"The Numis guys will be buying Ferraris with Deutsche Bank's money"
It's a fine day to be a senior person at Numis. After culling many of its equities people in 2019, Deutsche Bank is unexpectedly plunging back into the UK waters with its acquisition of Numis at a 72% premium to Numis's closing share price on Thursday.
Deutsche is paying around £410m for Numis, or 350p a share. Numis co-CEO Alex Ham, who owned 2,423,895 Numis shares last September, will personally receive nearly £8.4m, plus additional money from outstanding options. His co-CEO, Ross Mitchinson, has 2,113,944 of shares and will receive nearly £7.4m. In total, the FT suggests the two will receive £14m each, Other senior people among Numis's 336 employees will also benefit.
"The Numis guys are probably out there buying Ferraris," says one senior equities headhunter in London. "They will have made some very good money out of this."
The acquisition will help negate the sting of last year's compensation round, when Numis cut staff spending by 26%, despite hiring an extra 17 people.
For its part, Deutsche Bank's says it was motivated to buy Numis by its 'Global Hausbank strategy', an urge to 'accelerate the growth of our business in the UK' and by Numis's 'compelling strategic fit' and 'cultural alignment' with itself. The FT says Deutsche plans to merge 'merge most of its UK and Ireland corporate finance team of 35 people into the combined business.'
Although Deutsche Bank disengaged from hundreds of equities salespeople and traders in 2019, it didn't close its equities business altogether. It still has an equity capital markets business, albeit one whose revenues fell 36% year-on-year in the first quarter. It also still has some equity researchers and salespeople associated with distributing the deals it originates. Many of those deals are large-cap and pan-European.
Numis, on the other hand, is focused on the UK mid-market, where it covers everything from corporate broking to equity capital markets, M&A and debt advisory. 226 of its people are in the front office; and around 40 of its employees are thought to be equity researchers focused entirely on the UK.
"There's very little overlap between Numis and Deutsche Bank," says one senior equities headhunter in London. "This isn't like UBS and Credit Suisse, where there will be blood."
The merger does, however, mean that another UK independent bank has been subsumed by a larger rival. Historically, not all such endeavours have worked out well. "Deutsche Bank could run Numis at arms length in the way that Bernstein runs Autonomous and Stifel runs KBW," says the headhunter. "Or they could try to integrate it in the style of Macquarie and Fox-Pitt Kelton or HSBC and James Capel. And if they do that, they'll probably cock it up."
Deutsche has some history when it comes to acquiring UK-focused banks. It purchased Morgan Grenfell & Co, once one of Britain's top merchant banks, in 1990. However, that shine has long since lost its lustre: Deutsche ranked outside the top 10 for UK investment banking revenues in the first quarter of 2023 according to Dealogic.
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