Rothschild & Co. has one of the great names in finance, a rich history of advising kings and captains of industry for more than 200 years.
That legacy means nothing in domestic investment banking circles.
In the latest sign of an industry that has come to value merit over bloodlines, Rothschild and several other long-established platforms have dropped off the league tables that demonstrate which banks are winning takeover and financing assignments from Canadian companies.
As storied franchises fade, employee-owned boutique firms are winning an increasing number of mandates.
Paris-based Rothschild’s commitment to Canada is in doubt after Alex Graham, the recently recruited head of its Canadian office, and two colleagues departed last month. Mr. Graham joined Rothschild in July, 2022, from RBC Capital Markets, where he ran or co-headed the technology, media and telecom teams in Canada and Europe. He was also a successful banker at Morgan Stanley.
Rothschild is a generation removed from its glory days in Canada, when the firm financed development of the massive Churchill Falls power project in Labrador in the 1960s. When Rothschild signed up Mr. Graham, its head of North American banking Jimmy Neissa said the strategy was to “further grow our leading franchise in the region.”
Those ambitions are now far more modest. Last week, the bank said in a statement: “Rothschild & Co. has a long-standing presence in the Canadian metals and mining sector, a core sector of our global business, and the firm remains committed to its presence in Canada.”
A number of other venerable names, including several European banks, exited or scaled back in the competitive Canadian market in recent years. Lazard Inc. LAZ-N, founded in 1848, closed its Toronto office in 2023. HSBC Holdings PLC HSBC-N, launched in Hong Kong in 1865, is selling its entire Canadian retail and corporate bank to Royal Bank of Canada to concentrate on British and Asian operations.
Last fall, the bulk of the domestic team at London-based Barclays PLC, which has operated in Canada for more than a century, jumped to Wall Street’s Jefferies Financial Group Inc. JEF-N – although Barclays moved quickly to fill some of those roles.
As banks that have been around for centuries become less relevant in domestic capital markets, entrepreneur-owned shops are taking their place.
The dominant players in mergers and acquisitions, and in finance, remain the six domestic bank-owned dealers and biggest Wall Street banks. Their role as lenders, along with their deep experience, guarantees they will remain essential to deal-making.
Once you get past these platforms, Canadian league tables feature names of firms that only win roles based on the quality of their advice and ideas.
Last year, one of the top M&A advisory shows was Origin Merchant Partners, a Toronto-based boutique launched in 2011 by veterans of big banks, including former Rothschild executive Gordon Bogden. Origin is one of several dealers advising Teck Resources Ltd. TECK-B-T on the US$8.9-billion sale of its coal mines to Glencore PLC, one of last year’s largest acquisitions. Origin also worked on takeovers for crypto platform Coinsquare.
Other dealers with next to no legacy but lucrative local mandates include Ardea Partners, launched in 2016 by veterans of Goldman Sachs Group Inc. GS-D-N Last year, the New York-based firm advised on two major deals involving Power Corp. POW-T subsidiaries, the sale of Putnam Investments and purchase of a stake in Rockefeller Capital Management. Ardea also worked for Teck.
New York-based PJT Partners Inc. PJT-N, an investment bank spun out of Blackstone Inc. BX-N in 2015, worked on five large domestic transactions last year, including Bank of Montreal’s acquisition of Air Miles program owner LoyaltyOne Co.
And it’s not as if the Europeans have lost their Canadian clout. London-based Arma Partners, a 20-year-old investment bank that’s focused on the digital economy, cracked last year’s domestic M&A league tables as an adviser on deals for Visma SA, a software company that’s based in Norway and backed by the CPP Investment Board. Arma’s founders also include Goldman veterans.
Advising on takeovers is a lucrative business. Even in what qualified as a down year for M&A, Canadian companies did US$184-billion worth of deals in 2023, according to data service Refinitiv. Fees for advising on these transactions ran to the billions.
Roughly half of domestic takeover traffic was cross-border, the sort of assignments that seem suited to global players with familiar names, such as Rothschild, Lazard or HSBC. Instead, the deals are going to established platforms, including the big banks, and a handful of upstart firms. Corporate Canada doesn’t care what bankers did, it cares about what they can do.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
