By Freya Berry
LONDON (Reuters) - The tiny boutique firm that landed the two biggest merger deals of the year may well have won them because of the deals it advised clients not to make.
With just nine employees, boutique advisory firm Robey Warshaw became the talk of global finance this year by landing the advisory role for oil and gas firm BG, bought for $70 billion by Shell
Six months later they topped it. This month, the two year old partnership based in a London townhouse steered UK brewer SABMiller through hardball negotiations in its more than $100 billion acquisition by AB InBev.
Just those two deals catapulted Robey Warshaw into 13th place on the global mergers and acquisitions league table. For comparison, that puts it two places ahead of HSBC, Europe's biggest bank, which is about 180 years older, has around 266,000 more employees and holds, give or take, $2.6 trillion more in assets.
Founded by the former global M&A chief for Morgan Stanley, Simon Robey, and the former co-head of investment banking at UBS, Simon Warshaw, the firm has shown what can be accomplished with just a thick black book of contacts and a hard-nosed reputation for knowing when to say no.
In the case of SABMiller, Robey Warshaw earned the trust of the brewer's chairman Jan du Plessis, who is also chairman of mining firm Rio Tinto, when it advised him last year on how to shake off an approach from rival miner Glencore.
INDEPENDENCE
Boutique firms benefit from a perception that their advice is more independent than that of big banks - which have far more to gain if a deal goes through than if it fails, because they can earn bigger fees providing financing than just advice.
"You hire bankers for three things - their connections, their balance sheet to support the debt portion of the deal, and their advice," said Erik Gordon, a professor at the University of Michigan's Ross School of Business.
"Your board...might like to add a boutique for pure advice, uninfluenced by the potential doubling or tripling of their fees by arranging your lending."
In addition to advising du Plessis on the Rio Tinto defence last year, Robey Warshaw helped AstraZeneca fend off U.S. pharmaceuticals giant Pfizer, scuppering a deal that would have been worth $118 billion and would have earned hundreds of millions for big banks if it had gone through.
"It's all about experience, judgment and human touch," said a person close to Robey Warshaw, speaking on condition of anonymity because the firm was trying to avoid publicity in the wake of the SABMiller deal. "It's about knowing what to do when you're under pressure. You don't need a big team of people for that."
A specialist boutique bank was part of the advisory team on all but four of the 20 biggest deals this year, according to Thomson Reuters data.
Boutique investment bank Lazard is seventh on the global league table having advised on 194 deals, including Heinz
Robey Warshaw joins a list of even smaller micro boutiques that have been claiming some of the world's biggest deals, including the likes of brothers Michael and Yoel Zaoui, who advised Alcatel-Lucent in a $16 billion hookup with Nokia.
But no firm has quite managed to rack up as high a position on the league table with such a small number of deals and as small a staff roster as Robey Warshaw. Its haul so far this year, on SAB, BG and just one other announced deal, is $202.5 billion, or a mind-boggling $22.5 billion per employee.
Its plush but discreet Mayfair townhouse was the neutral spot where the executives of AB InBev and SABMiller met on multiple occasions to reach agreement, including a tense day of negotiations on Monday which finally culminated in a deal around 8 pm.
The advisory work was led by Robey, who is also chairman of the Royal Opera House and one of the best-connected figures in Britain's world of finance, nicknamed the "trillion dollar man" in Britain's press for the size of the deals he has notched over his career.
With Robey's advice, SABMiller drove a hard bargain: AB InBev was forced to raise its bid four times.
Robey joined forces two years ago with Warshaw, who set off from UBS after leading the team that advised Vodafone on its $130 billion disposal of Verizon's U.S. wireless business.
A third high-powered Simon, former president of Goldman Sachs Europe Simon Robertson, left the partnership last year and set up on his own out of another townhouse a few doors down.
Robey Warshaw declined to comment for this article and its partners rarely speak publicly, but in the past they have said one of the reasons clients trust them is that they are not solely driven to push deals through.
"I'm not a deal junkie, I'm probably a rather old-fashioned corporate financier," Robey told the London Evening Standard two years ago. He had a choral scholarship to Oxford and said he might have become an opera singer if he hadn't gone into banking.
Forming a boutique allows the bankers to serve clients without the legacy regulatory problems or internal politics that come with major banks, or the risk that bonuses may be slashed due to problems elsewhere.
A person who has worked with the duo previously and asked not to be identified to preserve that relationship, described the pair as "consummate investment bankers", well aware of their stature and prowess.
"They don't have a lot of self doubt."
(Reporting by Freya Berry; additional reporting by Pamela Barbaglia; Editing by Peter Graff)
