Cowen Acquisition: Unleashing New Opportunities Ahead

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AMY VAN ARNHEM: Welcome to Viewpoint, a TD Securities podcast. I'm your host, Amy Van Arnhem and today marks a very special episode. Last year, TD announced the completion of its acquisition of Cowen, and it has been an exciting year witnessing the synergies between the two firms.

To commemorate the one year anniversary, I had the pleasure to sit down with our CEO of TD Securities, Riaz Ahmed, and Jeff Solomon, President of TD Cowen and Vice Chair of TD Securities, to delve into the intricacies of this integration, as well as what it means for our clients. Thank you both for joining us.

RIAZ AHMED: Thank you, Amy.

JEFF SOLOMON: Good to be here.

AMY VAN ARNHEM: So it's been a year. And Jeff, I have to mention that you're wearing a very impressive tie today. And since you started with TD, how many TD gifts have you received now? And is this your favorite?

JEFF SOLOMON: No question it's my favorite because Bharat gave it to me. So just to be on the record, I'm not a person who wears lots of ties. I did a live stream with him to celebrate our one year anniversary. And at the end of that live stream, he presented me with a tie. And I'm good. I can take a hint.

AMY VAN ARNHEM: Yeah, there you go.

JEFF SOLOMON: Green is such an important part of our culture. I bought a lot of green things, but people literally went out of their way, both at TD, friends of mine from externally, to get me green things. So I was pretty surprised to find how passionate people are about it. And so I love it. I wear green all the time.

AMY VAN ARNHEM: Well, wait until you've been here for over 20 years, and then your closet will look much more green.

JEFF SOLOMON: I'm already there.

AMY VAN ARNHEM: Yeah, great. So it's been a year since we came together. What are you both most proud of?

RIAZ AHMED: Number one, I'm really very proud of the leadership from the combined platform, and really all of our people. And the reason for that is because the integration, the last 12 months, a lot of the decisions that have been made have been made organically. And people have really stood by and believed in the vision of this combination.

And they have facilitated, on the human side and the culture side, an integration that I'm very, very proud of the positive intentionality and the partnership that people have shown through the last 12 months to land us where we are today with the leadership integration, essentially, having been accomplished. And that can be difficult with people.

Change can be hard, and we have new people on both sides on the combined platform. And I've been really excited that every time we've brought people together so that they can get to know each other and know the power of the combined platform, that the excitement has risen above the nervousness that the initial announcement results in. And that's been amazing to witness, just to see how people have embraced the combined platform.

JEFF SOLOMON: I totally agree. I think it starts with our colleagues. When you see colleagues engaging with one another on behalf of clients or just on behalf of one another, recruiting new people to the platform, that's really powerful. We had our own reasons for doing the transaction. And we can dive into those and how that's gone.

But when you see the external validation of people choosing to opt in, externally looking and saying, wow, I want to build the next leg of my career at TD Securities, TD Cowen, because that combined platform in the US and Canada is so potentially powerful. And I think I can be better here than anywhere else-- when somebody comes to an organization, that's the statement they're making.

I think I can be a better version of myself here than anywhere else. And that energy infects everybody who's already here because everybody gets a chance to re-underwrite why they're in the organization. We've seen a bunch of those things happen. And that gets me really excited. And then, of course, when you get the external validation from clients who say that the combined platform delivers for them in a way that they need-- and we're just beginning to scratch the surface here, to be fair.

But the feedback from clients when you're sitting in the room, when they say, we do this with TD Securities, and we do this with TD Cowen-- on a combined basis, we can do this, which is bigger, then it's really just up to us to figure out how to make that happen at the service level that's required. And the clients are anxious and ready to really engage with us.

AMY VAN ARNHEM: Picking up a little bit on that and delving in a bit deeper, can you just discuss a little bit more about what the expanded capabilities are that we have now that we've come together?

JEFF SOLOMON: From the standpoint of the two organizations-- so the industrial logic of doing this acquisition, and I have to give credit where credit is due-- the work that was done by Riaz, and Robbie Pryde, and a bunch of people who had done the strategy deep dive to figure out that Cowen was the place you wanted to buy, I didn't have anything to do with that. But when I got the opportunity to read that strategy deck, it made a lot of sense to me.

The basic framework for putting the two firms together because they're highly complementary still holds. It's actually better than I thought it was going to be because, as you put two firms together, people figure out different things that weren't maybe on the initial framework to do together. And so no question that the initial framework actually holds true.

In the US, for example, when you look at our investment banking business, you can recognize that we can start to do things around our research effort and our equity distribution effort in the US that we couldn't do prior to the acquisition of Cowen. On the flip side, Cowen's equity distribution platform can now offer financing to a bunch of clients that it couldn't provide financing to before. The ability to do equities and fixed income as one combined product offering, these are huge opportunities that we can play at a scale that we've never played at before.

