TD Bank Buys Cowen in TradFi Push With Crypto Twist

Cowen’s digital assets division likely not much of a driver of the deal, an executive said

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key takeaways

  • Trajectory of Cowen Digital likely will not change and could be enhanced by TD’s distribution network, according to Piper Sandler’s Sumeet Mody
  • Final decisions on how to use Cowen’s digital asset capabilities not yet made, TD Securities CEO says

TD Bank is set to acquire investment bank Cowen for $1.3 billion in a bid that will add to TD’s cryptocurrency prowess.

Details of the integration — especially when it comes to TD leveraging Cowen’s newly formed, and expanding, digital assets unit — remain unclear. 

Cowen’s inaugural crypto division, Cowen Digital, launched in March. The Connecticut-based unit offers crypto trading for institutional investors, as well as custody solutions via Cowen’s partnership with PolySign’s Standard Custody and Trust Company.

TD Group CEO Bharat Masrani said in a statement that the purchase would help the company accelerate its long-term growth strategy in the US by providing new capabilities and increased depth in key business lines. The deal is expected to close in the first quarter of 2023, at which time Cowen’s CEO is set to join the leadership team of TD Securities.

Executives were asked during a conference call Tuesday how Cowen’s crypto unit could be impacted by the acquisition, considering regulatory distinctions between the US and Canada.

“We’ve done some very significant due diligence in all the business areas at Cowen…and I think there will be some areas where we will have opportunities,” TD Securities CEO Riaz Ahmed told analysts on the call. “We haven’t made any final decisions on that front, but the platform will be very attractive for us in terms of the development and research work they’ve done on all those fronts.”

TD Securities is the Canadian investment bank subsidiary of parent company TD Group.

A TD Bank spokesperson declined to comment further until the transaction closes. A spokesperson for Cowen, meanwhile, told Blcokworks in an email it’s “business as usual for Cowen” as the team works on “closing and integration.” 

Sumeet Mody, director of equity research at investment bank Piper Sandler, said he expects the upward trajectory of Cowen’s digital assets unit will not change — and could be enhanced by TD’s distribution network.

“The crypto space isn’t quite institutionalized yet, so eventually when that does happen, Cowen wants to be ahead of that,” Mody told Blockworks. “But because it’s so small, I don’t think that it was much of a consideration for the TD deal.” 

Cowen was trading 16 cryptocurrencies at the time of the digital asset group’s formation in March, according to a representative, including bitcoin, ether, chainlink, uniswap, polygon and decentraland. The company had announced that the unit would seek to offer financing solutions, derivatives and futures in the future, as well as “institutional DeFi and NFT access.”

Toronto-based TD Bank is the fifth-largest bank in North America by assets — with 1.8 trillion Canadian dollars, or $1.4 trillion, as of April 30 — and serves more than 26 million customers.

“The revenue synergy that comes with [TD’s network] will be good, but because this crypto initiative is so young, there aren’t very many revenues associated with it anyway,” Mody said.


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