SocGen, Daiwa Secs, others see gap in European M&A
* SocGen, BarCap, Daiwa, Mizuho growing businesses
* Hiring may be easier and cheaper but deal volumes meagre
* Three-way fight beckons with boutiques, existing titans
By Quentin Webb
LONDON, May 18 (Reuters) - A clutch of banks with previously limited reach in European takeovers and other corporate advisory work are betting now is a good time to grab market share -- before the dealmaking business recovers.
There are experienced bankers on the job market at bargain prices after the bloodletting of the financial crisis, while others who survived the culls are restless, recruiters say.
Advisory businesses, like the one Japanese banks bought in Britain on Monday [ID:nT137393], offer institutions the prospect of lucrative fees and follow-on work without gobbling up precious capital. But the latecomers may find they are chasing a limited pool of deals, competing with both better-established rivals and with newly emboldened boutiques fresh from their own hiring sprees.
On Monday, Societe Generale (SOGN.PA) said it had hired Thierry d'Argent, JPMorgan's (JPM.N) former head of French M&A, as one of the top managers of its strengthened M&A team.
The French bank aims to add 20 senior bankers and about 15 M&A specialists. It is a powerhouse in areas such as equity derivatives but ranks 18th in European M&A this year with $8.8 billion of announced deals, according to Thomson Reuters data.
COMPETITION
The overall data point to how tough competition might be, however, even as boutiques such as Centerview Partners, Moelis & Co, and Qatalyst expand or open London offices.
"I wouldn't underestimate the value of all the relationships that the big boys have developed over the years, and their expertise," said Marco Boschetti, head of M&A at human resources group Towers Perrin. "My sense is it will take many years to change the world order."
European M&A this year totals just $213 billion, down almost half from last year, and less than 30 percent of the volume from the same period in pre-crisis 2007.
Another comparative laggard, debt-focused Barclays Capital (BARC.L) ranks 25th in this year's European M&A tables. It has worked on $4.4 billion of deals compared to Deutsche Bank (DBKGn.DE), in No.1 spot with $114 billion of work.
But BarCap is now expanding in Europe, after leaping to prominence in the United States by taking on Lehman Brothers' operations there.
In recent weeks it hired equity capital markets experts Sam Dean from Deutsche Bank and Jim Renwick from UBS (UBSN.VX), and said it wants "to become one of the leading full service investment banks globally."
Like Barclays, Japanese brokerage Nomura (8604.T) saw opportunity in Lehman's collapse, picking up much of its European and Asian operations. Rivals Daiwa Securities SMBC Co and Mizuho (8411.T) are now following Nomura's lead.
On Monday Daiwa Securities SMBC, a joint venture between Daiwa Securities Group (8601.T) and Sumitomo Mitsui Financial Group (8316.T), said it would buy the corporate finance unit of Britain's Close Brothers Group (CBRO.L), a specialist in midmarket M&A and restructuring, for 75 million pounds ($114 million). [ID:nT137393]
A Mizuho International spokeswoman said it had hired 10 M&A specialists in London in the last 18 months. "M&A is an area we're interested in growing in, but we haven't made any firm commitment on future headcount and future plans," she added.
SHADOWS CHASED
Richard Madgwick, a senior consultant at recruiters Hudson, said many bankers were disillusioned or had been fired, and pay and bonus expectations had fallen sharply.
Both independent firms and banks looking to expand are "saying we're looking to hire, we want to take from the larger banks, we feel we've got a good opportunity to gain market share here," Madgwick said.
But Boschetti at Towers Perrin cautioned difficulties with financing and other problems meant many engagements led to lots of work but little in the way of fees.
"There are a lot of shadows being chased: whereas early last year maybe one in three deals closed, now it's more like one in 10," he said. ($1 = 0.6556 pound)