AMY VAN ARNHEM: Yeah, it's exciting. And you alluded to it, but just bringing the two organizations together, we've also seen a lot of other teams from other organizations grow. From my perspective, really amazing to watch that as well-- that evolution of talent coming over, and really excited for the journey ahead for all of us.

JEFF SOLOMON: So again, I think the manifestation of the strategy, when you look at, for example, the fig team that joined us, they could have gone to any one of a number of places, but they chose to come here. And it speaks volumes about the partnership mentality that we have at TD. TD had a fig business.

It was Canadian-centric. And again, in a lot of organizations, people would have been parochial about that, bringing in a high-powered team and saying, how's that all going to work? And that is not what happened here. What happened here is that the leadership in Canada said, this is a great opportunity for us to scale, and we'll be better at serving our core clients for having this team on board.

That's a huge statement. And it was early when it would have been reasonable for people to be a little bit more protective with their own territory. And that's not what happened here. If everybody recognizes that the opportunity sets that are opening up for us are beyond what either organization could have done on its own, it unleashes a tremendous power for us.

AMY VAN ARNHEM: That's really exciting. Riaz, one thing that I did want to ask was when we come together, it means we have equal focus on both sides of the border. So how are we continuing to gain momentum in the US while also maintaining focus on our already-large footprint and client base in Canada?

RIAZ AHMED: We have to start with the fact that TD Bank Group, and therefore TD Securities, and really all of the bank's businesses, are firstly anchored in Canada. We are a Canadian bank, and this is our home market. And we have to be strong in all respects, in all businesses in our home market.

But just like the bank itself, we also find that our clients tend to look for growth first in the United States, and then, subsequently, may go to other parts of the globe. And the power of the US capital markets to fund innovation and growth is just undisputed. It's unquestioned.

It is the reserve currency of the world, the US dollar. And we've been building on that US dollar strategy over the last 10 years so that we can continue to strengthen the power of TD Securities and its relevance to clients in North America, but also in Europe and Asia-Pacific. So really, this acquisition and the combination of the platforms has been about, How do we remain relevant? And where do we search for growth in our business?

And I think that the more present and the stronger that we are in US capital markets helps us advise and execute for our clients better on a global basis. In the early discussions with Jeff and his team, we realized the industrial logic that Jeff talked about, that to bring together a top research platform, together with fabulous execution capabilities in equities, as well as the ability to strengthen the investment banking business in the US alongside our own corporate and investment banking platform, and the strengths that we had in fixed income, commodities, and currencies was going to be an unbeatable combination.

So really, what we're trying to do here is to strengthen our capabilities on both sides of the border so that we can remain relevant to clients on a North American basis, which is, by and large, how the Canadian economy operates anyway. It's got a very strong nexus to the US economy, as we all know. So this has been, really, about capitalizing on that.

JEFF SOLOMON: Can I just add something to that? Because I think all of us in senior leadership are sensitive to this idea that, potentially, we might be not focusing as much on Canada. And I just want to be really clear about that. The acquisition of Cowen is not in any way, shape, or form meant to diminish the importance of Canada. It's to augment what we do here in Canada.

We made a conscious decision at legacy Cowen not to really engage in the Canadian market much because it's an inside market that's dominated by big players who have a lot of capital and a lot of know-how. Everybody knows everybody. So we couldn't really figure out how to be in Canada with the product offering that we had.

It's not reasonable to think that we know at legacy Cowen how things operate in Canada where everybody's learning. And the last year has been about learning the similarities and differences in how we can rethink collectively as a combined organization the way we approach things in both the United States and in Canada to augment those markets. But we should be number one or number two in any business in Canada.

And so that framework is very much alive and well in what we're doing strategically. The US is an important market, as Riaz mentioned-- we're not doing anything at the expense of what we're doing in Canada. In fact, quite the opposite-- it's really about nourishing our Canadian relationships and making sure that we are number one or number two.

AMY VAN ARNHEM: Well, and I think bringing the TD Cowen platform on just really does amp up our opportunity to do that here in Canada as well. So that's been, from my observations, a great part of this acquisition and integration. Well, maybe just expanding on that a little bit, too, Riaz, so I think what Jeff's saying is integration, it's not easy.

It's exciting, and there's lots of opportunity to look forward to, but it's not easy. And it is a process. And it does take time. How are we thinking about our clients in this process as well? And what's your message to them in how we're supporting them through the integration period?

RIAZ AHMED: Yeah. I think, Amy, to our clients, both on the corporate and institutional side, every interaction that Jeff and I have had with our clients has been incredibly supportive. Our clients know that we're integrating, and that we are in the process of building out our capabilities, and that we're growing in the interest of serving them better.

And they've been highly supportive and continue to express a tremendous amount of positive intentionality to do more with us. And we want to do more with you. And so I'm incredibly grateful to all of our clients for being on the journey with us and for continuing to support us through this journey because there is just such amazing relationships there that allow us to be confident in what we're doing and make sure that we're doing all the things that we need to do to deliver for what our clients want to do with us.

