Decura IM Investments, a London based asset management firm founded by former Goldman Sachs Group partner Vishal Gupta, has reportedly filed a lawsuit against Swiss banking giant UBS alleging the Swiss bank’s 2012 restructuring badly damaged a joint venture between the two.
The proceedings could cost UBS US$100 million, according to the Financial Times.
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The restructuring, dubbed Project Accelerate and launched in October 2012, resulted in UBS’s investment bank exiting several business lines and slash its headcount by 10,000.
Under the JV agreement, Decura IM Investments received mandate to offer managed accounts and "algorithmic strategies" for some of UBS’s investment banking clients.
In t lawsuit, Decura alleged that UBS’s "radical transformation" materially reduced the Swiss bank’s ability to market these services, the FT report said.
Between August 1 2013 and January 31 2014, UBS generated just £230,000 from algorithmic-strategies business and provided no information as to revenues from managed accounts, Decura claims.
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By GlobalDataDecura further alleged that it received only five enquiries from UBS for its algorithmic-strategies products between June 7 2013 and February 28 2014, yet was restricted by an exclusivity agreement from partnering with other groups.
"The financial stakes in this dispute are very high, the parties having contemplated annual revenues of circa $200m once their venture was up and running," Decura said in its written legal argument filed in court.
"In the current stalemate, no revenues are being generated at all and the exclusivity undertakings prevent Decura generating revenue from sales [of managed accounts and algorithmic strategies] to third parties."
"Decura’s staff are understandably anxious; some employees have already left and Decura’s viability as a business critically depends on retaining talent."
The asset manager has pleaded the court to terminate the contract, triggering a buyout process that would force UBS to buy the relevant part of Decura’s business, valued at US$100 million.
