Toronto-based Bank of Montreal (BMO) has entered into a definitive agreement to acquire New York-based KGS-Alpha Capital Markets (KGS), a fixed income broker-dealer specializing in U.S. mortgage- and asset-backed securities in the institutional investor market, the bank announced on Tuesday.
The transaction is subject to receipt of required regulatory approvals and other customary conditions and is currently expected to close in BMO’s fourth fiscal quarter, the firm says in a news release.
Founded in 2010, KGS now has 135 employees, including 84 sales and trading professionals. While based in New York, KGS has seven other offices across the U.S.
“BMO has built a solid capital markets platform in the U.S.,” says Pat Cronin, CEO of BMO Capital Markets. “The acquisition of KGS is highly complementary to our strategy, leverages our existing capabilities and allows us to better serve our clients. The size and scope of the mortgage-backed securities bond market represents a tremendous opportunity to continue to diversity our platform and grow revenues with key new initiatives.”
Says Kelsey Gunderson, managing director and head of global trading products of BMO Capital Markets, in a statement: “KGS has developed a strong reputation with institutional investors by providing a differentiated value proposition through customized market-based solutions to manage risk.
“In making this acquisition,” he adds, “we are broadening our distribution and expanding our offering through proprietary manufacturing capabilities.”
After the acquisition is closed, KGS will be rebranded as BMO Capital Markets. The KGS management team, sales and trading professionals will become part of BMO Capital Markets’ trading products group led by Gunderson.