• Targeting 6-7 additional hires for the sponsor team
• Focusing on middle-market sponsors with deals up to USD 1bn
• Firm has US offices in San Francisco, Chicago, New York and Washington, DC

DC Advisory is building out a US-based financial sponsors team to increase its private equity M&A coverage and enhance its cross-border dealmaking capabilities, Yaron Redlich, a managing director, told Mergermarket.

The international investment bank, part of Japanese financial institution Daiwa Securities, hired Redlich in January to establish and lead its new US financial sponsors unit. Redlich has joined from DA Davidson, where he ran its financial sponsors team, and has previously worked at Nomura and Jefferies where he also oversaw areas of their private equity deal coverage.

“In the last 12 months, about 45% of our [international] clients were financial sponsors, which is very exciting to me because that means we have a very strong base to grow,” said Redlich.

The search for new recruits has already begun, he said, adding that the firm plans to hire three to four senior directors and up to three junior level staff in the next few months.

Prior to Redlich’s arrival, DC Advisory had a broad coverage of US financial sponsors but no dedicated US-based team and its existing bankers felt they were missing a crucial tool to help them and the firm scale their business with US sponsors, Redlich said.

“It was more marketing to sponsors and letting them know what the capabilities of the firm were,” he said.

The group has four US-based offices in San Francisco, Chicago, New York and Washington, DC. The aim is to have a managing director or director covering financial sponsors in each location, he said.

Each new senior director will be tasked with covering a dedicated list of 70 to 100 middle-market sponsors based on geography, with Redlich aiming to actively cover up to 500 private equity firms once his team is complete. The team will be providing sellside, buyside, capital raising, and GP stakes advisory services as well as access to secondaries market deals, Redlich said.

The focus will be on middle-market sponsors, with Redlich noting that they are targeting deals in the USD 200m to USD 1bn range but will also maintain dialogues with larger sponsors.

“They’re going to be looking to buy some of the smaller assets that we sell as add-ons for their portfolio companies, and that also gives us entry into those portfolio companies to do other things,” he said.

Almost 30% of the group’s deal activity in the last year was with public companies, so Redlich expects his team to work on both public and private deals.

Cross-border activity

DC Advisory currently has established financial sponsors teams in Europe and Asia, which includes senior directors in Austria, Germany, UK, Spain and Japan.

Of the 183 transactions DC Advisory has completed internationally in the last 12 months, 58 of them were cross-border deals, Redlich said, and the goal is to increase that cross-border deal figure.

One way this will be achieved is leveraging Redlich and his team’s expertise to provide DC Advisory’s international clients with better access to US deals. This cross-border collaboration will also allow his team to present international buying opportunities to US sponsors, such as carve-outs of non-US domiciled companies.

“It’s having dedicated people, US, Asia, and Europe, who can all work together to find buyers and uncover new opportunities for us and use the global scale of the firm to make sure that those deals are executed properly,” said Redlich.

He added that DC Advisory has deep expertise in several sectors that are popular with the private equity community, including aerospace and defense, business and technology services, software, and healthcare. As a result, it is likely that their sponsor deals will be focused on those main areas.

“Those are all kind of hot sectors right now for private equity,” said Redlich.