Credit Suisse Acquires The Klein Group for $175m

Credit Suisse Group AG (Credit Suisse) announces that it has taken further important steps to progress the carveout of CS First Boston as a distinct, leading independent capital markets and competitive advisory led business through the acquisition of The Klein Group LLC¹ (“MK&C”), the investment banking business of M. Klein & Company LLC, for a purchase price of USD 175 million. The seller will receive equity in CS First Boston in the form of a convertible note². In addition, Michael Klein has been appointed Chief Executive Officer (CEO) of Banking and CEO of the Americas, as well as designated CEO of CS First Boston. He will join the Executive Board and report directly to Group CEO Ulrich Körner.

As announced by Credit Suisse at its Strategy Update on October 27, 2022, the carveout of CS First Boston is expected to create an independent capital markets and competitive advisory led business, headquartered in the US, with global capabilities and a preferred long-term partnership with Credit Suisse Group. CS First Boston, with its differentiated proposition and partnership model, is expected to be more global and broader than existing investment-banking boutiques, more focused than bulge bracket players, and to be competitive in attracting and retaining top talent.

MK&C is an internationally recognized investment-banking boutique and registered broker-dealer, with deep and long-standing client relationships including a broad network of senior executives at S&P 500 and blue-chip companies around the globe. MK&C, which is based in New York and employs approximately 40 professionals, has advised on transactions worth over USD 1.5 trillion since its formation in 2010. It has been consistently profitable, while contributing a portion of its earnings to philanthropic initiatives. The MK&C team will integrate with, and is expected to enhance, the management and advisory capabilities of CS First Boston.

Axel P. Lehmann, Chairman of the Board of Directors of Credit Suisse, said: “We are very pleased to announce the planned addition of Michael Klein to our Executive Board through the acquisition of The Klein Group. Michael’s experience and leadership will further strengthen our Executive Board and will help create shareholder value through this key strategic step of creating CS First Boston as an independent global capital markets and competitive advisory led business.”

Ulrich Körner, Chief Executive Officer of Credit Suisse, said: “This acquisition of The Klein Group is an exceptional opportunity for Credit Suisse to successfully deliver on its strategic objective to carve out CS First Boston as an independent global capital markets and competitive advisory led business. This will provide meaningful additional opportunities for the Group and an attractive value proposition for all our stakeholders. We see this move as a strategic way to create shareholder value. I am looking forward to welcoming Michael Klein to the Executive Board. He is an exceptional banker and dealmaker with proven and recognized entrepreneurial success, and I am confident that CS First Boston will thrive under his leadership. The creation of an independent CS First Boston is an important step in the wider transformation of Credit Suisse and the creation of a simpler, more focused bank built around the needs of our clients.”

Michael Klein is an experienced investment banker and financial industry leader with an established track record of building leading advisory and capital raising firms, including MK&C, with over 35 years of investment-banking and strategic-advisory experience. In October 2022, Michael Klein stepped down from the Credit Suisse Board of Directors, which he joined in 2018. He was previously CEO of Citigroup’s institutional businesses, where he was responsible for the bank’s corporate, institutional and government businesses, including corporate banking, transaction services, corporate lending, advisory, debt and equity underwriting, and alternative asset management activities. Under his leadership, the firm grew organically and, through mergers he initiated or executed, contributed to the building of a top tier firm in mergers and acquisitions and capital raising globally.

To align interests with Credit Suisse, M. Klein & Company LLC (the seller), will receive a convertible note and a warrant. The note will provide annual payments and convert into, and the warrant entitles the seller to subscribe to, CS First Boston shares at a qualified initial public offering or other liquidity event, at the then-valuation of CS First Boston, less a customary discount³. The transaction is expected to have a limited effect on Credit Suisse Group’s CET1 ratio of less than 10 basis points. Deutsche Bank AG, London Branch, has provided a fairness opinion to the Board of Directors of Credit Suisse Group AG in connection with the acquisition.

Following the acquisition’s closing, MK&C is expected to be fully integrated into CS First Boston. Credit Suisse will retain control over the ultimate scope and structure of CS First Boston, including options to attract third-party capital in the future, as announced at the bank’s Strategy Update on October 27, 2022.

Michael Klein’s appointment to the Credit Suisse Executive Board and Credit Suisse’s acquisition of MK&C are subject to regulatory approvals, with the transaction expected to close in the first half of 2023.

Today, we announced our fourth quarter and full year 2022 financial results. Find out more here: https://t.co/40CU4bUl6Q #CSresults

— Credit Suisse (@CreditSuisse) February 9, 2023