Family Office

International MFO Sets Out Merchant Banking Ambition

Tom Burroughes Group Editor 25 September 2018

International MFO Sets Out Merchant Banking Ambition

The multi-family office, which is being renamed and has expanded into regions such as Asia, wants to be a merchant banking-style dealmaker for ultra-wealthy clients.

Alvarium, which next year becomes the new name of international multi-family office formerly LJ Partnership, is busy making fresh deals as it gears up to become a “merchant bank" for multiple generations.

Co-chairman Ken Costa, a former UBS and Lazard banker, has partnered with Jonnie Goodwin and bought a 49 per cent stake in the latter’s merchant bank Lepe for an undisclosed sum. Costa becomes chairman of Lepe, with Goodwin remaining as chief executive of the business. Lepe Partners is, according to a listing on the tech site Crunchbase, “an independent merchant bank focused on the media, internet and consumer sectors”. 

“This collaboration is a signal of our confidence in the long-term potential of the European digital economy. Europe has emerged from the shadow of Silicon Valley to become a success in its own right and our vision is to build an investment and advisory offering to underpin its continued growth. The partnership with LJ will bring together the scope and quality of our combined offering, coupled with Lepe’s unique perspective into the digital sector, having advised on over 150 transactions in this space and having co–founded the Founders Forum.  I believe this will create a truly unique proposition for current and prospective clients," Goodwin said in a statement. 

The collaboration forms part of LJ Partnership’s strategy to create "a merchant banking platform for multiple generations, including the increasingly influential millennial generation", the firm said. The latter generation is set to control about $24 trillion of assets by 2020. "Younger investors increasingly want transparency, control and the opportunity to partner and co-invest with asset managers across a broad range of fast growing sectors such as digital media and technology," it continued.

“Big banks have become discredited for their lack of ability [to cater] to the next generation,” the Financial Times quoted Costa as saying in an interview about the development. “This generation wants to be more exposed and more involved ... A flexible, more skilful and light-footed investment bank is going to emerge,” he said. 

Alvarium and Lepe intend to deploy capital into deals involving each other’s clients. 

Goodwin was quoted by the FT as saying that the Alvarium collaboration is a bet that London will continue to provide a steady flow of tech exits regardless of Brexit. “These businesses want the skills, they want the backbone of the English language, they want the relationship with America and the rest of the world,”Goodwin said. “London remains the number one hub [in Europe] by a long way and will continue to be so.”

European tech promise
LJ Partnership sees the European tech and venture sector as having considerable promise. The European media, internet and technology sectors continue to experience strong growth, with deals valued at more than $460 billion completing in the last three years, the organisation said. "With £16 billion ($21 billion) of unrealised value in VC backed European businesses, Europe represents an increasingly fertile ground for future leaders in global technology. The increase in the number of tech exits has also created unprecedented demand for experienced European dealmakers with a thorough understanding of its digital economy. Since 2014, Europe has seen more tech IPOs than the US, and more than twice the number in 2016 and 2017 (source: LSE)," the firm said.

As reported in July, Dilmun, a New York-based family office, acquired a 40 per cent equity stake in LJ Partnership. LJ Partnership is planning to open offices in New York, Singapore, Sydney and Auckland as part of its worldwide expansion to meet the needs of Asian high net worth families and institutional investors.

LJ Partnership is backed by Hong Kong-based Petersen Group. The group has been a strategic investor in the MFO since 2015 and has a 35 per cent stake.

The firm also announced senior management changes in the summer. Co-chairman Andrew Williams (formerly chief executive) is now focused on driving the firm's growth in Asia and Australasia. Alexander de Meyer (formerly chief operating officer) was appointed CEO and is based in London. 

The organisation has been upbeat about prospects for its Asia business. LJ Partnership has offices in London, Hong Kong, Miami and Geneva, and supervises in excess of $15 billion of assets on behalf of individuals, family offices, foundations and charities.

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