Industry news

Credit Suisse begins internal probe after $10bn fund fallout

11 March | Credit

Credit Suisse has initiated an internal investigation as it came under regulators’ lens following the insolvency of British financial services firm Greensill Capital.

According to a Reuters report, Credit Suisse was a key source of funding for Greensill Capital.

The Swiss bank was associated with selling around $10bn worth of Greensill-created securities through its asset management unit.

Credit Suisse has hired external firms to deal with regulators’ queries, the news agency further reported quoting sources familiar with the matter.

Additionally, three Credit Suisse employees including the head of its European asset management arm were replaced.

Last week, the bank froze all funds linked with Greensill after the securities lost insurance coverage.

The sources further told Reuters that Credit Suisse has appointed external firms to accelerate the reimbursement process that will provide liquidation proceeds from the funds to investors.

To date, nearly $3.05bn worth of payments were made with further payments will be made ‘as soon as practicable’.

Notably, many assets in the funds were insured in order to protect investors’ money in case of default.

Japan’s Tokio Marine, which inherited a significant segment of the policies when it purchased Insurance Australia Group, has already initiated an investigation to determine the validity of the policies.

These policies may be directly linked with Credit Suisse funds.

However, Credit Suisse declined to comment on this matter when approached by Reuters.

This comes at a time when the Swiss Bank is emerging from a prolonged legal dispute that impacted its Q4 2020 results.

11 March | Market

Family Office Networks raises capital to fund business expansion

Family Office Networks (FON), a community of family offices, has announced Series A capital raise to meet the surging demand from its fintech platform developed for family offices.

The new capital will be used by the company to accelerate its expansion in fintech, media as well as other segments of its eco-structure.

Family Office Networks founder and CEO Andrew Schneider said that the number of family offices quintupled in the last five years to include over 20,000 single and multi- family offices while the AUM have grown to an estimated $14trn in wealth management industry.

Schneider said: “We’re privileged to have a global network of 12,000 family offices, plus trusted advisors who serve them, and we understand the investment preferences and lifestyle requirements of this hard to connect with investor segment. Therein lies a very significant opportunity.”

According to FON data, venture capital firms and family offices-backed fintech companies raised almost $38.5bn last year and are set to exceed that record this year.

Schneider added: “We’re well-positioned as one of the only fintech companies serving the family office sector and the outlook for our growth trajectory is incredible.”

Last month, FON entered into a strategic partnership with fintech firm tZERO to create liquidity for its network.

This collaboration aims to provide FON network with access to a technology solution that provides an opportunity for secondary liquidity on the tZERO alternative trading system (ATS).

The FON Marketplace, which offers the family offices with access to private deals, will display tZERO and its broker-dealer affiliates as an option to enable secondary liquidity for private companies and assets.

In 2018, Canadian wealth manager Canaccord Genuity Group made a strategic investment in FON.

9 March | Management

Palatine Private Equity facilitates major GHG reductions through minority investment

Palatine Private Equity has announced a multi-million-pound minority investment in sustainability activator – Anthesis – enabling the elimination of three gigatons of carbon dioxide by 2030.

Equivalent to more than half the current annual US total of emissions, the investment will enable Anthesis to support its clients in avoiding, reducing, and removing emissions across the decisive decade, via reduction programs and net zero strategies.

The acquisition combines investment from Palatine’s Buyout and Impact Fund, representing the first dedicated returns-focused impact fund in the mid-market, supporting profitable firms engaged in driving sustainable development.

Whilst remaining majority owned by the existing team, Anthesis will have access to Palatine’s ESG framework and its expertise across returns-focused impact investing and in buy-and-build.

Palatine partners – Beth Houghton and Tristan Craddock – will join the board at Anthesis as non-executive directors.

Referring to Anthesis as “an outstanding purpose-led business”, Houghton, head of the Impact Fund, said: “Anthesis’ mission-driven approach aligns with our long-term commitment to place purpose and responsibility at the heart of our investment strategy.”

Boasting over ten years’ experience across responsible investment approach, Palatine has won numerous sustainable finance awards, such as Responsible Investor of the Year and ESG Champion 2020.

The Impact Fund, which was launched in 2017, provides £5m – £10m in innovative, returns-focused businesses, such as Anthesis, that can create a clear positive impact on society or the environment.

Additionally, the Buy-Out Fund sees Palatine invest £10m – £30m in ambitious, high growth companies with “dynamic and visionary management teams”.

Commenting on Anthesis’ promising future, Houghton added: “We see tremendous growth potential as more progressive businesses seek out expert support to embrace sustainability in a meaningful way. We are thrilled to be working closely with the Anthesis team and taking the business to the next level.”

