Stepping into the offices of Robey Warshaw, the Mayfair-based boutique bank advising on the potential blockbuster takeover of SABMiller by Anheuser-Busch InBev, is like going back in time to a world before the rise of the global investment bank.
The firm, based in a discreet Georgian townhouse, consists of just nine people. There are no security guards at the entrance, no lifts to the 50th floor. Indeed, one of the bankers opens the door and takes me through to the boardroom himself.
Robey Warshaw is led by a trio of bankers, Simon Robey, Simon Warshaw and Philip Apostolides, who each left their roles at giant “bulge-bracket” banks to focus on what they enjoyed most – working with clients, being in their boardrooms, and not having to deal with the administration and management they have left behind.
To say the business plan appears to be working is something of an understatement. Not only has SABMiller hired the firm, among others, to advise on AB InBev’s potential £60bn-plus approach, but it is also working for BG Group on the £47bn deal with Shell.
The firm is also advising insurer RSA, subject of a bid by rival Zurich, and it assisted the London Stock Exchange with its takeover of US investment firm Frank Russell. It also advised pharmaceuticals giant AstraZeneca in its politically charged defence of a near-£70bn bid from America’s Pfizer last year.
Even before this year’s big deals, revenues last year reached nearly £24m. The accounts show a profit of £9.4m provisionally attributable to the highest-earning member of the firm, believed to be Robey.
Robey, a former co-head of global mergers and acquisitions at Morgan Stanley, is one of the best connected bankers in the City. Warshaw was one of the stars at UBS, the Swiss bank, and brought a bookful of relationships and contacts with him when he decided to start a new career two years ago. His last UBS deal involved advising Vodafone on the £81bn sale of its stake in Verizon, the deal of 2013.
Banking experts say the appeal of the micro investment bank is that it is everything that the multinational giants are not. Above all, being small, it is discreet. “If you’re thinking of launching a takeover bid and you bring in a big bank, you know that immediately you will be bringing in loads of people into the group. This raises the possibility of leaks,” says one source. “Whereas with a micro boutique, you’re dealing with just one or two bankers.
“Also, the bigger banks have all kinds of different trading arms and lending arms, and their focus is more commoditised these days and not necessarily aimed at giving straightforward strategic advice.”
Last year, Cenkos, a medium-sized investment bank, stunned its bigger rivals by pulling together a flotation for the AA roadside assistance group on its own, after spending months with the management team and then getting one or two key institutions to invest in the deal.
That move rattled the bigger banks, which have whole teams set up to approach potential investors in a somewhat mechanical fashion but cannot necessarily spend the time on the initial contacts. “Our business is all about volume,” one senior executive says.
Many say there has been a drift of experienced talent away from the bigger banks that has helped smaller rivals and micro boutiques such as Ondra or Zaoui & Co, founded by Michael and Yoel Zaoui, brothers formerly at Morgan Stanley and Goldman Sachs.
For example, Ian Hannam, the so-called “king of mining”, who was one of US bank JP Morgan’s top dealmakers in London, left the firm after being fined by the regulator in 2012 for market abuse. There are many excellent bankers at JP Morgan now, but few have Hannam’s strength of character or profile. And Rupert Hume-Kendall, another well-connected dealmaker, recently retired from Bank of America Merrill Lynch, despite only being in his early 50s. Indeed, many successful bankers don’t feel the need to continue their careers past that age.
There are still well-connected operators with experience at the big firms – Karen Cook, Mark Sorrell and Anthony Gutman at Goldman Sachs, for example. But Barclays, following the exit of Bob Diamond, is unquestionably diminishing in importance in this area and Deutsche Bank is going through a difficult time following the departure of co-head Anshu Jain in June.
The boutique investment bank is not a novel concept – there have been plenty in the past, such as Greenhill and Moelis – but with the rise of the ultra-small operation we may be seeing something new. For the time being the likes of Robey Warshaw, Zaoui and Ondra – whose revenues in the year to March 2014 hit £41m – are making hay.
This article was written by David Hellier, for theguardian.com on Saturday 19th September 2015 16.00 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010