Source Says Macquarie in Talks to Acquire Fox-Pitt Kelton

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Australia’s Macquarie Group Ltd. is in talks to acquire Fox-Pitt Kelton Cochran Caronia Waller, a small investment bank owned by its management and private equity firm J.C. Flowers & Co LLC, a person familiar with the matter said Thursday.

Macquarie is expected to pay more than $150 million and as much as $200 million, though a final agreement has not been signed and the usual hurdles remain, the person said.

At the low end of that range, J.C. Flowers would receive twice what it paid Swiss Reinsurance Co to acquire Fox-Pitt in 2006.

Fox-Pitt Kelton and Macquarie declined to comment.

Macquarie, Australia’s largest investment bank, has recently been on a buying and hiring spree, particularly in U.S. capital markets. The company is eager to extend its reach beyond Asia and Australia as well as lessen its dependence on infrastructure investing.

On Wednesday, Macquarie agreed to buy U.S. money manager Delaware Investments from Lincoln National Corp for $428 million. Earlier this year, it bought Tristone Capital, an energy investment bank, and a gas-trading business from Constellation Energy.

Fox-Pitt, partly owned by its management, has about 280 employees and provides M&A advice, underwriting and research that is focused on banks, insurers and other financial services firms. Buying Fox-Pitt would quickly give Macquarie a strong presence in U.S. and European financial institutions banking.

Fox-Pitt merged with insurance industry boutique Cochran Caronia Waller in 2007. Lazard Ltd. financial institutions dealmaker Gary Parr is also a shareholder in the closely held Fox-Pitt.

(Reporting by Joseph A. Giannone, editing by Maureen Bavdek)