Fox-Pitt, Kelton Inc. in London announced it would buy a U.S. investment banking boutique to broaden its coverage of the insurance industry.
Fox-Pitt said it had agreed to buy Cochran Caronia Waller, a Chicago firm, in order to increase each company’s coverage of the financial services sector but not expand beyond that focus.
“What we smell and what we sense is … that the market needs good specialists,” Giles Fitzpatrick, the chief executive officer of Fox-Pitt, said in an interview Thursday. “The generalist offerings out there, while I think some of them are high-quality, they actually don’t give investors enough” expertise.
Cochran Caronia Waller’s investment banking, advisory, and research businesses focus on the insurance industry, and Fox-Pitt’s larger business covers a wider range of the financial services sector, including banks, thrifts, and brokerages. The combined company is to have a research universe of about 450 financial services companies.
Mr. Fitzpatrick is to remain CEO of what will be renamed Fox-Pitt, Kelton Cochran Caronia Waller. George Cochran and Len Caronia are to become co-chairmen and John Waller, president.
“There is more of a need in the insurance industry — with the growth of Bermuda and the continued importance of London — to have international capabilities,” Mr. Waller said in the interview. “The increase of private equity in the insurance sector as a force required us to have a better capital-raising capability to serve our clients.”
Fox-Pitt has offices in New York, Boston, Hong Kong, London, and Hartford, Conn. Cochran Caronia Waller has offices in Chicago and New York. They said they do not expect to lay off any of Fox-Pitt’s 241 employees or Cochran Caronia Waller’s 41.
Though Cochran Caronia Waller said competitive pressures played no major role in its decision to sell, its niche has consolidated in the last 12 months. Howe Barnes Investments Inc. in Chicago, which specialized in community banks and thrifts, bought Hoefer & Arnett Inc. in San Francisco for an undisclosed price in July.
The Fox-Pitt deal’s price was not disclosed; Mr. Fitzpatrick said the deal would be immediately accretive when it closes early in the third quarter.
J.C. Flowers & Co. LLC brought the two companies together, Mr. Waller said. In June the private equity firm helped Fox-Pitt management buy its independence from Swiss Reinsurance Co. of Zurich for an unspecified price. Mr. Fitzpatrick said J.C. Flowers has a “large but undisclosed stake” in Fox-Pitt and three seats on its board.
