This publication interviews Apricus Finance, an EAM operating from Geneva and an example of the kind of independent player with a strong "family" orientation in terms of how it is run and in what it invests.
Family-controlled firms, whether listed or unlisted, tend to outperform other business models. Investors want a piece of that pie. And, if you happen to be a Switzerland-based external asset management firm with a family heritage, there’s a perfect fit.
And that is the sort of insight that one gets from Apricus Finance, a Geneva-based EAM that was founded in 1995. It is part of a still-vibrant Swiss sector of independent wealth management firms – approximately 2,000 at the time of writing – that face new Swiss regulations from the start of 2023. WealthBriefing recently caught up with François Struye de Swielande, CEO at Apricus, and Thomas de Sausmarez, head of Middle East at the firm.
Apricus was founded in 1995 to originally serve clients from Belgium and Switzerland – due to the two founding families’ nationalities. Since then, its client coverage has widened.
“One of the strengths of Apricus is that because it has a strong family culture, clients in regions such as the Middle East – where most wealth is held within family businesses – acquaint, and feel comfortable and aligned, with it. This is one of the drivers of new business,” de Sausmarez said at his firm’s offices in Rue de Rhône.
And his colleague warmed to the “family” theme.
Struye de Swielande expanded on the themes into which Apricus invests for its clients, seeking to outperform the overall market. “Some themes can be long-term, such as investing in global family holding companies, while others can be shorter-term niche plays, such as our investing in pet and animal wellbeing connected stocks for clients, that greatly benefited from increased demand, as a result of persons being at home during COVID.”
We discussed the firm's Concorde Partners SICAV Leaders' Portfolios Fund, which invests in holding companies that are family-owned. Such holdings are typically more robust over the course of an economic cycle with investors benefiting from discounts on assets (NAV) and having their interests diversified and aligned with those of successful entrepreneurial families.
There appears to be statistical evidence that family-controlled firms outperform rival business models. Over the 15 years to the end of 2018, companies controlled by their founders listed on the equity market performed almost twice as well as the annualised performance of the market (17.8 per cent returns vs 9.1 per cent for the MSCI, according to CPP Investments). The companies were also more profitable, with a 16.6 per cent return on equity versus 11.3 per cent over a 10-year period, according to a study from UBS and PwC. The reason for such outperformance appears to be that families are less likely to take a short-term view of running the business, avoiding pitfalls of sudden strategy changes and business fads.
And de Sausmarez argues that the theme of family-controlled businesses is one well suited to Apricus, given the firm’s own DNA and way of thinking. Investing on behalf of its clients, Apricus has the freedom to be overweight/underweight sectors or individual positions in a way that a larger wealth management house, or a bank, might not be able to do, he said. “This is about convicted, `market conscious’, investing. `Conscious’ of what the benchmark allocations are, but sufficiently convicted to go meaningfully off-benchmark when required to help drive alpha for clients. I am a big believer in this. If not, what are clients ultimately paying you for?” he said.
Broad and growing
Struye de Swielande commented: “Apricus Finance has a very broad offering, and our strategic goal is to double our assets under management in the coming five to seven years, attracting experienced professionals to join the firm and extending our geographical reach from the Geneva office. We are a very agile company and, if we decide that we wish to open an office in, say, the Middle East, then we will do so. At the same time, we strive to continue to serve our existing client base, working with the next generation to ensure a successful transition,” he continued.
What the future holds
“A first critical milestone for our business sector will be to integrate the new financial regulations LSFin and LEFin [referring to the new regulations on EAMs coming into force],” Struye de Swielande said.
“At Apricus Finance we have the advantage of having the required infrastructure and competences already in place, built up over many years. Given this, we are an ideal platform for those who do not want, or who don’t have the means, to invest much of their effort into complying with these new rules. As such, by joining us, they can continue to spend their valuable time concentrating on their clients. This industry consolidation has only just started. The coming 12 months will be critical,” he said.
The business was co-founded alongside Catherine Crochet, who is chairwoman of the firm and who has had an illustrious career in civil and commercial law and estate planning, founding Crochet & Crochet in 1977. Crochet & Crochet subsequently changed its name to CJC Advisors.
In de Sausmarez’s case, he has worked in banking for about 25 years in several senior roles, with a significant chunk of this time spent in the Middle East and in countries such as Saudi Arabia (he is an Arabist by academic background and speaks Arabic with clients when needed).
Not selling, but telling a story
“The business grows not because there is overt selling, rather because people see the very powerful story that is Apricus and wish to be part of it,” de Sausmarez said.
“Apricus has a simple fee structure – the agreed fee is written in the contract – with no other fees being either charged or received by the firm. With transparency being a key part of the Apricus philosophy, this helps avoid any conflicts of interest. Bankers, by contrast, are driven to sell products on an increasingly intense and targeted basis, tasked with creating as much revenue as possible” he continued. “Clients want performance as well as independence, and Apricus can deliver that.”
“Being truly independent, means we sit with clients on their side of the table, taking their investment journey hand in hand with them as it were. We can bring far more flexibility to a client’s portfolio. Increasingly – COVID being an example of this – windows of market opportunity appear for a limited period, and It makes sense for clients to invest both flexibly and tactically to take full advantage of them,” he added.