Tuesday 20 March 2018

Cantor deal for Dolmen opens debt markets

Donal O'Donovan

Donal O'Donovan

US brokerage already eyeing expansion after €11m takeover

US brokerage house Cantor Fitzgerald has completed the takeover of Ireland's Dolmen Stockbrokers following almost two years of negotiations and due diligence.

Terms have not been disclosed, but the deal is reckoned to value Dolmen at close to its book value of just under €11m.

Cantor Fitzgerald is already looking at other potential deals here, as well as at growing its new unit, chief executive Shawn Matthews told the Irish Independent.

The consideration paid for Dolmen is understood to be a mix of cash and equity and includes an "earn-out" period of four to five years.

That means Dolmen management, including founder and chief executive Ronan Reid, are staying on at what is now the Dublin unit of the global firm.

Other Dolmen shareholders include Dolmen directors Geraldine Jones and Paul McGowan and "Chicago spire" developer Garrett Kelleher.

The deal sees Cantor Fitzgerald has taken 100pc control of the business and Dolmen will be rebranded as Cantor Fitzgerald over the next year.

It's the latest takeover of an Irish brokerage by outside investors, following last year's €30m acquisition of NCB Stockbrokers by South Africa's Investec in June.

The deal is Cantor Fitzgerald's first Irish acquisition.

"We can be the number one broker-dealer in Ireland," Mr Matthews told the Irish Independent.

While most high-profile Wall Street banks mainly serve large corporate clients, Cantor's focus extends to advising medium-sized business and public entities on debt and equity raising, as well as distributing those new issues across a global platform of institutional and private client investors.

That model will be rolled out in Ireland, where the current lack of banks lending to business is seen as a significant opportunity to establish a "shadow banking" alternative.

That means beefing up bond and share underwriting for companies to replace bank debt as a financing tool.

Securities trading, wealth-management and pension businesses here will also be beefed up.

Shrinking banks are also seen as a chance to hire staff.

"Ireland has a pool of highly skilled labour since the banks shut; we think we can find ways to put them to work," Mr Matthews said.

The firm can bring "creative solutions" as Ireland works through the fall-out from the property crash, he said. That is likely to include looking to bundle up property loans for sale on the markets.

Brokerage houses like Cantor are expanding at a time when traditional banks are shrinking or standing still in part because they are not subject to the same heavy regulation.

Brokerage firms are not regarded as having "systemic" importance, so they escape the costly capital rules set to be imposed under the Basel III bank regime.

Irish Independent

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