Wells Fargo Securities, the investment bank and capital markets division of Wells Fargo, will acquire San Francisco and New York-based prime brokerage services provider Merlin Securities for an undisclosed amount.
The deal follows Wells Fargo’s acquisition of hedge fund administration and middle-office services provider LaCrosse Global Fund Services from Cargill in September last year. The deal was completed in December.
The latest acquisition enables Wells Fargo to break into the prime brokerage space for the first time. The bank wants to enhance its investment bank capabilities following its acquisition of Wachovia Corp. in 2008.
Merlins MerlinPrime and MerlinSHARP products provide open architecture technology, custody and clearing services, operational support, and securities trading to clients in the asset management industry.
John Shrewsbury, head of Wells Fargo Securities, said the acquisition is a logical extension of the firms offering to the investment industry, which is increasingly focused on tools to enhance risk management and improve capital efficiency: Merlins capabilities fill an important niche in Wells Fargo Securities product set and connect many activities where we already have expertise, including technology, custody, clearing, collateral management and execution.
This is a logical extension of our offering to the investment industry, which is increasingly focused on tools to enhance risk management and improve capital efficiency. In addition, it provides new cross-sell opportunities for existing customers of both Wells Fargo and Merlin. This transaction enhances our ability to meet customer needs and generate earnings for our shareholders, all while adhering to our disciplines of prudent risk management and controlled growth.
Under the terms of the agreement, Merlins 100 staff in New York, San Francisco and Toronto will join Wells Fargo Securities. Merlin managing partners Stephan Vermut and Aaron Vermut will continue to lead the Prime Services Offering.
Wells Fargo is the perfect partner for Merlin and its clients, said Vermut. Together, our clients will have access to a greater range of products and financial resources that will augment the open architecture solutions that Merlin currently provides. This combination will enable us to expand our client base to a broader set of asset managers looking for the safest custodians and the best products available.
With the acquisition of Merlin, we are gaining highly scalable, broker neutral technology with multi-asset and multi-custodian capabilities, said Chris Bartlett, head of Equity Sales and Trading at Wells Fargo Securities. Merlins open architecture platform enables clients to choose the custodian and trading platform that is right for their business. Their team members have extensive experience in this industry and we look forward to adding their expertise to our platform.
The deal is expected to close during the third quarter of 2012, subject to regulatory approvals.
(JDC)