World’s Best Investment Banks 2021: U.S. Regional Winners

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Commercial upheavals and historic volatility in financial markets allow regional investment banks to show that they can do sophisticated deals as more companies look to buy and sell.

In addition to going through a global pandemic and related business closures, U.S. regional investment banks had to grapple with some of the most volatile financial markets in history last year.

Now that corporate clients of banks ‘see a light at the end of the pandemic tunnel’ and move away from the defensive stance they have taken for much of 2020, many are evaluating the opportunities for growth through acquisition, says Stephen Philipson, vice -executive chairman and director. fixed income and capital markets with US Bank, a subsidiary of US Bancorp, the regional winner of Global Finance in the Midwest.

“Changes in consumer and business behavior, coupled with the attractive cost of capital in the marketplace, cause the vast majority of our clients to more closely assess and pull the trigger on M&A opportunities,” he said. .

At the same time, many midsize business owners are seriously considering selling, says John Cristiano, partner, strategies and transactions with consulting firm Grant Thornton: “They’ve just been through a pandemic and may not want to wait for that. the other shoe falls off. . Add to that low interest rates, lots of ‘dry powder’ and the proliferation of Special Purpose Acquisition Companies (SPACs) – making it easier to go public – and the result is a smoother market for mergers. and acquisitions, he said.

Regional banks that are successful in investment banking tend to come up with the same key propositions. One is in-depth knowledge of businesses in a particular geographic footprint. “They have an understanding of that space as well as the relationships,” says Patrick DellaValle, director of financial services advisory and compliance practice at consultant Guidehouse. Regions with expertise in specific verticals also benefit. “We’ve seen a very high premium on domain expertise” over the past year or so, he says, as some deals have been made with smaller companies because of their understanding of specific industries.

Northeast

KeyBanc Capital Markets takes top honors as Global Finance’s Best US Regional Mid-Market Provider for the Northeast. With a deep focus on healthcare services, medical technology and life sciences, Cain Brothers, the healthcare investment banking division of KeyBanc, achieved record investment banking revenues in 2020 and started 2021 with a record M&A backlog.

Among other deals, he advised CareSource, an Ohio-based nonprofit Medicaid health insurer, on setting up a for-profit management services organization to access additional capital while maintaining its status. nonprofit and its charitable mission: probably the first transaction of its kind, according to Randy Paine, president of Key Institutional Bank.

Mid-Atlantic

Over the past few years, Harris Williams & Co., a subsidiary of our winner, PNC Bank, claims to have completed over 60 transactions across multiple verticals, including consumer products, food and beverage, and retail. . Early last year, he advised United PF Partners, a major developer of the Planet Fitness system, on its sale to subsidiaries of American Securities. In December, Harris Williams advised Inspired Pet Nutrition, a UK-based pet food manufacturer, on its ongoing sale to funds advised by CapVest Partners.

Midwest

US Bancorp focuses on the fixed income markets, where it provides corporate bond origination, sales and trading services, private placements, syndicated loans and other services, as well as brokerage services. advice on the capital structure.

The bank has been particularly active in two segments last year: utilities and sports, explains Philipson. When Covid-19 hit, utility companies looked to boost their liquidity to ensure they could maintain service. US Bancorp has provided $ 3 billion in capital to the industry, leading more syndicated loan deals than any bank, as well as numerous bond deals and rate locks. It was also the first in number and volume of transactions for sports teams and leagues in 2020.

South East

Raymond James Financial’s financial markets group achieved record annual sales of $ 1.3 billion and pre-tax income of $ 225 million for the fiscal year ended September 30. Among other transactions, he acted as financial advisor in connection with the acquisition by Dollar Mutual Bancorp of Standard AVB Financial, an all-cash transaction.

South West

Piper Sandler, the product of the January 2020 merger between Piper Jaffray Companies and Sandler O’Neill + Partners, focuses on mid-sized companies in healthcare, energy, technology and others. vertical sectors. After the merger, the company exceeded $ 1 billion in sales. In one notable arrangement, Piper Sandler acted as financial advisor to Momentive Performance Materials in connection with the sale – terms withheld – of its consumer sealants business to German Henkel. This was the first transaction concluded by The Valence Group, which Piper Sandler acquired last April as a chemicals and materials group.

Where is

In December, Silicon Valley Bank (SVB) announced a partnership with Clearbanc, a leading e-commerce investor and funding platform, to accelerate the growth of technology start-ups in the United States. Clearbanc plans to provide more than $ 50 million in non-military capital to select SVB clients, to be used for growth, advertising and inventory financing.

Stay competitive

The transactions that these regional banks carried out during a global pandemic highlight the disproportionate role they can play in the world of investment banking. While many are small enough to develop close relationships with their clients, they are also large and sophisticated enough to create creative funding structures, says Joanna Chai, Managing Director, Strategies and Transactions at Grant Thornton.

During the 2008-09 financial crisis, many of the largest companies lost shares to boutiques, Chai notes. The same could happen again, given that the transaction process today – especially since the signing of Covid – is more streamlined, as many road shows move to virtual formats. Additionally, if talented individuals continue to move from expensive urban areas to small towns, a few will start businesses. Some may seek investment banks of character, argues Cristiano.

To continue to be successful, regional banks must use their knowledge of local businesses to bring together companies from different industries, says Jason Langan, managing partner of the M&A transaction services division of Deloitte & Touche.

“With changing business models, people who can marry companies with the skills they need, like an industrial company with a technology company, can be successful,” he says.

Regional businesses must continue to demonstrate their “ability to execute,” says DellaValle, showing that they can transact, work with new structures like PSPCs and offer legal and regulatory compliance systems.

Trust remains a key factor, adds Philipson: “Clients believe that our team members have the skills, the right market knowledge and a strong balance sheet; and they trust that we will always do the right thing. For banks that can offer these qualities, the future looks bright.

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