Kleinwort Benson Investors sold for about €130-€150m

Management’s 12.5% stake understood to be valued at about €16-€19 million

 KBI chief executive officer Sean Hawkshaw: “We have developed a truly international business over the last five years, with clients from Sydney to San Fransisco, and from the Shetland Islands to Seoul,”Photograph: Eric Luke / The Irish Times

KBI chief executive officer Sean Hawkshaw: “We have developed a truly international business over the last five years, with clients from Sydney to San Fransisco, and from the Shetland Islands to Seoul,”Photograph: Eric Luke / The Irish Times

 

Dublin based Kleinwort Benson Investors has been sold by its parent company Oddo to management and French asset manager Amundi, in a deal that’s understood to be worth around €130-150 million. This would value the 12.5 per cent stake acquired by management at about € 16-19 million.

A subsidiary of BHF Kleinwort Benson Group, which was recently acquired by the Oddo group, equity management firm KBI, which has some €7.6 billion in assets under management, is headquartered in Dublin, with offices in Boston and New York and employs 62 people. In 2015 KBI posted net revenues of € 31 million and a net income of € 9 million.

Senior management, including chief executive Sean Hawkshaw and chief investment officer Noel O’Halloran, portfolio managers and some key executives have all joined in taking a stake in the company, in a transaction which is structured as an earn-out over five -seven years.

It’s the latest in a series of ownership changes for the company that started life as Ulster Bank’s investment management arm back in 1980. Many of the current management team have been with the asset manager since its early days, with Hawkshaw joining in 1992 and O’Halloran in 1993.

It became known as KBC Asset Management after it was sold to KBC Bank in 2000, and then KBI when it was sold again, to BHF-Kleinwort Benson for €24.8 million back in 2010. With the benefit of hindsight, Mr Hawkshaw notes that it would have been a good time to take a stake in the asset manager.

“We talked about it at the time, but 2010 in Ireland was very different,” he says, questioning whether or not the team would have had the courage to do it at that point.

Since then, KBI has focused on building an international business, and just 15 per cent of its business is now based in Ireland. More than half is now US based.

“We have developed a truly international business over the last five years, with clients from Sydney to San Fransisco, and from the Shetland Islands to Seoul,” says Hawkshaw.

The sale process started in July last year when China’s Fosun International tabled a bid for BHF Kleinwort Benson, but this was later withdrawn and French private bank Oddo moved in, acquiring the company last November for € 760 million. With a focus on the Franco-German wealth management business, “it was obvious from the start” Mr Hawkshaw notes, that the company would look to divest the Dublin based asset manager, given its focus on the US.

So a search began for a buyer, with the bidding process attracting “strong interest”, something Mr Hawkshaw puts down to the company’s 28 per cent annual growth rate in assets under management.

“That attracted people’s attention,” he said, putting the company’s significant growth rate down to “a lot of shoe leather” and its niche in areas such as environmental equities, which have since moved into the mainstream.

The team in Dublin were looking for three things in their search for a buyer: 1) to preserve their autonomy going forward; 2) to provide a platform for growth; and 3) to have the ability to participate in growth through an equity stake.

This they found with Amundi, a trillion euro asset manager, the 10th largest in the world.

“The businesses are highly complementary in terms of both their product and geographic focus. KBI’s Global Equity expertise strongly augments Amundi’s equity franchise, so KBI is delighted to have Amundi as a strategic partner,” Mr Hawkshaw said.

While a name change is likely once regulatory approval is attained, there will be “absolute continuity” in terms of staffing and investment process, Hawkshaw asserts, adding that he expects employee numbers to grow by about 25 per cent over the next two years.

The transaction is expected to close in the third quarter of 2016.