Natixis Buys Stake in U.S. Boutique to Tap Advisory Growth

  • French investment bank to acquire 51% of Peter J. Solomon
  • Boutiques in favor after record year for global deals in 2015

Natixis SA, the French investment bank, agreed to buy a majority stake in mergers-and-acquisitions advisory firm Peter J. Solomon Co. to tap growth in the U.S.

Natixis agreed to acquire a 51 percent interest in the company, which is named after its founder, a former vice chairman of Lehman Brothers Holdings Inc. and deputy mayor of New York under Ed Koch, the Paris-based firm said Wednesday in a statement. The bank, a unit of Groupe BPCE, didn’t disclose the terms of the transaction.

Natixis, led by Chief Executive Officer Laurent Mignon, said on Wednesday that revenue at its key units is growing in line or faster than its 2017 targets as it invests in businesses such as advisory. The bank last year expanded its mergers and acquisitions business in Europe through the acquisition of Leonardo & Co’s activities in France.

“The U.S. is a very important market for us,” Mignon said in an interview with Bloomberg TV on Thursday. The bank wants to “increase every revenue coming from fee-based business. Going more into advisory is a key element to us.”

Natixis rose as much as 7.3 percent and was up 5.4 percent at 4.32 euros by 2:08 p.m. in Paris, while a rout among European lenders deepened. The 47-member STOXX 600 Banks Index fell 5.8 percent with Societe Generale SA, France’s second-largest bank, plunging 12 percent, its biggest daily drop in more than four years.

Profit Jump

Boutique investment banks are in favor after global M&A reached a record in 2015, and because their businesses are less capital intensive than lending or trading. Paul Taubman’s PJT Partners Inc. went public last year, while Moelis & Co. had an initial public offering in 2014. Roger Altman’s Evercore Partners Inc. reported a record year for hiring in 2015.

Evercore agreed in 2015 to acquire German boutique firm Kuna & Co. to boost operations abroad and add buyout clients, and said it will invest in Luminis Partners to expand in Australia. Greenhill & Co., the independent firm founded by ex-Morgan Stanley banker Robert Greenhill, bought pension adviser Cogent Partners to diversify last year.

Peter J. Solomon, founded in 1989 and based in New York, employs about 70 people, according to its website. Its deals include Staples Inc.’s agreement last year to buy Office Depot Inc. for more than $6 billion.

“Peter J. Solomon is a great, small sized, high-quality Wall Street firm,” Mignon said in the interview. “Together with them, we can enhance our ability to do business in the U.S.”

Natixis said on Wednesday that net income rose 39 percent to 316 million euros ($356 million) in the fourth quarter from a year earlier, with revenue from capital markets increasing 14 percent. The bank plans to pay an exceptional dividend of 10 cents per share on top of a 25 cent ordinary payout for 2015.

The bank’s revenue from equities trading jumped 43 percent in the fourth quarter, helped by “strong demand” for its equity derivatives. At Societe Generale, revenue from equity trading plunged 31 percent in the period as clients had “risk aversion notably for structured products,” the Paris-based bank said.

Mignon said the bank raised its bonus pool by 4 percent. That contrasts with Credit Suisse Group AG cutting its variable pay by 11 percent, with some bankers receiving cuts of more than 30 percent, based on the division’s performance.

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