Wall Street: TD’s investment-banking play

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Hi. I'm Aaron Weinman. Toronto-Dominion Bank agreed to buy investment bank Cowen for $1.3 billion on Tuesday.

Let's understand how this deal underscores the Canadian bank's investment-banking ambitions in the US, and how it reflects the broader dealmaking market for financial institutions.

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TD Bank One Vanderbilt

1. Toronto-Dominion Bank's $1.3 billion move for Cowen underscores that the Canadian lender wants more of the US investment-banking pie. The deal comes after TD agreed to buy Memphis-based First Horizon Corp. for $13.4 billion in February.

Cowen provides investment research and advisory services for M&A. TD will fund the acquisition from the $1.9 billion of proceeds it will receive from the sale of some of its stake in Charles Schwab.

TD also hopes to improve its share of business in the US capital markets by leveraging its balance sheet with Cowen's expertise in investment banking, one banker focused on M&A for financial institutions said.

While big-bank M&A is few and far between, there's room for smaller, strategic transactions like TD's move for Cowen. The small- to middle-market banking space in the US remains fragmented, and there's room for consolidation, according to Sid Khosla, a managing partner and M&A leader for financial services strategy at EY.

"There are adjacent areas where these banks may benefit from inorganic growth," Khosla said in regards to large lenders making acquisitions. "Not necessarily a scale play in consumer banking, but a play around another product set that can use the deposit base that these banks may have."

During Tuesday morning's conference call announcing the deal, Riaz Ahmed, TD Securities' group head for wholesale banking said one pressing question when determining an acquisition was finding a target with "complementary skills."

"It's difficult to time things exactly to where the markets are. When you have a long view of the business, then really what you're looking for is — can you find a party that has complementary skills, and then you worry less about the timing," Ahmed said in response to a question about why TD was making the purchase amid broader market volatility.

TD was advised by Perella Weinberg, and Simpson Thacher & Bartlett and Torys LLP were legal advisors. Ardea Partners and Perkins Advisors worked with Cowen, while Cravath, Swaine & Moore was its legal counsel.

In other news:

Igor Tulchinsky

2. The $7 billion WorldQuant is launching a new competition to crowdsource talent. Those battling it out can win up to $20,000 cash, or land a job.

3. Wells Fargo is reviving, and revising, a policy that led to fake job interviews, per this report from the New York Times. The bank is reactivating the practice that it paused earlier this year after a former employee revealed it was leading managers to interview non-white candidates for jobs that were already filled.

4. Andreessen Horowitz wants to manage the money of wealthy startup founders, Bloomberg reported. The venture-capital firm hired Michael Del Buono as chief investment officer for a new business that will provide wealth-management services. Meanwhile, Marc Andreessen is one of several top investors being dragged into Twitter's legal battle with Elon Musk

5. Two investment bankers with Centerview Partners have left the firm to start their own shop, according to the Wall Street Journal. Dealmakers David Handler and David Neequaye have secured backing from Consello and 25madison to start a company focused on advising tech companies.

6. Robinhood's crypto unit was fined $30 million by the New York State Department of Financial Services. The NYDFS said the company's crypto anti-money laundering and cybersecurity program was inadequately staffed and lacked enough resources to address risks. Robinhood also said on Tuesday that it would cut 23% of its workforce.

7. This NFT-based loyalty startup just raised $16 million from Kevin Durant and investors like Paradigm and Mr. Beast. Here's the 10-slide pitch deck that Hang used to nab the funding.

8. PwC is hiring for 4,000 roles across the company. Here's what incoming associates need to know, according to PwC's head of recruiting.

9. Blockchain engineers are in major demand at companies like Google and Deloitte. Even amid crypto layoffs, recruiters said compensation and job openings for these gigs remain high.

10. HBO's "Industry" nails how much bosses at investment banks hate employees working from home. The show, about the lives of junior employees at a fictional London-based bank, returned for its second season on Monday.

Done deals:

  • Carlyle's credit platform has launched a decarbonization-linked financing program. The initiative incentivizes borrowers to reduce their greenhouse gas emissions or achieve other climate-related targets. It's among the first in the US private-credit market.
  • Orthodontics company Impress has merged with Uniform Teeth to create a network of orthodontic clinics. Impress is a Barcelona-headquartered company founded by Dr. Khaled Kasem, and Uniform Teeth was formed in San Francisco. Uniform is backed by investors Canaan Partners, Lerer Hippeau, Slow Ventures, and Refactor Capital.

Curated by Aaron Weinman in New York. Tips? Email aweinman@insider.com or tweet @aaronw11. Edited by Hallam Bullock (tweet @hallam_bullock) in London.

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