Evercore Partners said on Sunday that it planned to buy Institutional Strategy & Investment, a move intended to bolster its research and trading arm.
The deal, coupled with a move to buy the 40 percent of Evercore’s institutional equities division that the firm does not already own, is aimed at building up a complement to the investment bank’s mainstay advisory operations.
By acquiring the company, known as ISI, Evercore hopes to expand its capital markets operations, providing more research and trading offerings for hedge fund clients.
Under the terms of the deal, Evercore will issue up to eight million share equivalents to buy the two businesses, worth about $401 million as of Friday’s closing price.
The ultimate deal price will depend on how well the new business, to be called Evercore ISI Institutional Equities, performs in the five years after closing. Together, the two operations claim to cover 620 companies and offer sales coverage to more than 1,750 clients around the world. They reported about $230 million in revenue from clients in the year ended June 30.
Ed Hyman, the founder of ISI, will become an Evercore vice chairman and will be chairman of the newly combined business. He will also be part of an executive committee overseeing the unit along with Vinayak Singh, the president of ISI, and Charles Myers, the current head of Evercore’s institutional equities arm.
Shares in Evercore tumbled more than 8 percent on Friday after Bloomberg News reported on the deal talks.