(Bloomberg) -- Blackstone Group LP's biggest transaction since the global financial crisis took Wall Street by surprise for more than one reason when a less than three-month-old London boutique took the top spot among its financial advisers.
Canson Capital Partners, founded by former HSBC Holdings Plc bankers Matteo Canonaco and James Simpson, beat out U.S. giants Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co. in advising the Blackstone-led consortium on the $17 billion deal for a unit of Thomson Reuters Corp., according to a statement late Tuesday. The companies didn't immediately disclose how much the advisers will be paid.
Canonaco's ties to senior Blackstone executives may have helped the three-man shop in London's posh Mayfair neighborhood secure the mandate on one of the largest takeovers of the year. The newcomer's win mirrors the success enjoyed by smaller boutique advisers including Robey Warshaw LLP and Evercore Inc. as well as rainmakers such as Michael Klein in landing key roles -- with juicy fees -- on some large transactions in recent years.
“At the end of the day, relationships matter the most in the industry,” Canonaco said in an interview Wednesday. “It's based on that, and the trust that we have built over many years that we will be chosen to work on large deals.”
Canonaco, the former global head of so-called financial sponsors -- which are mainly private equity and leveraged buyout firms -- as well as sovereign wealth funds and institutional private clients at HSBC, quit in June 2015 after 11 years at the U.K. bank. He'd previously been Lazard's head of financial sponsors in London and European coordinator of financial sponsors coverage.
“He's a great banker, and has been a key partner to us in getting the deal teed up and over the finish line,” said Martin Brand, a senior managing director in Blackstone's private equity group. “I'm thrilled this is the first deal for him as he's launching his firm.”
Deep Networks
Simpson spent 18 years at UBS Group AG, where he'd been a managing director for mergers and acquisitions and head of private equity M&A, before joining HSBC, where he was co-head of advisory for Europe during a two-year stint ended in November 2016, according to his LinkedIn profile. He then joined DuCanon Capital Partners, which Canonaco had set up some months earlier, and the firm acted as an adviser on the sale of Clarion Events by Providence Equity Partners to Blackstone in July 2017.
Canson Capital, which was founded by the two bankers last year and won its credentials from U.K. authorities in November, will focus on advising private equity, pension and other alternative-asset managers, according to Canonaco.
“The idea for us is to replicate the old merchant bank model,” he said. “We will co-invest with our partners on deals.”
Deal Terms
Blackstone's private equity funds, with Canada Pension Plan Investment Board and GIC, said late on Tuesday that it agreed to buy the Thomson Reuters unit that provides data, analytics and trading to Wall Street and financial professionals around the world. The consortium will own 55 percent of the business, which is valued at $20 billion, and Thomson Reuters is to get $17 billion in gross proceeds including $3 billion in a cash equity contribution.
Thomson Reuters was advised on the transaction by Guggenheim Securities LLC, TD Securities Inc. and Centerview Partners LLC, the company said.
Canonaco said he anticipates more private equity deals in the range of $1 billion to $5 billion, with bigger transactions being “far and few.”
Takeovers and IPOs that chose small boutique firms include:
- Saudi Arabia is being advised on the pending IPO of Aramco by Evercore and rival Moelis & Co., people familiar with the matter said last year
- Saudi Arabia's wealth fund, which aims to control more than $2 trillion by 2030, is working with Klein and Evercore on its global investment strategy and financing plans, people familiar with the matter said in November
- Raine Group LLC and Robey Warshaw were among the lead advisers on SoftBank Group Corp.'s acquisition of U.K. semiconductor designer ARM Holdings Plc in 2016
- Robey Warshaw was also drafted by London Stock Exchange Group Plc in 2016 as its lead adviser in the proposed tie-up with Deutsche Boerse AG, which ultimately failed
Bloomberg LP competes with Thomson Reuters in providing news, data and information to the financial industry. Peter Grauer, chairman of Bloomberg LP, is a non-executive director at Blackstone.
--With assistance from Melissa Mittelman
To contact the reporter on this story: Dinesh Nair in London at dnair5@bloomberg.net.
To contact the editors responsible for this story: Aaron Kirchfeld at akirchfeld@bloomberg.net, Chitra Somayaji, Devin Banerjee
©2018 Bloomberg L.P.
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