The Macquarie Group has acquired boutique investment bank Fox-Pitt Kelton Cochran Caronia Waller for $147 million, enhancing its capabilities targeted at financial institutions.
The acquisition price comprises $130 million in equity value, plus $16.7 million of net long-term liabilities on the balance sheet at financial close. Macquarie is paying the consideration entirely in cash, although part of the payment will be deferred over four years. The financial close is expected by the end of 2009, subject to regulatory approvals and other customary closing conditions.
Fox-Pitt Kelton was founded in London in 1971 and has grown into a boutique investment bank with an established standing in providing services for financial institutions. It currently employs 267 people of which 50% are based in offices in the US -- in New York, Chicago, San Francisco, Hartford and Boston. Another 40% are located in London and the rest are in Asia -- in Hong Kong and Tokyo. Two-thirds of Fox-Pitt Kelton's executives work in the firm's securities business, while the rest are employed in advisory, corporate broking and capital markets.
In February 2006, private equity firm J.C. Flowers backed a management buyout of Fox-Pitt Kelton from its owner, insurance firm Swiss Re, for an undisclosed consideration. Swiss Re retained an interest in Fox-Pitt Kelton through convertible preferred shares. Then in September 2006 Fox-Pitt Kelton merged with Chicago-based Cochran Caronia Waller.
Last year Fox-Pitt Kelton worked with J.C. Flowers to advise Bank of America on its $50 billion all-stock takeover of Merrill Lynch, a deal which cemented its league table position in the US.
"Acquiring a specialist firm like FPK is a prime example of Macquarie's expansion on both sides of the Atlantic," said Tim Bishop, president and chief executive officer of Macquarie Capital (USA), in a written statement announcing the deal.
George Cochran and Len Caronia, who are currently chairmen of Fox-Pitt Kelton based in Chicago, will become chairmen of Macquarie Capital's global financial institutions group (FIG) advisory business. Fox-Pitt Kelton president John Waller will co-head Macquarie's global FIG advisory business alongside Macquarie executive director Andrew Low. Low will move back to Sydney in January after six years in Hong Kong to take on a new role as chief operating officer for Macquarie Capital Advisers.
The acquisition is the third by the Macquarie Group this year. In August it acquired US-based asset manager Delaware Investments for $428 million, adding $125 billion of assets under management. And in June it acquired Canadian investment bank Tristone Capital Global for $120 million to consolidate its presence in the natural resources sector.