Private banks and wealth managers in Africa can be divided into two camps: the newer local players and the mostly European banking houses that have set up shop on the continent. But what if you can combine the two?
BlackPace Wealth was started last year by Paul Andrew, a veteran of both Africa’s investment space and Switzerland’s banking sector.
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Andrew’s knowledge of both means he is undaunted by entering a challenging market with a new venture. Private Banker International’s Oliver Williams talks African HNWIs and their wealth with O. Paul Andrew, founder of BlackPace Group.
Africa is not a single market
“Africa is by far one of the most attractive and, simultaneously, difficult markets to penetrate and develop from a wealth management point of view, specifically with regards to ultra high net worth individuals (UHNWIs).
“Africa cannot be looked at as a single market, a common mistake made by a large number of international banks and financial institutions looking to benefit from the wealth creation that is taking place across the continent.
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By GlobalData“The origin of the accumulated private wealth, the distribution of this wealth and the economic and political climates, vary from country to country. Additionally, the ethnic and cultural diversity present within individual countries mean that having a strong understanding of the specificities of each market is crucial to doing business on the continent.
How to enter the ‘Africa’ wealth management market
“It goes without saying that many African countries are not yet in a position to be attractive to wealth management firms and will not be in the near future due to their still emerging economies. Some countries may appear at first, from an economic point of view, to have good potential for wealth management services. However, other factors such as a polarized distribution of wealth with a relatively small middle class or non-transparent groups, mean that time is still needed before they become attractive for wealth managers.
“Regardless of the situation, firms also need to assess the appetite for wealth management services and devise an entry strategy before establishing a local presence in any given African country. More importantly, the needs of a large number of entrepreneurs and business individuals would be better serviced, at least initially, by local and regional African groups rather than bulge bracket and international investment banks or wealth managers.
“When it comes to establishing a local presence in African countries, wealth management firms should be patient and not expect an easy road. Since the 2008 economic crisis, there has been decreased confidence in the wealth management industry worldwide and these effects are still being felt today, with African HNWIs not excluded from this sentiment.
Sophisticated investors
“Investors are becoming increasingly sophisticated and demanding more transparency. Added to this, certain additional risk factors attributed to many African countries, including high levels of bureaucracy, corruption and political instability, mean that wealth management firms seeking to operate in these markets should allow for a substantial adjustment period before expecting to achieve significant results.
“BlackPace Wealth targets emerging wealth in Africa with specific focus on new wealth creation and conservation. We are advancing a unique strategy for burgeoning entrepreneurs in fin-tech, oil and gas, mineral resources, agriculture and real estate development. Our plan is to grow our wealth portfolio to hit $5 billion in 5-10 years with robust technology and human capital. Our board members also include those who have worked to improve the global financial regulatory landscape and promote investor confidence.
The Swiss-Africa model
“BlackPace Wealth works with some of the finest and leading wealth management firms in Switzerland. Our family office advisory offering is staffed with experienced wealth advisors from Switzerland, having advised multi family offices in Switzerland with assets under management of over $50bn.
“We believe this marriage of sophisticated Swiss banking practises with an African outlook brings something that has not previously been available to the African ultra high net worth.”
