Howard Lutnick, CEO, Cantor Fitzgerald LPRosa Park
In a chilly climate of few deals and slim profits, the investment dealer team of Versant Partners Inc. has found a way to weather the storm: They've joined Cantor Fitzgerald LP.
Cantor announced the acquisition of this small but respected Canadian investment dealer on Tuesday morning. The U.S. firm is taking over the sales and trading, research, and investment banking teams at Versant, which will officially move over in early September. The buy includes Mike Jams, former Versant chief executive, who will be joining the new team as the head of capital markets in Canada. Altogether, 16 Versant employees will join Cantor.
Mr. Jams, who is also Versant's founder, said in a release that it was Cantor's strong equities sales and trading platforms that he felt would "complement [Versant's] offering for clients in Canada."
Parent company Cantor Fitzgerald is a global financial services firm. The company was one of those most devastated by the World Trade Centre attacks on Sept. 11, 2001, in the number of lives lost. The firm now has 1,600 employees spread over 30 offices around the world, from Asia to Europe to the Middle East.
The year has been a miserable one for many Canadian brokerages, and that reality has put considerable strain on small firms in particular. The limited resources of these companies make it especially hard to endure the scarcity of business to be done. By joining a larger, global firm, the Versant team gains access to more markets and can distribute Canadian products to a wider group of investors (not to mention offering other products and expertise to the Canadian market).
"We're looking at a longer-term view," said Shawn Matthews, CEO of Cantor Fitzgerald. "The opportunity as the financial services landscape changes is becoming more and more pronounced. We think we can gain substantial market share at a time when the top five or six banks control a significant portion of the market share up there."
The move is also notable because it brings a Wall Street firm further into Canada. Jefferies also put a managing director on the ground in Toronto back in April, and the firm said at the time that having a headquarters in Canada was an important part of its global strategy to get into the centre of investment banking for mining.
But while Jeffries came with a commodities focus, Versant offers Cantor areas of expertise such as technology – which has been a hot spot for deal activity in the last year – and biotech (both are special areas of interest for Mr. Jams). It also has a focus on healthcare, a rapidly growing sector. To help the Cantor team continue to excel in these industries, Tom Liston, a former technology sector analyst at Versant, is moving up to the role of director of Canadian research.
But this is just the beginning of the action for Cantor in Canada. "We want to get into the natural resources aspect of the region as well," said Mr. Matthews. "So we'll be looking to add people to the oil and gas space in a relatively short period of time."
He says we can expect to see another couple of acquisitions in the next six months, at least. In Versant, he said, some of the attraction was the management team.