of Apex Crypto (April 2023)
- Credit Suisse (Investment banking): Acquisition of The Klein Group (February 2023)
- Double Delta (Impact investment advisory): Acquisition of Credit Suisse's Singapore impact advisory arm (January 2023)
- BUX (Neo brokerage): Acquisition of retail brokerage arm from Ninety Nine (December 2022)
- Houlihan Lokey (Corporate finance): Acquisition of Oakley Advisory (November 2022)
- SICO (Investment banking): Acquisition of 27.29% of Muscat Capital (September 2022)
- Marex (Brokerage): Acquisition of ED&F Man Capital Markets (August 2022)
- eToro (Online trading): Acquisition of Gatsby (August 2022)
- MNC Kapital Indonesia (Brokerage): Acquisition of majority stake in Auerbach Grayson & Company (January 2021)
Mergers:
- PhiDelphi Corporate Finance & Clearwater International (Financial advisory): Merger (April 2023)
- Redburn & Atlantic Equities (Stock brokerage): Merger (April 2023)
- FinnCap & Cenkos Securities (Stock brokerage): Merger (March 2023)
Partnerships:
- Slivr (Corporate finance): German on-demand business financing JV with Deutsche Firmenkredit Partner (December 2022)
- Société Générale (Equity research): Cash equity and equity research JV with AllianceBernstein Holding (November 2022)
Mounting online competition
- Funderbream (Online trading): Successful US$40 million funding round led by VentureWave (May 2023)
- eToro (Online trading): Successful US$250 million Venture funding round led by ION Group and Softbank Vision Fund 2 (March 2023)
- Amber Technologies (Crypto trading): Successful US$300 million Series C funding round led by Fenbushi Capital US (December 2022)
- 21.co (Crypto trading): Successful US$25 million Venture funding round led by Marshall Wace (September 2022)
- Bitlevex (Crypto trading): Successful US$50 million Venture funding round led by GEM Digital (September 2022)
- Lightyear (Online trading): Successful US$25 million Series A funding round led by Lightspeed Venture Partners and Virgin Group (July 2022)
