French bank Natixis buying into 3 M&A boutiques, bolsters China presence

PARIS, HONG KONG, REUTERS -- France's Natixis is buying stakes in three independent boutique advisory firms for an undisclosed sum that will diversify its investment banking activities and bolster its presence in China.

The investments in Fenchurch Advisory Partners LLP, Vermilion Partners and Clipperton will reduce Natixis' common equity tier one ratio by around 8 basis points, the investment bank said in a statement on Monday.

Natixis plans to buy a 51 percent stake in Fenchurch, which is focused on corporate finance advisory to financial services companies in Britain. The firm, which has advised on over 200 completed transactions worth more than 150 billion pounds ($208 billion), will continue to be managed by current partners, Natixis said.

The French firm has also agreed to buy a majority stake in Vermilion Partners, which focuses on cross-border mergers and acquisitions (M&A) involving Chinese state-owned and private sector companies.

The acquisition of a majority stake in Vermilion comes as bankers expect a surge in Chinese investments in Europe as part of the country's ambitious Belt and Road initiative and as tighter regulatory scrutiny makes M&A tougher in the United States.

Foreign direct investment in the European Union traced back to mainland China has surged in recent years to a record 35 billion euros ($42 billion) in 2016 from 1.6 billion euros in 2010, according to the Mercator Institute for China Studies.

The partnership with Vermilion will add to Natixis' existing investment banking capabilities in China, with local branches in Shanghai and Beijing. Vermilion has offices in Beijing, Shanghai, Shenzhen, London and Munich.

Natixis is also buying a minority stake in French M&A boutique Clipperton, which is specialised in high-growth technology.

"The acquisition of key expertise in financial services, China and European Tech is complementary to our existing franchise," Marc Vincent, global head of corporate and investment banking at Natixis said in the statement.

In February Natixis reported an unexpected rise in quarterly net profit as a one-off gain linked to the U.S. tax reform and stronger revenue growth in asset management helped offset a widespread trading slowdown.