Wells Fargo & Company (NYSE: WFC) announced Friday the acquisition of prime broker Merlin Securities LLC for an undisclosed amount.
The move is the bank's first into prime brokerage services for clients including hedge fund managers to records-handling and trade-clearing services. Access to Merlin's technology and clients gives Wells Fargo a boost in its equities trading. Hedge fund capitalization is at a record high.
Shares of Wells Fargo rose 3 cents to $33.88 in midday trading. The shares have gained about 29 percent in value since November, following the completion of its three-year acquisition of Wachovia, which tanked in the 2008 finanical crisis.
Merlin's managing partners Stephan Vermut and Aaron Vermut will join the San-Francisco-based bank, according to a statement, Bloomberg News reported. Merlin has about 500 clients and operates offices in New York, Toronto and its home base in San Francisco.
We believe there is a window of opportunity that exists today because of the macro landscape, some of the attrition on the street and some of the regulatory changes that are coming, Christopher Bartlett, Merlin's head of equity sales, told Bloomberg. This is another example of our commitment to the capital-markets business.
Hedge fund assets are growing. Investors injected more than $16 billion into these funds in the first quarter, the best performance in five years, according to a report by Hedge Fund Research Inc. Global capital invested in hedge funds has increased to $2.14 trillion, up from the previous record of $2.04 trillion hit last year.
Wells Fargo avoided the risks that took down competitors in the financial crisis. Now the bank is seeking forays into prime brokerage services to grab some of this business away from Goldman Sachs Group Inc. and JPMorgan Chase & Co.
Wells Fargo has a market capitalization of $160.7 billion, the highest of the country's banks.