A 26-year-old European investment banking boutique is reaping the benefits of a long focus on technology, healthcare and energy transition – the three hottest areas where bulge-bracket banks are ramping up – and said it welcomes the increased competition for ESG advisory work.
The firm, Bryan Garnier, is confident its history and expertise advising growth companies on complex areas will keep it ahead of the pack, including raising funds for mid-sized companies at the cutting edge of the move to a more sustainable future.
Bryan Garnier considers itself the go-to adviser for European companies and investors in the energy transition and sustainability sector and has advised on six deals of more than €100m in the industry in the past two years. The latest was as joint global coordinator and joint bookrunner on green hydrogen firm Lhyfe’s €118m IPO in May on Euronext Paris, one of the few listings to get done this year amid challenging market conditions.
Reflecting the varied nature of the industry, another role was as sole financial adviser on a €100m private placement for Agronutris, an insect protein company.
“It’s such a huge market I think it’s a good dynamic for all of us,” said Olivier Beaudouin, partner and head of the energy transition and sustainability team, on the surge in ESG-related deals. “It’s a good thing that everyone is going in that direction, and we’ve seen incredible momentum in our business despite the competition growing.”
ESG-related activity was picking up in 2019 and when Covid-19 and lockdowns hit there was a “huge acceleration” in interest from investors.
“We’re happy we got in early and we were on the ground when it came, but we didn’t see quite such a crazy groundswell coming. It wasn’t a very exciting space for many years,” Beaudouin told IFR in an interview last week.
Bryan Garnier was formed in 1996 by Shelby Bryan and Olivier Garnier (now managing partner) in London as a European specialist in healthcare and technology and is still owned by its partners. Beaudouin joined in 2007 and started building a corporate finance team for cleantech, which has evolved into the energy transition and sustainability team. Beaudouin previously worked at Cowen in New York and London as a technology banker, and Bryan Garnier has similarities with Cowen, the US independent advisory firm that is strong in tech and growth financing.
Bryan Garnier now has more than 200 people, more than double the 98 it had at the start of 2019, spread across offices in London, Paris, Munich, Stockholm, Oslo, and New York, and Palo Alto in California.
Beaudouin said the ETS corporate finance team has grown to about 30 people, after adding three managing directors in the last year. “We will continue to grow,” he said.
Beaudouin is one of 16 partners at the firm, up from six five years ago. Two partners have been added this year, including former head of Jefferies International Clifford Siegel, who is Bryan Garnier’s chairman.
It is strong in the mid-market space and typical deal sizes are €100m–€200m for fundraising and about €300m for M&A. On bigger deals it has worked alongside bulge-bracket banks – including Morgan Stanley, Goldman Sachs, Barclays and Deutsche Bank on major Nasdaq fundraisings for European biotech firms BioNTech and DBV Technologies in recent years – but more often is sole adviser.
The firm's long-standing ESG expertise and focus on innovation makes it a specialist in early stage financing for industrial joint ventures that is hoped will create some of the companies of the future. Much of this funding is through private placements, which were previously mostly equity-based and offered to large fund investors, but are increasingly structured as financing packages. They include more debt to finance capex, as other debt like lease financing and government grants and subsidies can make up 20%–30% of funding in emerging cleantech companies.
When acting as a debt adviser on deals that it has originated, the firm often brings banks into deals that it is syndicating via competitive tender. Banks may have previously overlooked small, early stage deals and are less familiar with the venture funding ecosystem, but are becoming more willing to consider smaller deals to gain exposure to fast-growing companies in the ESG space.
“We generally act as the lead adviser on transactions as we’ve been in this space for 15 years so we leverage our long-standing and extensive relationships with the strategic and private and public financial ecosystem globally very well, while keeping the agility of an entrepreneurial firm," Beaudouin said.
Record year
Bryan Garnier had record revenues of just over €100m in 2021, almost double 2020 and up from about €30m in 2019. About €45m of last year’s revenue came from ECM and about €30m came from M&A and private placements.
It worked on about 70 transactions last year and raised €2.75bn for clients, and it said 85% of that was ESG-related.
About one-quarter of last year’s revenues came from ETS, and Beaudouin said the unit’s revenues doubled in 2020 and again in 2021. This year’s growth is likely to be more modest due to the market correction in the first six months of this year as a result of the overall macro environment. But he said ETS revenues in 2022 should still grow from last year’s record thanks to high levels of innovation and continued investment interest in the sector, driven by increasing climate concerns and the strive towards energy independence as a result of the war in Ukraine.
Lhyfe’s IPO got away in May despite difficult markets. A key factor in getting the deal done was securing three cornerstone investors, including renewable energy company EDPR.
Beaudouin said securing those strategic investors is a key part of creating the "ecosystem" that can be crucial for deals in energy transition and other fast growing areas.
“We’ve been frontrunners in developing structured transactions, where you have strategic partners who provide a financial investment alongside an industrial technology or commercial agreement. This brings a stamp of validation and has a lot of value to financial investors – who then see that the company has the right partners, the right ecosystem and the right backing,” Beaudouin said.
Bryan Garnier was sole financial adviser and sole global coordinator to biomethane company Waga Energy in October on its €126m IPO and three months earlier advised hydrogen power company HDF Energy on a €151m IPO, and both deals were backed by cornerstone investors.
In October 2020 it was sole adviser to hydrogen equipment maker McPhy on a €180m follow-on offering, including strategic investments from Technip Energies and Chart Industries.
While the big US and European banks continue to hire in ESG and seek to beef up their ESG credentials there are relatively few independent specialists offering the suite of banking products. Greentech was a rival in the space, but it was bought in April 2020 by Nomura, which is using it as a platform to be a leader in sustainable finance. In a deal that echoed that, Sumitomo Mitsui Banking Corp last month bought a minority stake in US sustainable energy boutique Marathon Capital and agreed a strategic collaboration.