PARIS (Reuters) - Rothschild has agreed to buy a minority stake in British equity research and financial services firm Redburn for an undisclosed amount of money, as regulatory pressures push smaller companies to consolidate with larger players.
In a joint statement, Rothschild said the deal would expand its range of services, while Redburn said Rothschild’s investment would help Redburn expand its business. The companies declined to provide details on how much Rothschild is spending to buy the stake in Redburn.
“Redburn has established a market-leading position at a time when equity research providers have experienced significant dislocation following the introduction of MiFID2,” said Rothschild partner and future Redburn chairman Richard Wyatt.
“This dislocation has led to a general contraction in the depth and quality of research coverage. We want to help Redburn capitalize on the opportunities this present,” added Wyatt.
The EU’s Markets in Financial Instruments Directive II, known as MiFID II, which took effect in January, states that investment research must be priced separately from other broker services to ensure transparency and better value for money.
However, it has also put pressure on the City of London’s smaller stockbroking and investment banking outfits, with buyside investment firms looking to spend less money on research while brokers have faced a drop in commission fees.
London-headquartered Redburn was set up in 2003 by a team of people including Jeremy Evans, former head of UK and European equities at Fleming.
Founded by Mayer Amschel Rothschild in the 18th century, the Rothschild banking dynasty has worked on some of history’s biggest deals, including helping finance Britain’s war against Napoleon’s France.
Reporting by Sudip Kar-Gupta; Editing by Louise Heavens and Bate Felix