By Jessica Toonkel and John McCrank
NEW YORK Dec 11 Broadhaven Capital Partners, a
13-person investment bank that has advised on some of the
biggest deals in the exchange space in recent years, is gearing
up to expand.
The boutique bank, whose recent deals include
IntercontinentalExchange's $11 billion takeover of Big
Board operator NYSE Euronext, is planning to open offices in San
Francisco and London to complement its Stamford,
Connecticut-based operations in the next several months.
The West Coast expansion will bring the firm closer to key
players in the fast-growing payment provider industry,
co-founder Jerry von Dohlen said in an interview.
A presence in London will better position Broadhaven to take
part in international deals, he said.
The firm hopes to open both offices in the next 12 to 18
months, von Dohlen said.
While it lacks the massive balance sheet of the big
investment banks, Broadhaven has an advantage in being an
independent adviser for exchange mergers, because big banks also
happen to be the main customers of exchanges and often own
stakes in them.
"There are lots of levels of conflict and sometimes it's
nice to just stay out of the way of that," said an exchange
executive who wished to remain anonymous because he did not have
permission to speak to the media.
Big banks still get the lion's share of deals, but the
independence dynamic has paid off for Broadhaven. The firm has
advised on some of the top exchange deals in the past couple of
years, including BATS Global Markets' merger with Direct Edge
Holdings LLC and its acquisition of Chi-X Europe; and Nasdaq OMX
Group's sale of clearinghouse IDGC to LCH.Clearnet.
At the core of the bank are former Goldman Sachs Group Inc
investment banker von Dohlen, and former UBS
and Wasserstein Perella & Co banker Greg Phillips, who together
started Broadhaven in 2009.
Von Dohlen said the decision to go out on his own was in
part a way to get close to firms that were still small and help
them grow, which large banks do not generally do because they
focus on large clients that generate big fees.
ROLLING UP THE SLEEVES
U.S.-based stock exchange operator BATS was introduced to
Broadhaven through one of its customers and the fit was good
from the start, BATS Chief Executive Joseph Ratterman said in an
"We like the idea of someone that kind of rolls up their
sleeves and has the experience and the relationships but isn't a
large shop," he said. "We personally like the smaller hands-on
Broadhaven's independence was critical when it advised BATS
on its merger with Direct Edge, a deal announced in August that
will create the No. 2 U.S. stock market, said a source who at
the time was an executive involved in the talks.
BATS has seven large banks as investors, each with a seat on
the exchange's board, and the company did not want to be seen as
picking favorites, said the former executive.
"Joe said 'I don't want to hear from my board,'" the person
said, referring to Ratterman. "That's why you have an
independent firm doing it."
BATS' investors include Bank of America, Citigroup
Inc, Credit Suisse, Deutsche Bank,
JPMorgan Chase & Co, and Morgan Stanley.
Broadhaven is a regular adviser to ICE on deals, with von
Dohlen's relationship with the exchange operator going back for
nearly a decade.
"I would always be one of Jerry's first calls if he heard
something interesting that was going on," said an ICE executive,
who asked not to be named due to the matter's private nature.
Morgan Stanley was the lead adviser on the ICE-NYSE deal,
but Broadhaven was instrumental behind the scenes, helping fill
in gaps in ICE's lean financial team, the executive said.
Broadhaven has had some bumps along the way. One of its
early jobs for ICE was advising on its failed $13.3 billion
hostile takeover of NYSE Euronext with Nasdaq OMX.
"That was not their finest moment," said the exchange
executive, adding that the failure of that deal was not due to
Broadhaven but factors beyond its control.
As part of its growth plans, Broadhaven hired Michael
Spellacy, former head of Boston Consulting Group's alternative
investment practice, to advise asset management firms.
With the recent spate of consolidation among U.S. exchanges,
Broadhaven does not expect any major near-term U.S.-based deals.
"There will be a period of digestion," von Dohlen said. "But
for us that just means a number of small- to middle market-sized
transactions while the bigger players digest what they have and
figure out their next move."