Private Equity – HSBC takeover of CCF raises questions – and rumours

No sooner does one banking merger hit the rocks than another takes the market by surprise… In fact, HSBC Holdings’ GBP6.6 billion ($10.4 billion) takeover of Credit Commercial de France (CCF) came some days before the announcement that the marriage arranged between Deutsche and Dresdner would not take place.

But the done deal and the deal-that-might-have been share a common element: in both instances, the potential fit’ of a small merchant banking operation within the large merged group raises questions. Dresdner Kleinwort Benson was the rock on which the merger of German titans finally foundered. By contrast, the existence of CCF Charterhouse did not prove a problem when the HSBC/CCF deal was carved out. However, few market observers expect Charterhouse to remain within the enlarged group. While CCF’s retail banking operations are complementary to HSBC, there is significant overlap on the investment banking side – and particularly within Charterhouse. HSBC has successful brokerage and private equity operations of its own, so it is difficult to envisage the parallel Charterhouse divisions being bolted on or absorbed, particularly given the contrasting styles of the two groups – the first corporate’, the second, which has retained a high degree of self-determination under the CCF umbrella, collegiate’.

Following the announcement of the deal, HSBC chairman John Bond confirmed that the group was considering all options’ for Charterhouse, while Charterhouse itself has declined to comment on rumours of buyout plans. Were either the entire firm or its private equity arm to seek to regain its independence, however, it would merely be following an established trend. Third-party investors’ preference for genuinely independent managers is intensifying as the private equity market matures, as other recent deals such as NatWest Equity Partners and Indigo Capital confirm.

Neither Charterhouse Development Capital nor HSBC Private Equity was prepared to comment on the implications of the merger for their businesses.

HSBC Private Equity, however, may currently have other pressing concerns at the forefront of its collective mind. Although no official statement had been issued at press time, sources close to the HSBC Group have confirmed that rumours of the departure of Ian Forrest, for several years the head of HSBC Private Equity, following differences of opinion over future strategy. are based in fact.