Investment banking and corporate finance firms Redwood Capital and LD&A Jupiter are merging to form Drake Star Partners. The new financial advisory player will have a team of over 60 M&A advisers across nine offices in North America, Europe and Asia.
Founded in 2003, Redwood Capital is an investment banking firm that provides mergers & acquisition, corporate finance, restructuring and valuation advisory services to clients in the technology, media and communications sectors. The company has since its inception grown into a team of around 30 advisers, based in offices in New York, Los Angeles and Geneva. The firm, in addition, has a private equity co-investment partnership which invests between $25 and $150 million of capital per transaction in private equity, buyout and mezzanine opportunities, in the most cases alongside established lead investors.
LD&A Jupiter boasts a similar profile to that of Redwood Capital. The firm, established in 2004, provides a range of corporate finance services, and also focuses mainly on clients in the technology, media, telecom and internet space.
The merger of the two firms into a combined company, branded Drake Star Partners, builds, according to Gregory Bedrosian, co-CEO of the consultancy, on three main drivers. Firstly, the geographical footprints of Redwood Capital and LD&A Jupiter are highly complementary to one another – Redwood Capital has a strong heritage in North America, while LD&A Jupiter has a strong foothold in the European market, with hubs in London, Munich, Berlin, Amsterdam and Paris.
By joining forces, Bedrosian highlights that the merged entity will be better positioned to serve clients with their international M&A ambitions, an aspect which, on the back of growing internalisation and consolidation, is gaining an increasingly important share of the M&A market. Since launching, over 70% of the 120 transactions LD&A Jupiter advised on were cross border, with a similar percentage applying for Redwood Capital’s 150+ deals supported in the same period. Going forward, the co-CEO says that the cross border share is set to rise further, with Drake Star Partners offering more capabilities to deliver. “We are now even better positioned to drive international M&A and investment trends, and offer clients our expansive international reach and scale, along with the best possible level of service backed by execution knowledge on a global level.”
The third main benefit is, according to Marc JR Deschamps, the firm’s other co-CEO, based in London, the enlarged expertise around major technological trends that are unfolding globally. “From digitalisation, Industry 4.0, cloud services and analytics, to augmented reality, FinTech, HealthTech, cybersecurity or AdTech, all industries are affected by these trends. With offices in seven countries, we now offer our clients one international team of technology, media and communication experts, delivering deep industry transactional knowledge.”
From a merger & acquisition perspective, Drake Star Partners finds itself in a sweet spot. Although the M&A market is slightly down on last year’s record-breaking year, found a BCG report released earlier this month, the deal fundamentals remain strong. Investors are still keen on inorganic expansion opportunities, money remains cheap, and the private equity industry appetite remains strong as a result of the high stocks of ‘dry powder’ which are being held globally. Yet when it comes to differences between industries, tech driven deals are outperforming the rest, both in the megadeal and largecap segments, as well as in the midcap and smallcap space. A recent study from KPMG paints a similar picture in the startup scene – last year around two thirds of venture capital flows went to startups in the technology, online and telecom sectors.
“Many global, life-changing technology trends are leading to a continuous strong M&A and investment momentum”, says Deschamps.
Looking ahead, the Bedrosian and Deschamps say that Drake Star Partners, which is owned by its Managing Partners and investors, aims at maintaining the strong momentum Redwood Capital and LD&A Jupiter both enjoyed. To date 24 transactions have been completed this year with a transaction value of over $1 billion, which, according to the co-CEOs, represents a “heightened year-on-year momentum”.
One of the deals LD&A Jupiter advised on this year was the sale of XXImo, a Netherlands-based FinTech startup, to French giant Sodexo.