American investment bank Jefferies Group said it has been appointed corporate broker to Russian gold miner Nord Gold , its first new mandate since taking over British stockbroker Hoare Govett last month.
Jefferies will act as sole broker to newly listed Nord Gold, which was appointing financial advisors for the first time after being spun out of Russian steelmaker Severstal earlier this year.
A mainly British phenomenon, corporate brokers offer advice to clients for minimal fees, usually in the hope of winning their bank more lucrative business, such as mergers and acquisitions or equity fundraising, further down the line. They also act as a go-between for their clients and investors.
Jefferies acquisition of Hoare Govett from Royal Bank of Scotland made it an immediate contender in the hotly contested sector, complementing other areas of European investment banking in which it has been expanding aggressively in the past three years, including mergers and acquisitions.
This appointment is a great indication of what is achievable in the future, Peter Bacchus, co-head of European Investment Banking and global head of Metals and Mining Investment Banking at Jefferies, told Reuters.
We have a very established industry-led investment banking team; the core broking competency that Hoare Govett brings opens up a whole raft of potential new appointments that we will be looking to add. This is very much just a first step.
Rivals have been circling Hoare Govett's list of blue chip clients in the hope they may use the move to Jefferies as an opportunity to review relationships.
Pharmaceuticals group GlaxoSmithKline, security services firm G4S and oil and gas company Tullow Oil are among former Hoare Govett clients which have changed brokers this year, although all three were already reviewing before the acquisition by Jefferies.
Jefferies Hoare Govett has six FTSE 100 clients, including BAE Systems and Rolls Royce, as well as 32 in the FTSE 250.
We clearly want to keep the clients that Hoare Govett has won over the years, that is important; but at the same time there is enormous opportunity to broaden the relationships that we have with other companies to incorporate this broking expertise, said Bacchus.