By Eyk Henning
FRANKFURT--Berenberg Bank and BayernLB are teaming up in the
area of corporate finance, aiming to profit from a wave of expected
mergers and acquisitions in the coming years.
"Interest rates will remain low [in Europe] over the next two or
more years and German companies will take advantage of it by
financing acquisitions" to improve their global reach, said Hendrik
Riehmer, a managing partner at privately held Berenberg.
The cooperation should strengthen the banks' deal-brokering
power, after neither ranked among the top ten banks collecting
investment banking fees in Germany last year. That ranking was
dominated by Deutsche Bank, followed by Goldman Sachs Inc. and JP
Morgan, according to data provider Dealogic.
At a news conference with Mr. Riehmer, BayernLB board member
Michel Buecker said the banks would "offer a full range of advisory
services and form a credible alternative" to larger rivals by
combining BayernLB's debt capital market operations with
Berenberg's equity and M&A activities. The banks plan to
dedicate a handful of senior bankers to pitching deals to corporate
executives in Germany.
Low interest rates should fuel corporate appetite for deals,
although fee income declined in Germany last year. Despite a few
large deals, including Merck KGaA's acquisition of U.S.-based Sigma
Aldrich, overall fee volume for the top ten investment banks
advising on Germany-related transactions fell to $550 million last
year from $690 million, according to Dealogic.
"Many German companies have told us they'd like an alternative
to large U.S. banks, which seem to be closer to investors than to
companies when advising on bond or equity issues," BayernLB's Mr.
Buecker said. Both bank managers said they saw potential to jointly
advise on up to 20 transactions annually. Mr. Riehmer said the
banks would target deals valued between 500 million and 1.5 billion
euros ($597 million-$1.79 billion).
Write to Eyk Henning at eyk.henning@wsj.com
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