TD Bank Makes Investment Banking Inroads with NY-based Cowen Acquisition

Canada’s Toronto-Dominion Bank (TD) will buy the New York investment bank Cowen for $1.3 billion, its Securities Group Head announced in an early-August conference call.

"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," Riaz Ahmed said, addressing the market’s recent volatility.

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Cowen, which is nearly a century old, provides research and advisory services for M&A. TD will fund the purchase with the $1.9 billion it will receive from selling some of its stake in Charles Schwab.

This relatively small transaction is a strategic one for TD, which in February agreed to buy First Horizon Corp. for $13.4 billion. The small- to middle-market banking space in the U.S. is fragmented and ripe 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 (large) banks may benefit from inorganic growth," Khosla told Business Insider. "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."

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