Straumur extends international reach to central and eastern Europe
Straumur (“Straumur” or the “Bank”) has acquired a 50% stake in Wood & Company, the leading independent investment house in central and eastern Europe (“CEE”), with the option of acquiring 100% no later than early 2011. The acquisition is a demonstration of the Bank’s determination to build a stronger international presence, and to increase its fee and commission income by conducting a greater proportion of client-driven business.
The purchase is made subject to the approval of the Icelandic Financial Supervisory Authority and the Czech Central Bank. The sale will be settled in cash with a significant portion in Straumur stock. The price is not disclosed, since the financial effects are insignificant.
Wood & Company is owned by four partners who have all committed to continue to run the company in partnership with Straumur.
A major increase in client base and geographic reach
Wood & Company, which has its headquarters in the Czech capital, Prague, and a presence in Slovakia and Poland, is the largest securities trading company on the Prague Stock Exchange and a member of the Budapest, Warsaw, Bucharest and Ljubljana Stock Exchanges, as well as the Wiener Börse and Deutsche Börse. In 2006, it executed trades worth US$24 billion, had a dominant share – approximately 30% – of the market in Prague, and had a 6.6% market share across the CE region. It has been awarded the Euromoney Award for Excellence eight times, including for best local partner, best equity house and best domestic securities house in The Czech Republic.
Wood & Company’s customers include domestic institutions across the region, as well as the largest international institutional investors and investment banks that are seeking access to these markets. In addition to offering securities brokerage, including a greater breadth of research on CEE companies than any other local broker, it offers corporate finance services including, for example, flotation, capital markets’ transactions, mergers and acquisitions, fund raising and corporate advisory. In recent years it has also acted as an adviser in many privatisations in the region, including those of the Czech Republic’s largest companies.
Strong benefits for both parties
Through this partnership, Straumur will broaden its geographic base and increase the proportion of net interest and fee and commission income, in relation to its gross income.
Straumur offers a complete range of investment banking services, including brokerage, corporate finance advisory, and debt finance. Wood & Company primarily derives its income from equities brokerage services (execution, electronic trading and research) and commission for corporate finance activities, which will make a significant addition to Straumur’s existing products and services. In addition, Straumur’s clients will benefit from the distribution power and network afforded by Wood & Company’s significant geographic footprint in CEE.
Wood & Company will benefit from Straumur’s strong balance sheet and integrated business model, enabling it to build on its excellent growth, and increase the range of services it offers its clients.
William Fall, CEO of Straumur, commented:
“Wood & Company is exceptionally well positioned in this market and the preferred provider of access to central and eastern Europe. This company has been highly profitable for the past ten years and is a unique player in that region. The acquisition is in line with our strategy of international growth. Through this acquisition we will also enhance our fee and commission income from investment banking services, which is another goal of the company. Coming on the heels of the recent acquisition of eQ Bank in Finland, Wood & Company strengthens Straumur’s products, services and geographic access. Straumur now offers greater client geographic access, additional products and services, and a robust operating platform. These three components are at the core of our overall strategy.”
Jan Sýkora, Partner and Chairman of Wood & Company, commented:
“We are delighted to be entering into a partnership with Straumur, which we believe will add considerable value for the existing customers, shareholders, and employees of Wood & Company. Having access to an ambitious partner with a strong balance sheet enables us to accelerate our development. We are very much looking forward to expanding our geographic and product coverage by working with Straumur and continuously improving our service to our clients.”