(Bloomberg Opinion) -- A decade ago, a company couldn’t do much in Italy without hiring Mediobanca Spa, the merchant bank whose network of shareholdings in the country’s biggest corporations gave it commanding influence. The lender’s acquisition of a two-thirds stake in Jean-Marie Messier’s Paris-based advisory boutique shows how things have changed. Customers have a choice of advisers and the Italian bank needs a strategy that looks to other markets.
Thursday’s transaction will bring another 40 or so dealmakers into the Mediobanca fold and accelerate the bank’s effort to reposition itself as a southern European advisory shop and wealth manager.
M&A for Italian clients may still be its core business, but Wall Street rivals have been expanding in the country in recent years. Meanwhile, the domestic fee pool hasn’t been growing as fast as those in other continental European markets. There are far more big-cap companies in France and Germany’s benchmark stock indexes than in Italy’s FTSE MIB Index. The country’s crop of large public companies has shrunk with takeovers like Essilor International SA’s purchase of Luxottica Group SpA.
Mediobanca CEO Alberto Nagel has been actively unwinding the bank’s portfolio of corporate holdings and reinvesting the proceeds into strengthening the firm’s cross-border capabilities. Buying Messier Maris & Associes immediately gives him a strong roster of large French mid-cap and private equity clients. Mediobanca's investment banking fee pool jumps 30 percent overnight.
MMA, set up by Messier in 2003 with ex-Lazard banker Erik Maris joining in 2010, had carved out a good niche for itself, supplementing its core M&A business with debt and restructuring advisory work. The question is whether it could have developed radically further on its own.
There has to be some risk of a culture clash. But MMA’s founders are staying on board, and it looks like the business will function as a semi-autonomous republic within the Mediobanca empire. That should minimize the risk of defections as MMA loses its boutique status.
The big prize for Mediobanca would be to capture some sizable French corporate clients and large-cap cross-border M&A work. That part of the advisory market is hotly contested. The historical grip of Rothschild & Co. and Lazard Ltd. has lately been undermined by boutiques such as d’Angelin & Co. and Zaoui & Co. True, MMA is advising Thales SA on its 5.4 billion-euro ($6.1 billion) takeover of Gemalto NV. But it may take more than an acquisition like this for Mediobanca to land the really big corporate fish outside Italy.
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Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.
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