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Huntington (HBAN) Closes Capstone Buyout, Expands IB Vertical

·4-min read

Huntington Bancshares Incorporated HBAN completed the acquisition of Capstone Partners, a preeminent investment banking (IB) and advisory firm. The acquisition was announced in March and has helped HBNA create a full-service banking experience for clients in the company’s growing capital markets and commercial banking franchise.

Founded in 2002, Capstone, through its IB and advisory services (including mergers and acquisitions, capital advisory, business restructuring and financial advisory), caters to middle-market companies. The firm has a presence in 12 cities across the United States, with primary offices located in Boston and Denver.

Together, Capstone and Huntington are poised to offer a comprehensive set of banking solutions across traditional commercial banking, investment banking and capital markets. The deal also enhances HBAN’s industry expertise across 12 primary industry sectors and expands its geographic reach. The acquisition of Capstone is expected to increase HBAN’s capital market revenues.

Management Comments

Scott Kleinman, senior executive vice president and co-president of Huntington Commercial Banking, noted, "the combined industry expertise of Huntington and Capstone, along with our ability to serve our growing core middle market client base across the United States, enables us to expand our role as a trusted advisor to a wide variety of businesses.” He continued, "Our industry insights and full range of capabilities position us to provide a consistent, differentiated experience for our clients, who will benefit from an aligned culture that puts customers and communities at the center of everything we do."

John Ferrara, founder and president of Capstone Partners, remarked, "Capstone had a strong strategic partnership with Huntington before we agreed to join forces. We're seeing tremendous interest from Huntington commercial bankers, who are eager to add investment banking and advisory services to round out the full range of solutions they can provide their clients." He continued, “Our combination will accelerate Capstone's plans for continued growth while also bolstering Huntington's banking verticals, especially in sponsor finance, healthcare, technology and telecom, and industrials."

Our Take

Over the past few years, Huntington has expanded its footprint and capabilities in a number of verticals through acquisitions. In May 2022, the company acquired Torana to enhance its digital capabilities and enterprise payments strategy.  In June 2021, it closed the merger with TCF Financial to form one of the top 25 U.S. bank holding companies.

In the fourth quarter of 2021, Huntington completed the integration of TCF Financial. The acquisition strengthened Huntington’s position in existing markets, established a presence in new markets and combined complementary businesses, which will further enable the company to realize meaningful revenue synergies and fuel growth. It expects to achieve cost savings related to the merger in the second quarter of 2022.

At present, HBAN carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

So far this year, shares of HBAN have lost 10.7% compared with a 12.5% decline of the industry.

 

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Inorganic Growth Moves by Other Firms

With a view to helping clients build long-term financial wellness, Truist Financial Corporation TFC acquired the award-winning gamified finance mobile app, Long Game. Long Game changes the way people engage with their banks. The mobile finance app uses prize-linked savings and casual gaming to motivate smart financial behavior.

Truist Financial is expected to use Long Game’s innovative technology to inspire and build better lives and communities.

Franklin Resources, Inc. BEN, which operates as Franklin Templeton, entered an agreement with The Bank of New York Mellon Corporation BK to acquire BNY Alcentra Group Holdings, Inc. from the latter. The closing of the deal, subject to customary conditions, including certain regulatory approvals, is expected early in the first quarter of 2023.

Through the acquisition, Franklin Templeton’s U.S. alternative credit specialist investment manager, Benefit Street Partners, will be able to expand its alternative credit capabilities and presence in Europe, doubling its AUM to $77 billion globally.

Upon the deal closure, BNY Mellon Investment Management is expected to continue to offer Alcentra’s capabilities in BNY Mellon’s sub-advised funds and select regions via its global distribution platform and will provide Alcentra with ongoing asset servicing support.


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