Cantor Fitzgerald swings into profit as Merrion deal closes

Investment and stockbroking firm Cantor Fitzgerald Ireland said on Friday it has completed the purchase of Merrion Capital, as the group reported it returned to profit last year, helped by gains from the sale of its stake in the Irish Stock Exchange.

The deal, which sources had previously said values Merrion at between €14 million and €18 million, as well as the group’s 2017 purchase of L&P Group, which provides advisory services to charities, trusts, and not-for-profit organisations, reaffirms US-based Cantor Fitzgerald’s commitment to the Irish market, said Ronan Reid, chief executive of the Irish unit.

“It reflects a likely continuing trend in consolidation in financial services and our sector in particular, and we will continue to play a central role in this process,” said Mr Reid, adding that the industry is grappling with increased complexity and regulation as well as rising costs.

Merrion Investment Managers, which has about €1 billion of assets under management, will retain its brand, while the rest of Merrion Capital is set to fall under the Cantor Fitzgerald banner in future. While there are no redundancies planned across the combined workforce of about 230 people, it is likely that some cost savings will be sought in time.

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Cantor Fitzgerald Ireland announced the Merrion deal in May, within two months of the group and four other stockbroking firms closing a transaction to sell the Irish Stock Exchange to pan-European bourse operator Euronext.

Financial results

Cantor Fitzgerald Ireland’s latest financial results for the year to the end of 2017 reflected the terms of the Euronext deal, which was agreed last November. The investment firm reported €14 million of proceeds from the sale of its 8.39 per cent stake, which represented a €4.73 million gain over the value at which the holding had been carried on its balance sheet.

The €14 million proceeds level indicates that the Irish Stock Exchange deal netted €167 million for the five brokers, some €8 million more than the terms announced almost a year ago.

The one-off gain from the Irish Stock Exchange sale and general improvement in Cantor Fitzgerald Ireland’s business helped push the group into a profit after tax of €7.8 million last year, compared to a €835,000 for 2016.

Revenues for Cantor Fitzgerald Ireland increased to €22.5 million in 2017 from €15.8 million a year earlier.

New York-based Cantor Fitzgerald entered Ireland in late 2012 with the purchase of Dolmen Securities, led at the time by Mr Reid. The latest deal brings the Irish business’s assets under advice or management to about €5 billion. It also marks Merrion’s fifth ownership change in the two decades since it was set up in 1999.