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Imbalances In Swiss Independent Asset Management M&A - MilleniumAssociates

Ray Soudah

10 July 2018

There have been several merger and acquisition deals affecting Swiss and other European private banking and wealth management firms in recent weeks, with examples including Vontobel's purchase of Notenstein La Roche, the merger of Geneva-based houses Gonet & Cie and Mourgue d’Algue & Cie, an Austrian purchase by Liechtensteinische Landesbank, and the Union Bancaire Privée deal to buy Banque Carnegie Luxembourg.

A highly respected figure who tracks such activity and advises players in the space is Ray Soudah, chairman and founding partner of , each handling and or advising assets under management of under one billion Swiss francs.

Many of them are using external custodians and third-party fund managers and tend to focus on advising their end clients on investment strategy and fund/asset allocation. They maintain their client relationships are strong and longstanding.

The whole industry or most players in it have been enjoying reasonable revenues and margins in the recent years owing to still relatively favourable and highly priced asset and securities markets, thus there is no pressure on most of them to sell, merge or consolidate.

Nevertheless, they face the ever-increasing costs and burdens of compliance regulations and technological issues, even though they may manage to handle these one way or another.

A recent direct strategy survey of several dozen such firms located all over Switzerland produced interesting feedback which can be summarised, in general terms, as follows:

Lack of growth:

Most stated that they are challenged to find suitable growth either from existing clients, but especially from new clients and markets.

Desires to acquire:

Most stated that they wish to leverage their "platforms or infrastructure" and acquire one or some of their peers since "their peers must be having challenges".

Unique proposition:

Most stated that their investment strategy or investment philosophy was quite special and unique and that they were "different".

Initial conclusions:

With such opinions being expressed by a large membership of the industry, it clearly reflects an imbalanced M&A market in favour of potential sellers given that:

• most want to buy others;

• most believe the industry should consolidate;

• most believe they are in a strong position to be a consolidator; and

• most deny or avoid admitting they are potential sellers

The desire for scale is not limited to independent asset managers but also aspired to by the smaller private banks especially those with unlimited liability like the recent well regarded example of Gonet and Mourgue d'Algue et Cie.