Davy is expanding its corporate advisory and capital markets business into London in a bid to acquire new UK corporate clients and increase lucrative transaction fee income.
The stockbroker has hired three senior investment bankers to work out of its City of London office, backed by a capital markets team of 110 in Dublin.
Davy has poached Marco Schwartz from KPMG to be the new Head of Davy Capital Markets UK. Mr Schwartz will be backed by former AB Bernstein managing director Derek Buckley as Head of Client Coverage and Graham Hertrich, also from KPMG, as Director. Davy said Mr Schwartz will build out a larger team in 2021.
The new group is tasked with growing Davy's list of corporate clients beyond its largely Irish stable of listed companies, which includes Ryanar, CRH and Flutter (Paddy Power). The idea is to position the firm as a dealmaker in the UK's massive equity and debt capital markets ecosystem.
The move follows many years of small bolt-on acquisitions to grow its wealth management business, primarily in Northern Ireland. Davy also recently agreed to buy the Irish business of Sarasin and Partner, a UK asset manager, in a Brexit-driven deal.
Davy will be chasing business alongside a highly entrenched fraternity of UK brokers and corporate advisors, as well as cross-town rivals Goodbody.
Goodbody set up its London capital markets business four years ago after hiring a team from Canaccord Genuity with deep relationships in the gaming and food sectors - two areas of research expertise for the firm. Goodbody has been involved in more than 20 UK capital markets transactions since 2016 and added Playtech and Rank Group as clients.
Notwithstanding the fierce competition, the potential prize for Davy is large. The Covid-19 crisis has led to a frenzy of capital markets activity in the UK this year, with nearly 500 companies raising £26bn in new funding - the biggest number in a decade.
However, market sources say the UK is already overbroked and it will be hard for Davy's expensive new hires to make quick gains. The long-awaited consolidation of the UK's highly fragmented stockbroking industry has yet to materialise despite a consensus that the Mifid II regulations of 2018 would shrink the number of players.