Regions Acquires BlackArch Partners for Push Into M&A Dealmaking

  • Deal is first for bank since it began building advisory unit
  • Global M&A volumes are on track to reach a record this year

Regions Financial Corp., Alabama’s biggest bank, bought BlackArch Partners to expand in the business of providing advice on mergers and acquisitions.

The deal will add scale and capabilities to Regions’s M&A advisory businesses and bolster non-interest revenue, John Turner, head of the corporate banking group at Birmingham-based Regions, said Friday in a statement. BlackArch’s founding partners will continue to lead the firm, according to the statement, which didn’t disclose terms.

Regional lenders are pushing into investment banking to take advantage of a surge in dealmaking and increase fee revenue as they seek to counter pressure on interest income. Regions and other firms, such as KeyCorp and SunTrust Banks Inc., are adding staff and other capabilities to strengthen advisory businesses and capital markets. Regional banks including BB&T Corp. also are making small acquisitions of their own to extend into new geographies and businesses.

“BlackArch Partners has an attractive growth profile and a strong reputation for excellence serving the middle market,” Turner said in the statement.

BlackArch is Regions’s first acquisition since it started building its advisory unit last year, said Evelyn Mitchell, a bank spokeswoman. The lender, which sold its Morgan Keegan retail brokerage to Raymond James Financial Inc. in 2012, has been expanding its capital markets division over the past five years by adding talent and expertise, Mitchell said.

Regions climbed 1.7 percent to $9.37 at 10:23 a.m. in New York. The stock has dropped 11 percent this year, the second-worst performance in the 24-company KBW Bank Index.

Global M&A volumes are near a record pace this year, with $4.5 trillion of announced deals, fueled by large transactions. Some investment bankers including Lazard Ltd. Chief Executive Officer Ken Jacobs have said they expect work to trickle down to the middle-market. BlackArch will compete with boutique investment banks such as Lazard, Houlihan Lokey Inc. and Moelis & Co.

BlackArch, which opened in 2010, drew talent with experience at larger firms including Bank of America Corp. and Goldman Sachs Group Inc. Its founders include people who also helped create Edgeview Partners, a boutique acquired by Piper Jaffray Cos. in 2013.

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