Raymond James (RJF) to Buy Boutique Investment Bank Financo

As part of its efforts to expand coverage within Consumer & Retail Investment Banking, Raymond James RJF has agreed to acquire Financo. The completion of the deal, subject to certain regulatory and other closing conditions, is expected in Raymond James’ fiscal second quarter.

Financo is a boutique investment bank that has offices in New York and London, and focuses on the consumer and retail sector. It is well-known for its capabilities in the beauty and personal care, direct-to-consumer e-commerce, enthusiast brands, healthy living and active lifestyle, and home furnishing segments as well as for working with private, private-equity-backed and publicly traded high-growth, transformative consumer companies.

As part of the deal, more than 25 Financo professionals will join the Raymond James Consumer & Retail practice. Moreover, the acquisition will position Raymond James as aglobal marketleader in consumer and retail investment banking.

The current CEO of Financo, John Berg, will lead the combined Consumer & Retail business, post the completion of the deal.

The CEO of Raymond James, Paul Reilly, stated, “With our strong capital position and the growing demand for effective investment banking expertise among consumer and retail companies, this deal allows us to strategically grow our capabilities with an industry-leading team that has a similar culture and desire to deliver meaningful outcomes for clients.”

Jim Bunn, the president of Raymond James Global Equities & Investment Banking, said, “As the consumer and retail spaces undergo significant shifts in business models and shopping behavior, we see tremendous growth opportunity for M&A and growth capital-raising in the space, which are Financo's main areas of expertise.”

The present head of Raymond James Consumer & Retail Investment Banking, Mark Goodman, stated, “This agreement marks an exciting new chapter for the Raymond James Investment Banking platform. I welcome my friend John Berg and his colleagues at Financo to our team.”

Our Take

Supported by a strong liquidity position, Raymond James has accomplished several deals over the past few years. In 2019, it acquired Silver Line Advisors and 100% stake in ClariVest Asset Management. The company looks forward to further grow through acquisitions, with an aim to strengthen its Private Client Group and Asset Management segments.

In fact, in a latest deal, Raymond James agreed to acquire NWPS Holdings, Inc., which specializes in retirement plan administration, consulting, actuarial and administration services. The acquisition is anticipated to be value accretive to Raymond James, as the new solutions created by this year's Setting Every Community Up for Retirement Enhancement Act (“SECURE”) will broaden the investable market for employees looking to manage their retirements.

Over the past six months, shares of Raymond James have gained 28.7% compared with 33% growth recorded by the industry it belongs to.

Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Amid the pandemic-induced economic slowdown, several finance companies are taking steps to focus on core businesses and restructure operations with an aim to improve profitability. Recently, Farmers & Merchants Bancorp, Inc. FMAO announced the acquisition of the assets and clients of Adams County Financial Resources.

Last month, People’s United Financial’s PBCT banking subsidiary, People's United Bank, completed the divesture of People's United Insurance Agency to AssuredPartners. Further, in September, Umpqua Holdings Corporation UMPQ signed an agreement to divest the wealth management business to Steward Partners Global Advisory, LLC.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.