Raymond James Financial Inc. has acquired a boutique investment bank to expand its reach in that business, following through on plans to scoop up acquisitions in the troubled market.
The St. Petersburg, Fla.-based brokerage firm last Tuesday announced its deal for Lane Berry & Co. International LLC, a middle-market investment-banking and advisory firm that focuses on the business services industry. Terms were not disclosed.
In October, Chet Helck,
Raymond James' president and chief operating officer, said that the firm could be poised to make a “meaningful acquisition”
(InvestmentNews, Nov. 2).
At that time, however, he said that the firm would like to increase its asset management business, but did not specifically mention an investment bank.
Investment banking is a small fraction of the business at Raymond James, which houses more than 5,000 representatives and financial advisers worldwide on its various platforms.
For the six-month period through March, Raymond James reported almost $1.3 billion in total revenue, and just $38.7 million — or 3% — of revenue came from investment banking.
A MEANINGFUL DEAL?
Whether this is the meaningful acquisition Mr. Helck mentioned remains to be seen.
The acquisition is “not earth shattering, but a nice fit,” said Sean Cunniff, research director for brokerage and wealth management at TowerGroup of Needham, Mass. “It could be both a strategic fit and simply a good opportunity. It seems like it makes sense to me.”
And the deal comes at an interesting time for banks that have combined retail-securities shops and lucrative investment banks, another analyst said.
There are “two schools” of brokerage firms populating the Street at the moment, said Alois Pirker, senior analyst with Aite Group LLC of Boston.
One is the universal-bank model, such as the combination of
Bank of America Corp. of Charlotte, N.C., and the former Merrill Lynch & Co. Inc. of New York. The other is the “pure-investment-bank” model, best exemplified by firms such as Morgan Stanley and The
Goldman Sachs Group Inc., both of New York, Mr. Pirker said.
In the past, investment banks and retail-securities firms have operated under the same roof, he said. The retail-securities side of the business sold wealth management services to wealthy investment-banking clients, and the investment bank placed product with the brokers and their clients on the retail side of the business.
That is clearly changing, Mr. Pirker noted. “The interesting thing is that investment banks and retail firms have backtracked from that model to a certain degree,” he said.
In investment banking, Raymond James has been known for its work in the energy sector, with an emphasis on oil and gas.
Lane Berry, which is based in Boston, was founded in 2002 by Frederick C. Lane and Robert M. Berry, former managing directors at Donaldson Lufkin & Jenrette in New York.
Lane Berry employs 21 investment bankers. The firm has expertise in financial services technology, and payment and transaction processing. Mr. Lane, formerly chief executive of Lane Berry, joins Raymond James as vice chairman of investment banking and will work closely with Jim McDaniel and Dav Mosby, co-heads of the firms' investment-banking group.
Mr. Berry, former president of Lane Berry, joins Raymond James as managing director and co-head of its mergers and acquisitions practice.
“This acquisition underscores the continued expansion of our investment-banking platform and the firm's commitment to strategic growth in all market conditions,” Jeff Trocin, executive vice president of Raymond James and head of the firm's equity capital markets unit, said in a statement.
Raymond James has client assets of $172 billion.
E-mail Bruce Kelly at [email protected].
