Prime broker pushes for market share as banks exit

Leading multi-asset prime brokerage business, Invast Global has rebranded to 26 Degrees, repositioning itself to gain market share in the billion-dollar industry as broker-dealers, hedge funds and family offices are left out in the cold by the shakeout in the prime brokerage market. Prime services, estimated to be a US$20 billion industry, and once the domain of global investment bank behemoths, has become increasingly fragmented over the last five years. The number of global players is rapidly diminishing, with further reductions expected as providers implement the BASEL III/IV regulatory changes. Fund managers and broker-dealers are increasingly disenfranchised by the diminishing service levels and more costly access to liquidity offered by the larger Tier 1 banks as a result of this contraction. According to 26 Degrees CEO Gavin White, this operating environment has made it very difficult for broker-dealers, emerging hedge funds and family offices to access the markets and services they need to remain competitive in an industry measured by the ability to perform. This has renewed interest in the capabilities of independent prime service providers, particularly those with expertise, technology and experience, like 26 Degrees. “The prime brokerage global market is in a state of flux. This has highlighted the strong position of prime broking independents such as 26 Degrees to step up and support these underserviced market segments.” He added: “We are excited about this opportunity and have made the strategic decision to retire the Invast Global brand and focus 26 Degrees on institutional clients. We’d predicted this shift, and this repositioning futureproofs our business to continue to thrive in response to the changing regulatory and operating environments we are seeing unfold.”

“With the collapse of a number of international banks and the resulting headwinds, we have bolstered our relationships with Tier 1 investment banks including, JP Morgan, Deutsche Bank, NatWest and Morgan Stanley,” said White. “As some prime brokers have chosen to step away from the prime broking space over the past year, our ability to continue to expand and diversify our panel of prime broker relationships shows commitment to the industry and also the esteem with which our business is held by the Tier 1 investment banks,” said White. The growth opportunity is significant. 26 Degrees estimates the revenue attributable to clients with AUM under US$100m is US$3.2 billion or 15.8% of the industry. As thresholds for Tier 1 investment banks retract from this segment of the market, the opportunity for 26 Degrees becomes clear. “We are seeing a watershed moment in our industry, one that we predicted based on history repeating itself, and which we planned for,” said White. “Our partners deserve better and are looking for a record of performance, a longevity of experience and a commitment to the industry and their clients, which 26 Degrees can deliver now and into the future.” 26 Degrees Global Markets, previously Invast Global, is an established global provider with a decade-long history of providing innovative and accessible capital market solutions while executing sustainable partnerships at a global scale. 26 Degrees expects to significantly grow its market share over the next five years as it deepens these relationships and capitalises on the changing market conditions that are seeing the traditional investment banks exit this market segment creating a vacuum that 26 Degrees is well positioned to fill.

26 Degrees refers to the 26th degree latitude which runs parallel across the widest breadth of Australia dividing it from North to South. It crosses the Indian Ocean to meet the Cradle of Humanity in South Africa, where humankind evolved. “26 Degrees is seizing the opportunity that this shift in Prime Services presents and we are challenging the dominant model in our industry,” said White. “We are very excited to be modern pioneers of the independent model, providing accessible prime solutions and are stepping up our presence globally as a prime partner of choice.”