Evercore is to acquire the operating businesses of ISI International Strategy & Investment, an independent research-driven equity sales and agency trading firm.
Evercore also will acquire the approximately 40 per cent interest in its institutional equities business not currently owned by the company.
The combined business, which will be known as Evercore ISI Institutional Equities, will be one of the two leading independent equity research, sales and agency trading businesses in the US.
Evercore will issue up to approximately eight million share equivalents in the two transactions, with almost 70 per cent of the share equivalent consideration dependent on the financial performance of the combined business over the five years following closing. The transactions are expected to close in the fourth quarter of 2014, subject to receiving required regulatory approvals.
Founded in 1991, ISI is an institutionally-oriented investment research firm providing macroeconomic, policy and fundamental equity research. ISI’s 28 research analysts provide fundamental research covering 345 companies in 10 major industry sectors.
Evercore and ISI plan to merge their research, sales and agency trading operations upon closing. Ed Hyman, the chairman and founder of ISI, will become a vice chairman of Evercore and chairman of the combined equities business, which will be run by an executive committee comprised of Hyman, Vinayak Singh, currently president of ISI, and Charles Myers, the current head of Evercore’s institutional equities business.
“We are excited to have ISI’s talented team of professionals join Evercore, significantly advancing our goal of establishing the company as an elite and scale provider of non-proprietary equity capital markets advice and execution. These transactions bring together two teams of exceptional professionals delivering highly regarded research and corporate and policy maker access, which, when combined with our exceptional advisory business, brings us closer to our goal of creating the most elite independent investment banking advisory firm in the world,” says Ralph Schlosstein, Evercore’s president and chief executive officer.
“ISI has delivered an exceptional record of revenue growth and market share gains during a challenging equity market environment, adding talent and capitalising on the trend of increased market share for independent research providers. The transaction structure that we have crafted together provides strong incentives for continued top line growth, for meaningful cost discipline and for the achievement of competitive operating margins, and it will enhance the consistency of our financial performance through the M&A cycle.”
