Wall Street investment bank Allen & Co is to take a 30 per cent stake in Merrion Capital, the Dublin stockbroking firm set up by seven former NCB executives last June.
In return for its investment, Allen, which specialises in merger and acquisitions, private placements, underwriting, institutional equities and financings and recapitalisations, will receive two seats on the board. These will be filled by Allen's managing director Mr Paul Gould and director Mr Clarke Keough.
The US company will also provide Merrion with business support in the form of business backup and introductions.
Merrion declined to say how much Allen was investing in the new firm but, given that the costs of setting up a stockbroking operation are estimated at between £3 million and £5 million (€3.8E6.3 million), the figure is thought to be several million.
"It is the first time a Wall Street firm has had a direct investment in a Dublin stockbroking firm," said Merrion chief executive Mr John Conroy.
He said the link-up provided Merrion with access to the largest corporations in the world while, on the institutional equity side, Allen has strong relations with the leading US fund managers. "It means we are not confined to the island of Ireland but can be a player on a larger stage."
Mr Conroy said Merrion wanted to put a strategic investor in place before looking to the Central Bank for a stockbroking licence but it hoped to have that in place "within a matter of weeks".
The firm, which was formed after seven senior NCB executives walked out last June, has spent the last few months developing its infrastructure and has just moved into new premises in the Sweepstakes in Ballsbridge. The firm currently employs 25 people and expects that to increase to 30 shortly, rising to 40 by the end of next year.
Although Merrion has to wait until it has its licence to start its institutional equity and private client business, its corporate finance division has been up and running since June. Mr Pat Landy, director of corporate finance, said the company had 10 mandates at this stage.
The new firm will be targeting the technology sector in particular, an area in which it can draw on the Wall Street firm's expertise. Allen & Co was ranked sixth among US merger and acquisitions advisers in the technology sector in the first eight months of the year.
