ConvergEx, a provider of investment and execution technology solutions to institutional clients, has signed a definitive agreement to acquire NorthPoint Trading Partners.
With this acquisition, ConvergEx will offer small and medium sized hedge funds access to a full range of boutique prime brokerage services through NorthPoint’s service model and clearing and custody agreements.
The deal is expected to close in the near term. Financial terms of the agreement were not disclosed.
"ConvergEx has well-established execution and technology relationships with many of the world’s large hedge funds and we understand the nuances of what hedge fund managers need to succeed. This acquisition is a natural extension to those relationships and enables us to offer smaller hedge funds wide-ranging services and expertise embedded in the high-touch service model that is so important to them," says Joseph M. Velli (pictured), chairman and chief executive officer of ConvergEx Group. "Additionally, as we integrate this new business line, NorthPoint’s clients will reap many benefits from leveraging ConvergEx’s state-of-the-art technologies and products."
According to a recent Tabb Group report, it is estimated that the number of funds in the small to mid-sized hedge fund segment exceeds the count in the larger hedge fund segment by 25 to one and that introducing or boutique prime brokerage firms garner approximately ten per cent of all new prime brokerage arrangements.
Douglas M. Nelson, chief executive officer of NorthPoint, and Michael L. DeJarnette, NorthPoint’s president, will continue in their respective roles at ConvergEx.
"NorthPoint offers services that are very much in high demand. In order to be competitive and thrive, start-up and mid-sized hedge funds need access to powerful and customised boutique prime brokerage services, and in the past they have had difficulty accessing these services through traditional prime brokerage arrangements," says Nelson. "We are all thrilled to have joined the ConvergEx family. Together we believe we can offer the next generation of boutique prime brokerage services."
NorthPoint will continue to be based out of Atlanta, Georgia, and all of its clearing and custody arrangements, products, partnerships and projects will continue uninterrupted.
