acquisitions a core part of its model to add client assets,
announced three acquisitions at the year-end, adding to a deal to
buy Marble Bar, a London-based alternative asset manager in early
December.
It also disclosed an improved performance in attracting new client
money in the fourth quarter of 2007, after a dismal performance in
the third quarter. That poor showing has helped to depress the EFG
stock price and triggered questions about the bank’s aggressive
business model.
Go deeper with GlobalData
In a research note, UBS said it was worried about EFG’s weak
third-quarter client money inflows, saying it could be partly due
to “clients’ de-leveraging in a more difficult market environment.
We think this trend will have persisted at least in the fourth
quarter of 2007 or even well into 2008.”
A 10 percent reduction of loans in one quarter would almost halve
money inflows at EFG, causing outflows of around CHF800 million
($717.5 million), UBS estimated.
Upbeat and optimistic
But EFG is upbeat about prospects. In an update on performance, it
declared that, notwithstanding market uncertainty, net new money
“improved” during the last quarter compared to the third quarter.
The bank added that it is optimistic about the coming year, with
the benefit of the latest acquisitions as well as ongoing
acquisition opportunities. It has also “comfortably exceeded” its
recruitment target for new client relationship officers for
2007.
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By GlobalDataIn its string of acquisitions, EFG is buying 75 percent of Stratcap
Securities India (SSI) along with the brokerage’s CHF700 million of
assets under management. The firm has 24 employees including
founder Atul Sud, who will become chairman of EFG Wealth Management
India. Terms were not disclosed.
EFG already covers the non-resident Indian community in Asia, the
Middle East and Europe and so Stratcap provides a complementary,
onshore presence.
At the same time, EFG has hired Shankar Dey to become CEO for
India. Dey is an industry veteran who has worked across investment
banking and private banking with Citi and Rothschild.
“India is an attractive opportunity for us, reflecting dynamic
economic growth and strong entrepreneurial wealth creation,” said
Lonnie Howell, EFG chief executive.
EFG highlighted three benefits which drove the acquisition of SSI.
The firm provides entry to the Indian wealth management market, in
keeping with EFG’s strategic goal of capitalising on new growth
markets; it has an established client base, and there will be scope
to extend capabilities in order to broaden and deepen client
relationships and finally, SSI provides a foundation for future
growth in terms of existing employees, premises and back office
support including licences covering the provision of a range of
local wealth management services as well as a domestic IT
platform.
Moves into Spain
EFG is also entering Spain, with agreement to buy a controlling
interest of 72 percent in A&G Group, a wealth manager, from its
management team. The 28 percent not being acquired will continue to
be owned by senior management and key employees.
The deal follows the decision by Banque Cantonale Vaudoise, a Swiss
bank, to sell its 50 percent stake in A&G to the other
shareholders. Madrid-based A&G provides advisory services to
high net worth individuals, encompassing estate planning,
investments, brokerage, insurance and pensions. It also caters to
select institutional clients in the areas of portfolio management
and third party fund sales. A&G has 61 employees, including 21
client relationship officers.
Total client revenue-generating assets under management are €2.5
billion ($3.7 billion), of which the majority relates to
high-net-worth individuals.
EFG declared that A&G is profitable, and in recent years has
been characterised by strong growth. For the period 2003 to 2007,
CAGR in private client assets under management (AuM) was of the
order of 33 percent and it retains strong forward momentum.
Alberto Rodriguez-Fraile, the founder of the business and its CEO,
will continue in this capacity.
Acquisition at home
In its home base of Switzerland, EFG agreed to buy On Finance SA,
based in Lugano, on undisclosed terms. On Finance is a financial
services boutique specialising in the origination and distribution
of structured products and financial advisory services.
It focuses on independent investment managers and family offices.
Founded in 2000 by Stefano Pezzoli and Franco Maranesi, it has five
employees and handles clients AuM of CHF750 million.
