Amherst Securities Group LP and Pierpont Securities LLC agreed to merge, in the latest consolidation of bond dealers that were started or expanded after the financial crisis hobbled the largest banks.
The combined firm, known as Amherst Pierpont Securities LLC, will have almost 200 employees and be based in Stamford, Connecticut, the companies said today in a statement distributed by PR Newswire. Private-equity firms Stone Point Capital LLC and General Atlantic LLC and Amherst’s parent company will be “major” shareholders. Terms of the deal weren’t disclosed.
The merger will bring together Austin, Texas-based Amherst’s specialization in structured debt such as mortgage-backed securities and Stamford-based Pierpont’s focus on interest-rate and corporate-credit products, creating “the scale and infrastructure to support a diverse set of trading and banking businesses,” the firms said.
Dealers such as Amherst, Pierpont, KGS-Alpha Capital Markets LP and Gleacher & Co. benefited from bond-trading retreats by the biggest banks after the 2008 crisis, before being buffeted by the rivals returning to competition and their own higher capital costs. This year, they’re confronting the slower volumes plaguing fixed-income businesses.
Pierpont, which formed its debt-trading unit with a $200 million investment from Stone Point and General Atlantic in 2010, agreed in 2012 to merge with Warburg Pincus LLC-backed Cortview Capital Holdings Inc. It later aborted talks about combining with CRT Capital Group LLC, which is backed by Aquiline Capital Partners LLC and in 2011 acquired a sales and trading team of Braver Stern Securities LLC.
Amherst’s parent company, Amherst Holdings LLC, raised $225 million from an investor group led by Stone Point in October 2008, and later added Fixed Income Analysts Society’s Hall of Fame member Laurie Goodman, seasoned traders and a Hong Kong office as it grew.
KGS-Alpha, founded in 2010 with backing from Arsenal Capital Partners LP, raised $65 million in debt in December to boost its trading. Gleacher & Co., with investors including MatlinPatterson Global Advisers LLC, closed its businesses last year. Ticonderoga Securities LLC, Chapdelaine & Co., Citadel LLC and Aladdin Capital Holdings LLC were among firms to shutter or scale back debt-trading units in 2011.
Pierpont Chief Executive Officer Mark B. Werner, a former head of Bank of America Corp.’s securities unit, is set to become CEO of the new firm, according to the statement today. Amherst Holdings President Joseph N. Walsh III, who joined in 2009 from Fortress Investment Group LLC, will hold the same title at the combined dealer.
Amherst Holdings will continue to operate asset-management units and license its analytics to the new firm after the merger, which is expected to close by year end.