Bob Diamond, the former chief executive of Barclays, has taken a 20% stake in the French broker Kepler Cheuvreux as part of his ongoing efforts to capitalise on a changing regulatory landscape for European investment banks.
The deal is Atlas Merchant Capital’s most notable investment in Europe since its purchase of a controlling stake in the UK stockbroker Panmure Gordon in March 2017. Investing alongside Atlas is Edmond de Rothschild Equity Strategies, which has taken an 8% holding.
Atlas was founded five years ago by Diamond and David Schamis, a former executive at the private equity firm JC Flowers, specifically to make acquisitions in the financial services industry.
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Diamond told Financial News: “One of the recurring themes we see is opportunities in the UK and in Europe. A lot of financial institutions still struggle to generate returns on equity.”
The 66-year-old said Kepler, which is focused on continental Europe, could expand into the UK and US, as well as new products. It currently offers independent research, sales, trading and execution for equities, debt and derivative products and corporate finance.
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Diamond said Atlas takes an active approach to the companies it invests in. Even if it does not buy a majority stake — as was the case with Panmure — Diamond said it always has a “modicum of influence”.
Atlas’s stake in Panmure was viewed as a low-key return to London for Diamond, who spearheaded the expansion of Barclays’ global investment bank and rose to become CEO before leaving as the 2012 Libor scandal gripped the bank.
However, Panmure has since unveiled an aggressive expansion plan for its investment bank, where it is set to double headcount under CEO Ian Axe.
Atlas will continue to target European deals as investment banks in region struggle. Many have changed their business model since the 2008 financial crisis, with Swiss banks Credit Suisse and UBS both favouring an approach that draws on their wealth management businesses, while Barclays and Deutsche have both restructured heavily under numerous CEOs.
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Diamond said fragmentation in Europe’s investment banking industry will continue, and that specialist firms will gain market share. “Investment banking is moving towards a model where institutions have to be much more focused and selective in terms of the regions and products they operate in,” he said.
In Europe, new trading rules under the revised Markets in Financial Instruments Directive have forced banks and brokers to charge separately for investment research, putting pressure on dealing commissions.
Kepler’s research team covers more than 1,000, primarily mid-cap, companies and has been a “net beneficiary” of Mifid II, according to Matt Hansen, head of Europe at Atlas Merchant Capital.
“They were running a Mifid II model long before Mifid II,” he said.
Italian bank UniCredit, meanwhile, has upped its interest in Kepler from 5.2% to 10.3%. The French private equity firm BlackFin Capital Partners and its co-investors have sold out of Kepler.