UK & European Financial Services M&A: Sector Trends H2 2023 | H1 2024 — Brokers / Corporate Finance
Mid-market investment banks consolidate at the fastest rate yet—Panmure Gordon & Liberum, Redburn (Europe) & Atlantic Equities and Cenkos Securities & FinnCap Group mergers reshape the City skyline.
Current market:
Promising M&A activity levels
We are seeing:
Europe's banks hone-in on:
- Expansion, as the historic shackles of the global financial crisis finally ease (e.g., Deutsche Bank's acquisition of Numis)
- Depth of bench (e.g., Renta 4 Banco's acquisition of Sigrun Partners)
- Specialist tech financial advisory skillsets (e.g., Mediobanca's acquisition of Arma Partners and Bryan Garnier's acquisition of NOR Capital)
- Mobile / online trading capability (e.g., ABN AMRO's acquisition of BUX)
Market consolidation:
- Mergers between culturally aligned investment banks (e.g., Panmure Gordon & Liberum merger)
- Acquisitions to build scale (e.g., Marex's acquisitions of Cowen's prime brokerage and outsourced trading businesses as well as Eagle Commodities)
- Strategic alliances to enter new markets (e.g., Livingstone Partners' debt advisory JV with Corus Corporate Finance)
- Partnerships to widen product offering (e.g., Tomorrow's brokerage-as-a-service JV with lemon.markets)
- Deployment of private equity-backed M&A firepower (e.g., Evolution's acquisition of Creditas Financial Solutions, following equity investment from Carlyle)
Key drivers / challenges:
Mid-market investment banks seek:
- To secure economies of scale and scope in already well-serviced UK markets (e.g., Panmure Gordon & Liberum, Redburn (Europe) & Atlantic Equities and Cenkos & FinnCap mergers)
- To be prepared for anticipated rebound in M&A and IPO activity in H2 2024 / H1 2025
- To bolster tech and mobility deal credentials (e.g., Arma Partners and NOR Capital both found new owners in the last 12 months)
- To weather mounting competition from digital trading platforms (e.g., GFO-X and Pontera both successfully secured fresh funding in the last 12 months)
Renewed focus on key business lines:
- Tag-out of discretionary wealth management (e.g., Investec's sale of Investec Wealth & Investment)
- Tag into financial advisory (e.g., Investec's acquisition of majority stake in Capitalmind)
Resurgence of appetite for digital asset classes (e.g., Andromeda's and OANDA's acquisitions of controlling stakes in Change Group and Coinpass, respectively)
Trends to watch:
Market consolidation amongst online trading platforms as the bar for private capital equity cheques rises— smaller number of platforms successfully executed funding rounds in the last 12 months
March of the global crypto trading giants (e.g., Robinhood joins the scale of Binance and Coinbase through acquisition of Bitstamp)
Continued appetite for specialist traders (e.g., New Holland Capital's cornerstone investment in Shinfalls Commodities)
Our M&A forecast
Market consolidation to continue in the short / medium term amongst mid-market investment banks as pressure mounts to attract top financial advisory talent and rationalise rising compliance costs.
These pressures are prevalent on both sides of the Atlantic—Houlihan Lokey’s acquisition of Waller Helms bears many hallmarks of deals in the London market.
Brokers / Corporate Finance – Publicly reported deals & situations
High investor appetite
Private equity:
- New Holland Capital: Hedge fund, Equity investment in Shinfalls Commodities (August 2023)
Strategic investors:
- ATFX: Online FX trading, Acquisition of Rakuten Securities Australia (July 2023)
Market consolidation to achieve economies of scale & scope
Deal highlight:
White & Case advised Mediobanca, in connection with its acquisition of a majority equity interest in Arma Partners and US Arma Partners, to create a leading digital economy franchise within Mediobanca’s CIB division.
Acquisitions:
- Investec: Corporate finance advisory, Acquisition of majority stake in Capitalmind (June 2024)
- Evolution Funding: Motor finance brokerage, Acquisition of Creditas Financial Solutions (May 2024)
- Renta 4 Banco: Financial advisory, Acquisition of Sigrun Partners (March 2024)
- Marex: Prime brokerage, Acquisition of Cowen’s prime brokerage and outsourced trading business (December 2023)
- Bryan Garnier: Financial advisory, Acquisition of NOR Capital (October 2023)
- Deutsche Bank: Financial advisory, Acquisition of Numis Corporation (October 2023)
- Mediobanca: Financial advisory, Acquisition of Arma Partners and US Arma Partners (October 2023)
- Marex: Commodities brokerage, Acquisition of Eagle Commodities (September 2023)
Mergers:
- Panmure Gordon & Liberum: Investment banking, Merger (January 2024)
- Redburn Europe & Atlantic Equities: Research and execution, Merger (August 2023)
- Cenkos Securities & FinnCap Group: Financial advisory, Merger (March 2023)
Partnerships:
- Livingstone Partners: Financial advisory, Italian M&A and debt advisory JV with Corus Corporate Finance (June 2024)
- Tomorrow: Brokerage-as-a-Service, Brokerage-as-a-Service JV with lemon.markets (June 2024)
- Berenberg: RegTech, Regulatory reporting JV with Kaizen (April 2024)
Mounting digital competition
Growth of digital brokers:
- Pontera: Trade technology, Successful US$60 million funding round led by ICONIQ Growth (December 2023)
- Snap-up of digital brokers: ABN AMRO Bank, Neo-broking, Acquisition of BUX (December 2023)
Resurgence of interest in digital asset classes
- Red Circle: Crypto trading, Acquisition of Aximetria (January 2024)
- M&G Investments: Digital asset exchange, Participation in US$30 million Series B funding round in GFO-X (December 2023)
- Andromeda Capital Partners: Crypto trading, Acquisition of 51% of Change Group (September 2023)
- OANDA Global Corporation: Crypto trading Acquisition of majority equity interest in Coinpass (August 2023)
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