The New Year is starting with a burst of divestments among
wealth managers as firms seek to adjust their businesses to the
economic downturn and plunging investment markets.
Ansbacher Banking Group, the UK private bank, is looking for a
buyer or strategic partner for its investment management operation,
a business with just under £400 million ($582 million) under
management. If sold, it would effectively remove Ansbacher from
much of the full-service private clients business in the UK and
Channel Islands.
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Officially, the UK bank says that it is “currently looking at
strategic options for the future of its investment management
business,” without elaborating. Reports that the business is worth
up to £250 million are wide of the mark and valuations for
investment managers are down significantly since 2006.
No significant asset growth
PBI understands that the Ansbacher business has shown
no significant asset growth in recent years, despite the purchase
of the UK operations by Qatar National Bank in 2004. There were
hopes that this deal would bring high net worth and institutional
money flows from the Gulf into Ansbacher. Now, with the relapse in
oil prices, Middle East wealth flows are starting to dry up.
The Ansbacher operations are understood to have a significant
portion of funds in dollars, suggesting a preponderance of offshore
business. In what could prove an incentive for any buyer, its chief
investment officer Mike Hollings is highly regarded in City of
London circles.
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By GlobalDataSince the QNB acquisition, Ansbacher has undergone several
restructurings in order to focus exclusively on the provision of an
integrated wealth management service encapsulating banking,
investment management and trust and fiduciary. Past divestments
include a Cayman Islands-based fiduciary business, a UK fund
administration business and a UK property development business.
As a result, Ansbacher looks as if it will now shrink to become
a basic banking businesses with selected trust and fiduciary
services. It has even agreed a management buyout of its main yacht
financing business for high net worth (HNW) clients.
Its move must also raise questions of the future of QNB First, a
joint venture between the British bank and its parent to offer
wealthy Qatari residents the chance to tap into Ansbacher’s
expertise in the areas of private banking and offshore accounts. A
sale of an investment management operation will prove tough in
current market conditions, after major stock markets fell by
between 40 and 50 percent last year and investors continue to be
nervous about exposure to equities, analysts say.
Towry Law CEO Andrew Fisher told PBI his business was
in acquisition negotiations with more than one wealth management
firm but said Ansbacher was “not up our street” because of the
international focus of its business. He declined to comment on
other acquisition targets, citing non-disclosure agreements, but
said Towry Law was looking at large, distressed IFAs or private
banks.
UK fund manager New Star Asset Management is still looking for a
buyer for its £13.9 billion business, thought to be worth up to
£200 million. Some analysts talk about valuations for investment
management firms falling to lows they last test towards the end of
2002, at the bottom of the last bear market. Then, Insight
Investment bought Rothschild Asset Management in for 0.6 percent of
its assets.
Ray Soudah, founder of Swiss-based independent global M&A
advisory firm Millenium Associates (cor), believes the current
troubled environment makes this the right time to acquire private
client investment managers as some managers see a collapse in
revenues as global stocks plunge.
Sellers, however, may have missed the boat because they declined
advice to divest back in 2006, at the height of the bull market,
when “valuations were double current levels and buyers were
plentiful”, he observes.
Distressed selling
Sizable asset management transactions, largely absent in 2008,
are likely to reappear in 2009, driven by distressed selling of
investment divisions by banks and insurers, consolidation among
alternative firms, and opportunistic buying by financial players
unaffected by the credit crisis, according to US investment bankers
Jefferies Putnam Lovell.
Credit Suisse has just sold its Global Investors fund management
operations to the UK’s Aberdeen Asset Management. The Swiss bank,
in the £250 million all-share deal, took a 25 percent stake in
Aberdeen.
Liverpool-based wealth manager Rathbone Brothers is trying to
sell its various trust businesses. These include Rathbone Trust in
Singapore and its Geneva-based trust business, with a net asset
value of £1.7 million, to management. The sale of its British
Virgin Islands-based trust business to management is under
negotiation.
John Evans
