For years, the sector appeared ripe for consolidation. Little happened - until now.
It is almost like the dam has broken. Before last week, you would have been able to count the total number of takeovers and mergers in the independent asset management industry on the fingers of one hand. But we have already seen more than a handful of deals just this year – and it is still January.
Part of that is due to the whims of public disclosure given many of the deals had been brewing behind closed doors for months. But still, after years of guessing, you can say something seems to happen in the market.
Zurich Takeover
Last Friday, fast-growing Geneva-based boutique Decisive Capital Management announced it was taking over a small competitor, the Swiss unit of Artorius Wealth, a British family office. Although the details were not disclosed, the boutique, which specializes in the ultra high net worth individuals, made a big jump up ranks with the Artorius Swiss client roster, not least given it already manages about $6.5 billion US dollars in assets.
In both Geneva and Zurich, Mathias Vandermeeren has been trawling the market since last year and signs of his work are beginning to bear fruit. Quaestor Coach, a Zug investment partnership sponsored by large European investors, took over Zurich asset manager Diem Client Partner (DCP). As Vandermeeren indicated to finews.ch, this is one of several on the table in Switzerland. «There is a pipeline with further potential deals».»
No Accident
Quaestor Coach is searching for local discretionary managers with more than $270 million in assets, aiming to integrate them under the DCP brand. The takeovers will essentially be placed like Lego blocks on the DCP platform. Vandermeeren has seen the same thing play through in the Netherlands, where the same investor group built the Auréus Group by making seven takeovers between 2018 and 2021, turning it into an asset manager with more than $2.2 billion in assets under management. Now, according to him, Switzerland has become a focal point for independent asset management takeovers.
Quaestor Coach's arrival is no accident. The market currently totals about 2,000 players and a big turning point looms at the end of 2022 when small financial firms are required to make a license application with the Swiss Financial Market Supervisory Authority (Finma) while becoming affiliated with a supervisory organization (SO).
The sector is experiencing a severe jolt and many are getting nervous as operating under the new requirements is going to prohibitively expensive for many, if not most.
Three Paths Ahead
Close, sell or buy to gain scale. Those are the three paths the sector can choose from. And it is not only asset managers that are seizing the market opportunities.
Geneva Private Bank Syz announced at the start of January that it was taking over Zurich asset manager BHA Partners. It will use the buy to build up its business in the German-speaking regions of Switzerland. The team of seven at BHA Partners manages about $1.1 billion, according to Syz. This is also slated to be the first such deal of a series. «This strategic takeover will be the first of many», according to the bank's head, Yvan Gaillard, talking about the BHA purchase.
Management Takeover
The significantly larger Bank Julius Baer is going exactly the opposite way. At the start of the month, they sold their fully held Wergen & Partner business in Zurich to management. The details were not disclosed. What is known is that the deal took place in the context of a strategic review of the bank's different stakes. Wergen & Partner was originally taken over in 2017 by Julius Baer and it has since doubled its assets under management to about $1.3 billion.
Christoph Lieber is also thinking in terms of many. The Swiss banker, who previously headed St. Gallen Cantonal Bank's German private banking business, is currently leading Cinerius Financial Partners as CEO. He plans four to eight takeovers a year, with the ample help of money from Summit Partners, an American private equity house. But his hunting ground is also quite a bit larger in that it includes both Germany and Austria as well.
Exemplary Market
Cinerius, based in Zug, found the first target in Germany by announcing that it was unifying four renowned asset managers under the roof of the Swiss holding. The condition usually granted to such takeovers is continued freedom to operate independently provided you give up a 75 percent stake to the private equity partners.
Ironically, Germany was usually held up as a model for the Swiss independents market, given it experienced a wave of consolidation after the introduction of MiFID II.
Only about 10 percent of the companies back then still remain there, but there is a silver lining to it all. The number of people employed in the sector has not dropped measurably in the meantime.
