Last week, Wells Fargo Securities managing director and group head of M&A international Daniel Bricken visited Israel. During the visit, he said, unofficially, that the US bank would step up efforts in the Israeli market. He said that Wells Fargo & Co. (NYSE: WFC) was aiming for mid-sized and larger deals, in other words, mergers and acquisitions of at least $50 million. He said, "We're seeking deals of between $100 million and $200 million".
Wells Fargo's average deal size has historically been around $1 billion.
Wells Fargo, or more accurately Wachovia, began operating in Israel five years ago, in collaboration with Avalon Capital Ltd., run by founding partner Joseph Sabet. This collaboration is expanding, including Wells Fargo's first activity in the region.
In the past two years, investment banking almost disappeared. With the recovery on Wall Street and of mergers and acquisitions, investment banks are back on the scene.
The impact of the financial crisis is reflected in "Bloomberg's" rankings of the banks that led IPOs in 2009. Goldman Sachs Group Inc. (NYSE: GS) was number 1, with a 21% market share. It was followed by Bank of America Corporation (NYSE: BAC) in the wake of its takeover of Merrill Lynch, with an 18% market share. JPMorgan Chase & Co. (NYSE: JPM) jumped to fourth place after taking over Bear Stearns. Barclays Bank plc (LSE: BARC) was in eighth place after acquiring Lehman Brothers, and Wells Fargo reached ninth place following its takeover of Wachovia and the merger of the two banks' investment banking activity.
The amounts that Wells Fargo is referring to in Israel are the average size of exits in the local market. "It's very rare to find a CFO these days who does not think about mergers and acquisitions," said Bricken in explaining what the bank is looking for in Israel. "I have something to talk about with local companies, and to offer our customers seeking acquisitions."
Offers in this spirit were heard last week by 13 Israeli start-ups who met with Wells Fargo representatives, although Bricken said, "Some of them are interested in making acquisitions, in order to grow."
Bricken and Sabet see real growth in M&As and IPOs in Israel over the next two years. "The market doesn’t always cooperate," said Bricken. "That's what happened in 2009, when people were afraid of the economic developments and there were balance sheet problems. We think that this will change, sooner or later."
Published by Globes [online], Israel business news - www.globes-online.com - on February 10, 2010
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