Huntington (HBAN) Expands IB Business, to Acquire Capstone
Huntington Bancshares Incorporated HBAN has inked an agreement to acquire Capstone Partners, an investment banking (IB) firm. The transaction, expected to be closed in the second quarter of 2022, is subject to regulatory approval. The terms of the transaction have not been revealed yet.
Founded in 2002, Capstone, through its IB and advisory services (including mergers & acquisitions, business restructuring and financial advisory), caters to middle-market companies. The firm has a presence in 12 cities across the United States, with primary offices located in Boston and Denver.
The transaction is in sync with Huntington’s efforts to expand its capital markets business and grow its footprint across the country. Scott Kleinman, co-president of Huntington Commercial Banking said, “The combination of Huntington’s brand and capabilities alongside a premier middle market investment banking franchise with unique industry insights creates a differentiating experience for our clients.”
“Huntington is the perfect partner for Capstone, with complementary cultures focused on people and the community. Our combined capabilities will enhance Capstone’s full suite of products and services to private business owners and financial sponsors.” said John Ferrara, Capstone’s founder and CEO.
Huntington is growing organically through its solid loan portfolios. It is growing inorganically as well. In 2021, HBAN acquired TCF Financial, which positions the company well to produce positive operating leverage. In 2018, it had acquired Hutchinson, Shockey, Erley & Co., while in 2016, Huntington acquired FirstMerit Corporation. Such inorganic expansion efforts help the company to gain significant market share and diversify revenues.
Over the past year, shares of Huntington have declined 9.6%, wider than 2.9% decline of the industry.
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Huntington currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Inorganic Growth Efforts by Other Firms
Several companies from the finance sector are undertaking buyout efforts to improve competencies in a bid to counter the low-interest-rate environment.
In early February, Truist Financial Corporation’s TFC subsidiary, Truist Insurance Holdings, Inc., inked an agreement to acquire Kensington Vanguard National Land Services.
Over the years, Truist Financial has been strengthening its real estate services through strategic acquisitions. The transaction is expected to aid Truist Insurance expand its business in title insurance. The existing title operation of Trist Insurance is BridgeTrust Title, which will likely be integrated with Kensington Vanguard.
Walker & Dunlop, Inc. WD inked a deal to acquire GeoPhy, a commercial real estate technology company. Per the terms of the transaction, Walker & Dunlop will pay $85 million in cash at the closing in addition to $205 million of cash earn-out potential. The cash earn-out potential is structured to directly align with the company’s Drive to ’25 goals.
The acquisition of GeoPhy is expected to bolster growth in Walker & Dunlop’s brokerage, lending and emerging businesses, including Apprise (the tech-enabled appraisal business) and small balance-lending platform.
Moody’s Corporation MCO plans to further expand in Africa and has agreed to acquire a 51% stake in Global Credit Rating Company Limited. The transaction, still subject to customary regulatory approvals, is expected to be closed in second-quarter 2022.
The combination of Global Credit Rating’s solid footprint in the continent and Moody’s global reach will boost the latter’s presence in the high-growth markets.
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