UK wealth manager eyes acquisitions in Asia

Crossbridge Capital plans to launch a digital advisory platform in Singapore as it strives to build scale quickly. AsianInvestor spoke to co-founder and chief executive Tarek Khlat.
UK wealth manager eyes acquisitions in Asia

Having gathered $3 billion of client assets since it was set up in 2008, British wealth manager Crossbridge Capital intends to bring in more investor money by launching a digital advisory platform in Singapore and buying businesses.

Co-founder and global chief executive Tarek Khlat pointed to the importance of building scale quickly in the current environment.

On the acquisition trail

Crossbridge has engaged financial advisers to help it identify acquisition targets, he told AsianInvestor. These might be either traditional wealth management businesses or digital platforms.

“There is consolidation, but we want to be a consolidator; we don’t want to be consolidated,” noted Khlat, referring to the growing trend towards wealth industry M&A in recent years.

He is not alone in taking this view. Hong Kong-based multi-family office Carret Private bought wealth manager QL in July and is eyeing more such deals, while Swiss private bank Julius Baer took a 5% stake in China's Jupai Holdings in December. 

London-based Khlat said: “Getting to $3 billion is a good achievement, but with regulatory costs rising and margins shrinking, we want to take the next transformational step [in terms of expansion]. Our goal is to increase our global reach.

“We don’t think we need to reach $10 billion to be sustainable, but that is a number that we discussed very seriously as somewhere we need to be,” he added. These days, he suggested, independent wealth managers with less than $1 billion in AUM are unlikely to survive.

Asia already accounts for a substantial chunk of Crossbridge’s client base. Khlat said the firm was not far away from S$1 billion ($734 million) in AUM in Singapore, where it set up an office in 2010 and now has 12 staff, led by Yai Sukonthabhund.

Going digital

The firm hopes to accelerate this growth by building a digital advisory platform in the city-state for accredited investors (those earning at least S$300,000 a year or with least S$2 million in net worth) and expanding it across Asia.

This is the first such venture that Crossbridge has launched. “We’re hoping to develop this platform around the region with Singapore as a hub,” said Khlat. “It made sense to use [the Lion City], as we had people there already.”

In addition, there is a high concentration of wealthy investors there, making it a suitable testing ground, he noted.

The bulk (around 95%) of Crossbridge's AUM is advisory, though it does have discretionary licences. It builds most of its portfolios by investing directly into securities or using exchange-traded funds, noted Khlat, but it also has an approved list of actively managed funds.

The new platform will provide “personalised investment solutions”, said the firm in a statement. Asked whether it would resemble a robo-adviser, Khlat said Crossbridge was an investment specialist looking to use technology more, rather than a technology company seeking to move into the investment space.

Changing approach

He said he could not provide much more detail prior to the platform launch later this year. “It will be a new channel for communicating with clients. We will continue to do what we do every day, just using technology more.”

“Clients don’t necessarily want to talk to an adviser as much has they did in the past,” he added, noting that Crossbridge’s client base was getting steadily younger every year.

This view is supported by a recent report from consultancy PwC, which concluded that the wealth management industry was "dangerously" behind the digital curve in Asia, with the region's private investors increasingly managing their money online. 

Crossbridge's platform is being developed by business-to-business platform provider Bambu, while client assets and funds will be cleared and held with Pershing, part of US custodian BNY Mellon. Pershing offers US tax reporting, so Crossbridge will also be targeting American expatriates in Singapore.

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