Established in 2013, with an average annual growth in revenue of 20%, Anthesis is one of the UK’s fastest-growing private firms.

Turning to the decisive decade, Stuart McLachlan, CEO at Anthesis said: “We have ten years to effect change.”

He concluded: “While we have achieved strong growth since the Company was formed in 2013, we need to accelerate progress, and I am delighted that Palatine is joining us on this journey.

“Palatine understands that the way business repositions their brands and operations to become a force for good will determine future performance, or more relevantly sustainable performance.”

4 March | Deal

Amundi forms new technology business line for asset managers, institutional investors

French asset manager Amundi has launched a new business line, Amundi Technology, to bolster the sale of its technological solutions for asset managers and other players in the saving industry.

Amundi expects the new business line to generate €150m in revenues within five years.

Backed by Amundi’s technological resources, the new business line will offer three cloud-based software solutions, namely, Alto Investment, Alto Wealth and Distribution, and Alto Employee Savings & Retirement.

Alto Investment is designed to cater to complete needs for the asset management industry while Alto Wealth and Distribution offers several discretionary portfolio management and advisory solutions for private and retail banks.

Alto Employee Savings & Retirement is a consolidated front-to-back management platform dedicated to retirement savings.

The business line will consist of 700 experts spread over its Dublin and Paris hubs as well as teams located in 19 countries, including at the company’s key centres in Europe, Asia and America.

Commenting on the development, Amundi CEO Yves Perrier said: “Technology is a key point of differentiation and development for financial institutions. Amundi has had strong growth over the last ten years thanks to this firm belief, by continuously investing in talent and infrastructure. As such, we have committed to creating a dedicated business line for asset managers, institutional investors, and all those within the savings industry.”

Last month, Amundi launched three flagship funds to retail investors in Singapore and a focus on ESG.

The firm, last month, posted a net income of €288m for the quarter to December 2020, its highest quarterly net income since inception.

5 March | Finance

Citi drives sustainable development through support of World Bank bond

Citi has revealed it acted as sole structurer and arranger on the World Banks $100m 5-year bond, which will support the International Bank for Reconstruction and Development’s (IBRD) ongoing sustainable development.

The bond will also support similar efforts from the United Nations Children’s Fund (UNICEF), as children worldwide have been severely impacted by the effects of the pandemic. The issuance will channel $50m to UNICEF to support its Covid-19 response programmes for children across a 5-year period.

Investors included a combination of institutional and ultra-high net worth (UHNW) clients of Citi Private Bank.

Praising the support of the Citi investors and clients, Jim O’Donnell, head of Citi Global Wealth, commented: “Making real headway in alleviating social challenges requires new ways of doing things. We’re excited to innovate in the financial space and our institutional and private clients have shown overwhelming support for investments that can further their social missions.”

The Covid-19 pandemic has presented an opportunity to start over for governments, organisations, and society; to forge a path towards a more sustainable, equitable future.

In the financial sector, the importance of a just recovery has manifested in the explosion of ESG integration. The World Bank bond reinforces the important role of the private sector in sharing financial risks to achieve positive development impact.

David Malpass, World Bank Group president, added: “We are grateful to our investors for joining this effort and demonstrating how investors can participate in the global response to COVID-19, through this unique opportunity to scale up resources available to UNICEF to expand its programs.

“The bond also spotlights impact investor support for World Bank Sustainable Development Bonds and the potential for finding new ways to collaborate for impact.”

Henrietta Fore, UNICEF executive director, concluded: “The COVID-19 pandemic has exacerbated deep inequalities within and across countries worldwide. Keeping children at the heart of recovery efforts and focusing on innovative partnerships will enable us to reimagine children’s futures and secure more equitable societies.”

8 March | Deal

Cambridge Associates expands Asia presence with Hong Kong office

American investment firm Cambridge Associates (CA) has expanded its footprint in Asia by launching a new office in Hong Kong.

The company, which caters to endowments, foundations, family offices, sovereign wealth funds, and pension funds, already has offices in Singapore and Beijing.

With its entry into Hong Kong, the firm is looking to accelerate its business growth in the Asian region.

According to Cambridge Associates regional head for Asia Aaron Costello, the region has long been a key market for the firm.

Speaking on the opening of the new office, Costello said: “We are very excited to be expanding in Hong Kong as the next stage in our mission to provide strong investment performance and excellent service to clients across the region.

“We continue to see strong demand in Hong Kong, mainland China, Singapore, and Southeast Asia for access to our portfolio management services and global investment network. We’re seeing particular interest in alternatives, including private equity and venture capital investing, ESG and impact investing.”

