Technology, outsourced services and specialty finance are driving deals in the financial services sector, despite regulatory uncertainty. Private equity firm Lovell Minnick Partners has been especially active, announcing four financial services investments in the first quarter: Currency Capital, Engage People, Foreside Financial and Trea. The firm has been expanding its focus on financial technology, including closing its fourth fund with $750 million of commitments in 2015.
In 2016, Steve Pierson, an investment banking veteran focused on financial institutions and the financial technology sector, joined the firm as president. Pierson had most recently served as the head of financial institutions group (FIG) investment banking Americas and global head of financial technology and services at UBS (NYSE: UBS). Previously, he served as vice chairman and co-head of FIG investment banking Americas at Credit Suisse. Over the years, Pierson has worked on huge, high-profile deals, such as State Street’s $4.5 billion acquisition of Investors Bank & Trust in 2007, and also well-known middle-market deals, including the $530 million sale of the Hull Group to Goldman Sachs Group Inc. (NYSE: GS) in 1999.
“We have been privileged to work closely with Steve over many years and have been continually impressed by his superior investment acumen and professional skills,” said firm co-chairs Jeffrey Lovell and James Minnick in a joint statement when Pierson joined the firm. “He brings to Lovell Minnick an enviable record of success and a deep network that will elevate our existing capabilities in the sectors where we are focused on investing our fourth institutional fund, including financial technology.”
Investors and strategic acquirers see opportunities to leverage data, analytics and new applications to create efficiencies and better customer experiences in an industry that’s historically slow to innovate, says Pierson. Subsectors likely to see significant activity include: insurance, regulatory compliance, asset and wealth management and capital markets. Outsourced services companies will continue to provide options in response to the changing competitive and regulatory pressures affecting all types of financial companies, resulting in continued demand for these businesses. Specialty finance will continue to fill the void left in the many asset classes where bank lending activity is still below pre-recession levels, thereby creating valuable, differentiated platforms that ultimately will be acquired, according to Pierson.