Swiss private bank EFG International has acquired UK hedge fund group Marble Bar Asset Management. MBAM, which was set up in 2002, has $4.4 billion in institutional and ultra-high-net-worth assets under management. It specializes in long/short equity strategies.
It is the second acquisition for the private bank of an alternatives house. In February 2006, EFG International acquired CM Advisors, a fund of hedge funds business. Total client assets relating to hedge funds will now be about SFr15 billion ($13 billion) and 18% of total revenue-generating client assets.
Since its acquisition, CM Advisors’ profits have more than doubled, and MBAM is also expected to be a highly profitable business. Its net profit for 2008 is expected to reach at least $80 million.
The acquisitions form part of EFG’s strategy to build out a range of value-added products for its clients. In October 2007, the firm launched a new business venture in structured products, whereby it issues instruments in its own name.
Tapping the ultra rich
EFG International is also hoping the acquisitions will give the private bank greater access to ultra-high-net-worth individuals. The firm has been getting increasing traction with ultra-high-net-worth clients, helped in part by other acquisitions. EFG bought ultra-high-net-worth boutique PRS at the beginning of 2007. As of the middle of 2007, EFG International had about SFr87 billion in assets under management.
The deal values MBAM at about $1.2 billion. The staff and partners will receive $400 million initially that will be reinvested into MBAM’s funds for a staggered period of six years. Lehman Brothers will receive about $117 million in cash for its 20% stake in MBAM. A further $300 million to $800 million, depending on performance, will be paid, with 30% being invested in EFG International’s shares. There is also a long-term equity incentive scheme for key partners of MBAM. As part of the deal, EFG’s sister firm, Eurobank EFG, has taken a 9.99% stake in MBAM.