Banco Santander today announced that Santander Holdings USA, the bank’s US holding company, has reached an agreement to acquire Amherst Pierpont Securities, a market-leading independent fixed-income broker dealer, through the acquisition of its parent holding company, Pierpont Capital Holdings LLC, for a total consideration of approximately $600 million (c.€500 million). Amherst Pierpont will become part of Santander Corporate & Investment Banking (Santander CIB) global business line.
Amherst Pierpont is a leading independent broker-dealer based in the US, with a premier fixed-income and structured product franchise. It was designated a primary dealer of U.S. Treasuries by the Federal Reserve Bank of New York in 2019 and is currently one of only three non-banks to hold that designation. Amherst Pierpont has approximately 230 employees serving more than 1,300 active institutional clients from its headquarters in New York and offices in Chicago, San Francisco, Austin, other US locations and Hong Kong.
Completion of the acquisition significantly enhances Santander CIB’s infrastructure and capabilities in market making of US fixed income capital markets, provides a platform for self-clearing of fixed income securities for the group globally, grows its institutional client footprint, and expands its structuring and advisory capabilities for asset originators in the real estate and specialty finance markets. The combined platform will also have strong capabilities in corporate debt and securities finance across the US and emerging markets. The acquisition creates a comprehensive suite of fixed income and debt products and services that will drive deeper and more valuable relationships across its respective client bases.
Ana Botín, Santander Group executive chairman, said: “This acquisition is consistent with our customer focused strategy and our commitment to profitable growth in the USA. It complements our product offerings and capabilities, allowing us to strengthen our relationships with our corporate and institutional clients. The Amherst Pierpont team bring a successful track record and experience in delivering value for their clients. We look forward to incorporating their many strengths into our very successful and growing CIB organization.”
Joe Walsh, Amherst Pierpont chief executive officer, said: “Santander Group is one of the world’s most respected financial institutions and an ideal partner for our growing franchise. With Santander’s global reach we will be able to significantly expand our product offering, grow our client base and increase the level of service we can provide to our clients. We are pleased to achieve this important milestone for our platform and look forward to working with the Santander CIB team to deliver the full potential of this combination.”
Amherst Pierpont has generated attractive returns, with an average return on equity (RoE) of c.15% since 2016. In 2020 it generated a RoE of 28% and an estimated return on risk weighted assets of 3%.
The acquisition of Amherst Pierpont is expected to be c.1% accretive to group earnings per share and generate a return on invested capital of c.11% by year 3 (post-synergies), with a -9 basis point impact on group capital at closing. As of 31 March 2021, the group’s CET1 capital ratio was above its target range of 11-12%.
The transaction is expected to close by the end of the first quarter of 2022, subject to regulatory approvals and customary closing conditions.
Wachtell, Lipton, Rosen & Katz and WilmerHale served as legal advisors to Santander in connection with the transaction. Barclays served as financial advisor to Amherst Pierpont, and Shearman & Sterling as legal advisor.