Evercore in $120 Million Deal With Mizuho

Evercore Partners, the boutique investment bank, announced an agreement Thursday to secure a $120 million investment from Japan’s Mizuho Corporate Bank by selling debt and warrants.

Evercore plans to use the fresh capital to expand its investment management business, including the financing of several new operations by the end of the year, the company said in a statement.

The deal would expand an existing agreement between the two firms, struck in 2006, that covers their mergers and acquisitions business.

Because of the fees investment management companies collect, the business is considered a steadier source of income than the more volatile deal advisory sector. Last month, Evercore bought a 50 percent stake in Pan-Asset Capital Management, a British investment management firm.

According to the terms of the agreement, Mizuho will pay $120 million for senior unsecured debt that carries a coupon rate of 5.2 percent. The Japanese bank will also receive warrants convertible into 5.45 million Class A shares in Evercore, at an exercise price of $22, or a 71 percent premium over Wednesday’s closing price. Mizuho will also invest up to $150 million in Evercore-managed funds.

In return, Mizuho will have the right to name a director to Evercore’s board and to buy additional Evercore shares in the open market.

Through its current relationship with Mizuho, Evercore has sourced about five deal advisory assignments, according to a person briefed on the matter. But the two firms began discussing a broader alliance, one encompassing the steadier business of asset management, 10 to 12 months ago.

Shares in Evercore closed Wednesday at $12.84, down about 3.7 percent. The firm’s stock has fallen nearly 42 percent over the last 12 months, lagging competitors like Lazard and Greenhill & Company.