As part of the development, CA has appointed Hong Kong-based senior director Edwina Ho as senior director of business development for Asia.

Additionally, the firm has relocated global private client practice head Mary Pang to the region. Pang, who was formerly based in San Francisco, will operate out of CA’s offices in Singapore.

Pang said that the expansion of CA’s footprint to Hong Kong will allow it to better serve the growing Asia, and global, client base.

She further said: “I am personally thrilled to be in Singapore and look forward to partnering with our local team of talented colleagues to support existing and future clients across Asia.

“We’re also delighted to have Edwina on board to support these efforts. Edwina’s knowledge of the region, and her connectivity to institutional and family clients makes her a welcome addition to our team.”

Last June, CA opened its second European location in Munich, Germany to support its European clients.

The surge in wealth growth in Asia has attracted a slew of global financial firms into the region.

Last month, HSBC revealed plans to establish itself as a wealth management leader with focus on high-growth markets in Asia.

In December last year, Vontobel Asset Management opened an office in Japan with the aim of expanding its reach in the region.

The same month, reports suggested that Japanese brokerage Nomura is set to accelerate hiring in its wealth, fixed income businesses in Asia.

Investment manager Barings also established an office in Singapore, the same month, to ramp yo its presence in the Asia Pacific region.

1 March | Firms

Julius Baer concludes CHF113m share buy-back programme

Julius Baer Group is set to launch a new programme to repurchase up to CHF450m ($493m) of its shares on 2 March 2021, after wrapping up its 2019 share buy-back programme.

The new share buy-back programme is expected to last until the end of next February.

Under the new programme, the Swiss private bank will purchase the shares through a second trading line on the SIX Swiss Exchange.

“Shares that have been repurchased under the new programme are expected to be cancelled through capital reduction to be proposed at the AGM in 2022,” noted the private bank.

Julius Baer suspended its 2019 share buy-back programme last March due to Covid-19, at the request of Swiss financial watchdog FINMA.

As part of the programme, Julius Baer bought back 2,585,000 shares at an aggregate cost of CHF113m on a second trading line on the SIX Swiss Exchange.

The cancellation of the shares bought back under this programme will be proposed at the annual general meeting (AGM) this April.

Julius Baer reported a nearly 50% jump in net profit in 2020, driving on higher client activity which negated the impact of a write-down related to its struggling Italian subsidiary Kairos.

The group posted a net profit of CHF698.6m in 2020, compared to CHF465m reported a year ago.

Last November, the bank agreed to a settlement in principle with the US Department of Justice (DOJ) to resolve allegations over corruption linked to world soccer federation FIFA.

In October last year, a report said that Julius Baer is looking to launch a majority-owned joint venture business in China by joining forces with a local firm.

11 March | Deal

Threat of shareholder proposal drives HSBC coal phase-out

The board at HSBC has tabled a resolution committing the firm to a phase out of financing coal-fired power and thermal coal mining by 2030 across the EU and OECD.

The resolution, put to a vote at the AGM on 28 May 2021, follows months of negotiations between HSBC and a $2.4trn coalition of investors led by campaign group ShareAction.

This week, HSBC, which channelled more than $15bn to coal developers from October 2018 and October 2020, pledged a series of commitments to fight the climate crisis, following pressure from the coalition.

The announcement comes after ShareAction field a shareholder proposal in January, calling on HSBC to reduce its exposure to fossil fuels.

The coalition, including Amundi and Man Group, agreed to withdraw the shareholder proposal in exchange for a board-backed resolution, but pledged to take further action next year if the bank failed to adequately implement new commitments.

Jeanne Martin, senior campaign manager at ShareAction praised the outcome of effective shareholder engagement: “Today’s announcement sets an important precedent for the banking industry.

“Net zero ambitions have to be backed up with time-bound fossil fuel phase-outs and today HSBC has taken an important step in that direction.”

Martin continued: “Our focus now turns to ensuring it delivers on these commitments. HSBC must ensure that its coal phase-out policy, to be published before the end of the year, includes a clear commitment to stop financing coal developers and top coal companies and to ask its clients to publish their own coal-phase out plans by 2023 at the latest.”

In a statement from HSBC, the bank acknowledged that “the expansion of coal-fired power is incompatible with the goals of the Paris Agreement”.

The resolution renders HSBC as the first mainstream bank to take such a stance on negative emissions technologies.

5 March | Market

Schroders registers 15% surge in AUM despite pandemic uncertainty

British fund manager Schroders has registered a 15% increase in assets under management (AUM) last year in spite of the economic uncertainty caused by the Covid-19 pandemic.

