Rothschild has snapped up a minority stake in equity research house Redburn, in the latest sign of industry consolidation amid regulatory pressures from EU legislation.
The deal, which was struck for an undisclosed sum of money, will help Rothschild broaden its range of services and boost Redburn’s expansion plans, the two firms said earlier this week.
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According to Robert Leitão, managing partner at Rothschild, the move would enable Redburn to “expand both research coverage of new companies and the geographical depth of its distribution, whilst maintaining its independence”.
Rothschild partner Richard Wyatt, who will take the reigns as chairman of the research equity firm, said: “Redburn has established a market-leading position at a time when equity research providers have experienced significant dislocation following the introduction of MiFID2.”
He added: “This dislocation has led to a general contraction in the depth and quality of research coverage. We want to help Redburn capitalise on the opportunities this present.”
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The acquisition follows on from a number of similar deals aimed at consolidation in the wake of Mifid II, an EU piece of legislation which has hit stockbroking and investment banking firms in the City.
Mifid II, or the EU’s Markets in Financial Instruments Directive II, states that investment research must be priced separately from other broker services in a bid to bolster transparency and better value for money.
In February Shore Capital Markets bought its rival Stockdale in a £9m deal, making Shore the fourth largest stockbroker by UK-listed clients.
“Political and economic uncertainty, as well as the introduction of MiFID II, has slowed the market in recent months, but difficult markets create opportunity and the integration of Stockdale has really strengthened our business,” according to Simon Fine, chief executive of Shore Capital.
He added: “The acquisition of Stockdale was an attractive opportunity to expand our successful business and boost our corporate advisory, broking, equity research and sales and trading capabilities.”