IFR Editor-at-large Keith Mullin
It still isn’t entirely clear (well to me at any rate) whether the new firm will be UK focused, pan-European or start out with a broader EMEA footprint. McIntyre has spent the majority of his career focusing on the UK, but if as many as 45 RBS M&A bankers move to the new firm, as is suggested, that suggests a broader focus than the UK.
Launching an advisory boutique in the midst of an economic downturn may look counter-intuitive to some extent, but in other respects getting the new firm up and running during a downturn in takeover activity is a smart move
According to Reuters, Justin Symonds, head of transport and logistics, as well as Charles Roast, Mark Crossley and Christopher Huggins, all managing directors in UK M&A, will join the new firm.
There has certainly been a boom in capital markets, restructuring and M&A boutique start-ups since the global financial crisis, and they’ve done relatively well as advisory players with no balance sheet muscle to buy them into deals. IPO advisory firms, for example, are part and parcel of the process of going public these days and the advisory bankers – who stand between the underwriters and the company – are predominantly drawn from the ranks of ECM bankers at major firms.
Beyond independent heavyweights Rothschild and Lazard (currently ranked 4th and 6th respectively in UK M&A year-to-date), the top 25 UK M&A league table also includes Ondra, Centerview, Moelis, and Gleacher Shacklock. Whatever country or region you look at, the story is the same, even more so in the US where around 10 boutiques are in the YTD top 25.
RBS’s M&A pipeline has not surprisingly slipped since the group announced it was quitting the business. Prior to that, though, it had managed to get itself into a middling position. For full-year 2011, the bank ranked 18th in world-wide announced M&A, 16th in EMEA and 11th in the UK. That advisory business could be poised to move to the next stage under its own steam, with the right backers.
Indeed, the plan is to bring in outside capital to enable the new firm to hit the ground running, helping it build out its deal pipeline and complete deals in process. Timing of the launch will depend on completing these not insignificant details.
The partners will have a sizeable minority stake in their business and they have reportedly approached banks that currently lack a ranking advisory footprint in Europe – including Asian, US and Latin American players – to inject the rest. RBS may initially retain a small residual stake in the new firm. Whoever the new backers are, the new firm will be looking to link up with parties that can either bring deals to the table or which have some relevant expertise on offer.
Who needs a broader UK platform?
I have no inside track into the identity of any of the parties being approached to back the RBS venture, but you’d imagine they’d include sovereign wealth funds as well as banks. As for the banks, I can’t see any European bank immediately stepping up to the plate and sinking capital into an M&A boutique in the midst of a general deleveraging cycle.
But I wouldn’t necessarily discount the likes of Macquarie, the Canadian or Japanese majors, or some of the more ambitious Indian banks. The Japanese have been aggressively buying up positions and businesses for sale out of the European banks although they’ve steered clear to this point of advisory businesses. Latin Americans? Hmmm. I don’t see it. But who knows? Other names out there are Jefferies, Houlihan Lokey, and Wells Fargo.
What about the likes of Evercore? The firm has been aggressively expanding in the past three years and is now more of a full-service global investment bank. It’s added product lines (such as institutional equities), and acquired private equity and asset management businesses. On the investment banking side, it’s signed co-operation agreements with G5 partners in Brazil, India’s Kotak Mahinda Capital (for M&A between India and the US, UK and Mexico), and Woori Investments in South Korea.
Of existing UK banks, there are rumours that Standard Chartered is contemplating a more aggressive push into advisory in Europe and could be looking for an angle. *
McIntyre in the limelight
Whoever the backers are, the new venture will be a big step for M&A high-flier McIntyre, who has been in the game since the mid-1980s. He spent 14 years at Morgan Grenfell and then Deutsche Morgan Grenfell following Deutsche Bank’s acquisition of the leading UK investment bank in 1990. He jumped ship in 1999 to the-then fast-growing Lehman Brothers, where he was head of UK M&A until 2006.
He took a short break from the business at that point, working for real estate tycoon Robert Tchenguiz before joining Dresdner Kleinwort in 2007, also as UK M&A head. Dresdner was of course acquired by Commerzbank in 2008. McIntyre left the firm fairly acrimoniously in 2009; RBS poached him at the end of 2010 to bulk up its EMEA corporate financing unit before the majority state-owned lender opted to exit M&A and equities earlier this year. He has worked across a broad range of sectors and with a range of high-profile clients.
Launching an advisory boutique in the midst of an economic downturn may look counter-intuitive to some extent, but in other respects getting the new firm up and running during a downturn in takeover activity is a smart move insofar as when we do get through the current point in the economic cycle, it will be raring to go.
* (Revised from previous version to update details)