The company’s AUM rose to £574.4bn in 2020 from £500.2bn a year ago.

Schroders Group chief executive Peter Harrison attributed rise in AUM to the strong demand in its private assets, wealth management and solutions businesses, which currently accounts for 54% the firm’s AUM.

Meanwhile, Schroders recorded a profit before tax and exceptional items of £702.3, while net inflows to £42.5bn from £43.4bn last year.

The company’s partnerships, majorly in Asia, generated a further £12.4bn of net inflows, bringing total net flows to £54.9 AUM including partnerships reached £663.0bn.

Net income increased by 3% to £2.18bn as against £2.12bn in 2019.

Asset Management net income before exceptional items for the year stood at £1.78bn, up from £1.78bn last year. The business saw a higher contribution from joint ventures and associates of £49.5m.

Profit before tax and exceptional items was £573.3m and profit before tax was £543.5m.

The AUM within Private Assets & Alternatives rose at a compound annual growth rate of 21% in the last five years, recording £46.1 bn in asset the close of 2020.

Schroders said the business attracted good client demand for securitised credit, infrastructure finance, real estate and private equity during the year.

Furthermore, it said that the acquisition of real estate investment manager Pamfleet enabled it to expand its geographical capabilities within Real Estate into Asia.

Schroders witnessed strong revenue growth and continued client demand for its wealth management arm during 2020.

The unit generated net new business of £1.7bn last year as against £14.7bn the year before.

Schroders Personal Wealth recorded net outflows of £0.2 bn, down from the £12.6bn in 2019.

The total AUM for Wealth Management grew to £72bn during the year from £66.7bn in the previous year. The unit also witnessed a 24% rise in the net income to £382.7m.

Profits before tax and exceptional items increased by 26% to £110.5m and profit before tax increased to £64.8m.

Schroders said that the group is increasingly balanced towards the higher growth areas of Private Assets & Alternatives, Solutions and Wealth Management.

The company expects the macro-economic environment will accelerate demand for these areas in the future, while hoping to maintain strong capital position to generate value for its clients, shareholders and wider stakeholders.

Last month, reports suggested that Schroders secured the clearance to launch a majority-owned wealth management JV with a unit of Chinese lender Bank of Communications (BOCOM).

5 March | Finance

Huobi Asset Management secures virtual asset funds licence in Hong Kong

Cryptocurrency exchange Huobi Technology’s subsidiary had received the regulatory nod to launch 100% virtual asset funds in Hong Kong.

Following the receipt of approval, Huobi Asset Management is planning to launch three virtual asset funds, namely BTC tracker fund, ETH tracker fund, and multi-strategy virtual asset fund.

The company plans to roll out its multi-asset fund with 10% allocation to virtual assets, whilst 90% into traditional assets, including equities and fixed income.

Huobi Asset Management CEO Gillian Wu said: “We aim to provide various choices to investors with different risk appetites. We have covered comprehensive perspectives through in-depth dialogues with SFC and made full preparations on corresponding solutions.

“We are confident that our funds could offer one of the most secure and reliable channels for Professional Investors to access this novel asset class conveniently.”

A senior investment team will oversee virtual asset funds of the Huobi Asset, whose key business partners include DBS, Sidley Austin, Mourant, and Fidelity Digital among other institutions.

The firm is the second licensed virtual asset manager in Hong Kong. In 2019, fund services provider Zedra entered into the digital assets space in partnership with digital custodian Vo1t.

Commenting on the development, Huobi Tech management said: “We are delighted that Huobi Asset Management team has secured such a breakthrough. The approval’s timing is perfect, coinciding with the mainstream institutional adoption of virtual assets starting from this year.

“We will continue to explore the possibility of diversifying our businesses in relevant areas to enhance our growth prospects and bring long-term sustainable returns to our shareholders.”

1 March | Development

Chinese wealth manager Hywin seeks public listing in US

Chinese wealth manager Hywin Holdings has filed for an initial public offering (IPO) with the US Securities and Exchange Commission.

The company aims to raise up to $48m in the IPO and has applied for the symbol ‘HYW’ for listing on the Nasdaq Global Market Stock Exchange.

Network 1 Financial Securities is the sole bookrunner for the deal. Other terms were not disclosed.

According to the prospectus, Hywin is the third largest third-party wealth management service provider in China with a market share of around 7.5% in terms of 2019 transaction value.

The company primarily provides wealth management services, insurance brokerage services and asset management services to its clients.

In October last year, another Chinese firm Lufax Holding Limited filed for a US IPO with the US Securities and Exchange Commission. The filing set a placeholder value of $100m.

It is expected that China’s asset management industry may see accelerated growth in the upcoming years.