The New York IB will advise on M&A, corporate finance solutions, restructurings and financings. Three Ocean, like its larger rivals Harris Williams and Moelis & Co. , will not have a lending, trading or research arm.
However, the IB will have a merchant banking division that will allow the firm to co-invest alongside clients. Three Ocean will split its practice between private equity and corporate sponsors, says Knowlton, who is managing partner. The IB will focus on consumer products, retail, luxury consumer, industrial, business services, FIG and media, he says.
Three Ocean is owned by its employees and prominent investors, Knowlton says.
There is one major difference that Knowlton hopes will separate Three Ocean from its rivals. “We will work with only one client in an industry at a time,” he says. “That’s something others won’t do.”
Three Ocean isn’t interested in league table standings, he says. The boutique firm aims to work only for its customer in that particular industry. “We will not work for your competitors,” Knowlton says. “You will have our intellectual capital and creativity working for you exclusively.”
Three Ocean is the latest IB launched by Knowlton. In 2003, he started Watch Hill Partners, a New York advisory boutique. FBR Capital Markets acquired Watch Hill in September 2009 for an undisclosed amount. Knowlton stayed at FBR for a year and left in 2010 to start Three Ocean. Knowlton is one of the bankers who advised Hershey Trust when it was considering making a $19 billion bid to buy Cadbury in late 2009 (Kraft ended up winning that deal).
Knowlton also helped establish the financial sponsors practice at Gleacher & Co. in the 1990s, according to the Three Ocean website.
Knowlton says he’s optimistic about starting another IB, despite all the broad market volatility. “There has never been a better time to establish a boutique banking firm,” he said. “There has been significant consolidation and disruption among large firms and clients want clarity and senior partner advice from their bankers.”
The strategy seems to be working. Three Ocean says it has several mandates. Over the summer, the IB advised MidOcean Partners on its $650 million buy of Prepaid Legal.
Three Ocean also plans to expand. The IB currently has a staff of seven but has offers out to three execs. “We will be building that out in the next two to three months,” Knowlton says. Three Ocean also expects to open offices in London and Los Angeles and to establish affiliates with groups in India and Brazil, Knowlton says.