Compass Advisers to merge with RPP

Compass Advisers, the US merchant banking group, is merging its London business with UK rival Richmond Park Partners in a move that highlights how boutique advisers are seeking to gain global scale.

The two groups are set to announce on Monday that they will combine Compass in London with the advisory arm of Richmond Park Partners.

The group will be named Compass Partners and will have up to 15 partners and about 50 employees globally.

RPP will spearhead the European arm of Compass and continue to be led by its three founding partners, former Goldman Sachs partner Scott Mead, ex-Dresdner Kleinwort chief executive Andrew Pisker and Werner Grub, a former global head of risk policy at Dresdner Bank.

The trio founded RPP four years ago as an independent merchant bank with advisory and asset management arms, and concentrated on financial services and telecoms clients in Europe and the Middle East.

Compass is more focused on natural resources, consumer industries and manufacturing, and has advised emerging market companies such as Russia’s Lukoil, ChemChina and India’s Mahindra on large cross-boarder takeovers.

The merger allows Compass to expand its sector expertise and its global network with offices in New York, London, Milan, the Middle East and Shanghai.

Stephen Waters, Compass managing partner, said: “We see significant potential opportunities in Europe for both our advisory and investment businesses, even though many of our competitors are moving in the opposite direction.”

The merger will combine RPP’s advisory arm with Compass’s European advisory and also its private investing businesses.

The US group started 14 years ago in Europe with a more than $900m private equity fund, and later expanded with an advisory business led out of New York.

The merger comes as a string of independent advisory groups that were set up in the past decade to serve local clients are in the middle of establishing global footprints.

One example is Moelis & Co, the US advisory firm set up by former UBS banker Ken Moelis on the cusp of the financial crisis. It has grown rapidly in the past five years by setting up global offices and increasing its staff size to 600.

These independent groups have managed to take market share from larger established rivals that often combine advisory business with trading and capital markets units.

In 2012, independent advisory groups such as Rothschild, Lazard, Moelis and Perella Weinberg share of the overall M&A advisory fee pot year-on-year by 3 percentage points to 21 per cent, according to Thomson Reuters. A decade ago, these groups only captured 9 per cent of the fees.