AMY VAN ARNHEM: And we did spend a lot of time talking about the North American platform. And so I felt like it may be important for us to just talk about how the global platform is coming together as well, and just getting a better understanding of how we're thinking about our growth there and how that works.

RIAZ AHMED: Amy, we've expressed our ambition as becoming the top 10 North American investment bank with global reach. And I think that global reach piece is very relevant and super important to us because both in Canada and the United States, our clients-- again, both corporate and institutional-- do tend to look towards Europe and Asia-Pacific. And in the same vein, we have a number of clients that in Europe and Asia-Pacific that are looking to become more relevant in the United States and in Canada.

And we want to provide that connectivity and make sure that we not only improve our capabilities here in North America, but we're equally relevant in those markets to continue to serve our clients. Because many clients do say to us, for example, on the institutional side, that our balance sheet is relevant to them as much in Europe and Asia-Pacific as it is in North America. And we need to continue to build those capabilities out so that we're more complete in our service to our clients.

JEFF SOLOMON: The other thing I would add is I think it's very difficult if you're in Europe or you're in Asia to engage on a day in and day out basis with the center, if you will, or with the strategy that emanates from Toronto. We have an expanded set of capabilities that we can now present to clients globally.

When we say "North American bank," we have domain expertise and industry expertise in North America that we can bring to other parts of the world. And when you look at Canada and the US on a combined basis, it's a dominant capital market. And every other geography wants to engage with that capital market.

And they want to do it with somebody who has deep knowledge and understanding of what's happening in that market and what the context is in global flows, fixed income, and in equities, right?

We now have that full suite of capability end to end. And so taking that full suite of capabilities and angling it towards audiences that sit in Asia and in Europe, we're just at the beginning of that journey, right?

People might know TD for the thing that TD does in those regions. People may know TD Cowen for what it does in those regions, which is primarily Europe, because we didn't really do a lot in Asia-- think about the clients that will benefit from having that combined platform as we take our domain knowledge, our intellectual capital, as well as our financial capital, and our human capital, and apply it to those regions-- the future growth, which we have barely begun to scratch the surface on. So I'm mindful of the fact that if you're sitting in in Asia or you're sitting in Europe and you're hearing North America, top 10 North America bank, it's the domain that we have here and the intellectual capital we have here that we can export and bring to you in a way that maybe other banks don't.

AMY VAN ARNHEM: That's very well-said. Is there any questions that I didn't ask or anything else that you wanted to talk about?

RIAZ AHMED: I'd say, Amy, just to reiterate, when we came together, legacy Cowen and legacy TD Securities, one of the things that the leadership really recognized was that the cultures of the two firms were very alike. And in addition to the industrial logic of combining the platforms, the culture similarity was a huge component in bringing us together and through the integration. It's a people business. And it is deeply rooted in principles of partnership, trust, and advice, both internally as well as externally with clients.

And I think that has been amazing to see the two platforms come together. And it's because of the expression of that partnership that we've really been able to move the integration faster than we expected. I just want to take this opportunity not only to thank our clients for supporting that, but also our colleagues who've just really expressed that intentionality with a tremendous amount of enthusiasm and flexibility. And I'm just incredibly grateful to be able to lead such a wonderful group of people.

JEFF SOLOMON: The only thing I would pick up on is you mentioned a really important word, which is the word trust. Trust takes time. So the frameworks that we've put in place and the strategy we've put in place is great, and we can see how the opportunities are unfolding in front of us for us to take meaningful share in the places where we want to be and be more relevant to the clients as partners.

It takes time for the trust to build internally and externally. You can't rush trust, you know? That's something that's earned over time. We're one year into this, and we're seeing those green shoots, that foundational trust that's being put in place, where colleagues from both sides of the organization, our new colleagues, as you've highlighted, come into the organization and begin to say, I can trust that we can execute on this. I can trust that when we're in front of a client, that we can deliver.

Clients are saying, I trust that when I hire TD or when I interface with TD, that they're going to get the job done. That is such an important part of the first year. And the second thing I would say is empathy. We talk about this, and we were smiling about it yesterday-- when Riaz and Robbie first came to see me, we sat in the Empathy Conference Room at 599.

We exhibit in this organization an understanding for one another at a deep level. That's something that is so critical. When we interface with clients, how do we understand their needs? When we interface with each other, what's happening in our respective lives that helps us to be helpful to other people? And that's alive and well in TD more broadly, not just at TD Securities, and in our interactions with our clients on a daily basis.

AMY VAN ARNHEM: Well, like you said, there's been a tremendous amount accomplished in the first year. And I know I'm excited to see what the next year brings and your promise to come back in a year. And we'll talk a little bit more about that and what we've all accomplished in another year.

RIAZ AHMED: Thank you, Amy.

JEFF SOLOMON: Thanks, Amy.

AMY VAN ARNHEM: Thanks so much.

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