Cantor Fitzgerald takes over Dolmen

The US brokerage firm Cantor Fitzgerald has taken over the Dublin-based stockbroking firm Dolmen for an undisclosed fee.

Cantor CEO Shawn Matthews plans to beef up Dolmen’s operations in Ireland to take advantage of the economic recovery.

“We are looking to be the number one fixed-income dealer in Ireland in a relatively short period of time,” he said. “We are still aggressively looking to expand. I can see us adding at least 200 people over the next year.”

Mr Matthews said Cantor will offer fixed-income and equity underwriting, trading, wealth-management and pension services in Ireland as the country and its banks recover from the sovereign-debt crisis.

Matthews said Cantor sees an opportunity in the aftermath of the Irish housing bust through repackaging mortgages into securities to get them off troubled lenders’ books.

“We are looking to go in there to solve part of that issue,” he said. “I think the solution will come through securitisations of real-estate loans.”

Dolmen CEO and co-founder Ronan Reid said Dolmen’s pre-tax loss narrowed to €1.9m in 2011 from €2.5m a year earlier, while revenue rose 1% to €12.4m.

Revenue in the first 10 months of 2012 has already exceeded last year’s total, partly on institutional demand for fixed-income services, he said.

Mr Reid said most of the new hires would be based in Dublin, although there would be some new employees added to the private client division in Cork.

The tie up between Cantor and Dolmen has been rumoured for well over a year. However, it is believed that Dolmen had to restructure the business into one entity before the deal could proceed.

Reid said the division may hire up to 30 people over the next two years, which would bring employment to 120 staff, compared with Dolmen’s peak of 130 before the crisis. More Irish acquisitions to “further diversify the client base” may follow, he said.

Reid, who founded the firm with Paul McGowan in 1995, said he has committed to stay as CEO of the unit for the next four to five years, and that 14 or 15 other employees are likely to become equity shareholders in Cantor Fitzgerald.

Cantor Fitzgerald was almost wiped out in the 9/11 terrorist attacks in New York, when its Twin Towers headquarters was destroyed.

There has been a considerable amount of consolidation in the Irish financial services sector over the past few years. In 1988 there were 16 domestic stockbroking firms members of the Irish Stock Exchange. Now there are six. Earlier this year NCB was taken over by Investec and Davy acquired Bloxham Stockbrokers when it went into liquidation. Last year Fexco took over Goodbody Stockbrokers.

* Additional reporting by Bloomberg