Banco Espirito to buy majority of Execution Noble


Banco Espirito to buy majority of Execution Noble

Published: 09:03 p.m., Thursday, February 25, 2010

Small Portuguese and British investment banking operations are targeting U.S. growth with Banco Espirito Santo de Investimento S.A.'s anticipated purchase of a 50.1 percent stake in London-based Execution Noble, an investment banking and securities firm with its U.S. operations in Greenwich.

The purchase is expected to close within six weeks. Execution Noble's staff and senior management will remain significant shareholders.

The deal comes after Execution Holding's purchase ofNoble Group Holdings, a mid- and small-capital specialist investment bank, in December.

Negotiations between Lisbon-based Banco Espirito Santo de Investimento and Execution Holdings were going on while Execution was planning the purchase of Noble, said Gary Cunningham, chief executive officer of Execution Noble, who is based at the U.S. operations, where the firm employs 18.

Banco Espirito Santo de Investimento encouraged Execution to proceed with the acquisition because of the value of Noble's expertise in the investment banking industry, he said, noting that Banco Espirito Santo de Investimento has a presence in the Brazilian banking industry, as well as in Latin American and Asian equities.

"They'll use this as a springboard to get well known over here," Cunningham said. "We'll work closely with BESI to develop their products in North America."

With Banco Espirito Santo de Investimento, Execution Noble's capital base will be strengthened and the equities and fixed-income teams will be widened to provide an emerging-markets securities franchise and specialized Iberian coverage, said Nick Finegold, chairman of Execution Noble.

"We will have a leading position in some of the world's most exciting emerging markets, notably Brazil and India, in addition to a strong pan-European," he said in a statement.

Banco Espirito Santo de Investimento also will provide access to an underwriting capability as part of Execution Noble's equity and fixed-income markets offering.

"This acquisition establishes our ambition of becoming a key international investment banking player," Jose Ricciardi, chief executive officer of Banco Espirito Santo de Investimento, said in a statement. "The transaction will open new opportunities for Execution Noble while preserving its individuality."

The combined group will offer products in corporate finance and mergers and acquisitions, capital markets, corporate brokerage, research, corporate access, equities, derivatives and fixed-income sales and trading. The new group also will include Execution Noble's reinsurance distribution platform.

As financial services firms, they play a crucial role in the buying and selling of businesses around the world, said Roger Aguinaldo, chief executive and publisher of Mergers & Acquisitions Advisor.

"They want to expand their reach because more mergers and acquisitions are global," he said, adding that it makes sense for the Portuguese firm to control a slim majority of the operation and leave the remainder for the Execution Noble management. "In service business, you want the partners to have a significant share. If you buy them out and they go away you lose the value of the firm."

As the economy worsened and the value of the American dollar declined, there was a belief that U.S. companies would be subject to take-overs, but that is not the case because the downturn has been global, said Ken MacFadyen, editor of Mergers & Acquisitions Journal.

"It's not happening the way people expected it to happen," he said, noting that in 2008, 33 percent of purchases of U.S. companies involved foreign buyers. The percentage decreased to 16 percent in 2009.

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