Apex Group in January will bring all its different management company sub-brands under a single brand. Now that the major takeovers of Sanne and Maitland are closed, country head Pierre Weimerskirch told Investment Officer more acquisitions can be expected, although not directly in Luxembourg. “There are some markets where we are still not at the level where we want to be.”
Acquisition-fuelled growth is expected to continue in 2023 as the firm’s management, led by founder and CEO Peter Hughes and backed financially by San Francisco-based Genstar Capital, TA Associates, Carlyle and Mubadala continues to build a global single-source service provider for funds and asset services. For Luxembourg though, the primary focus will be on integration.
Its presence in Luxembourg received a significant boost this year thanks to the acquisitions of Sanne and Maitland. As a result, its workforce in Luxembourg has increased to some 1,200 people, on a global total of approximately 10,000.
Couple of challenges
“As you can imagine this also brings complexity when it comes to integration and alignment, which is why we have taken our time to find the right moment to bring the brands together,” said Weimerskirch, former co-founder of LIS, an alternative investment fund manager that was already integrated into Sanne in 2018. “This isn’t about operational change. It is about simplifying our message to the market, about Apex’s capabilities and that of its ManCo offering.”
“I have jumped into this new role, as the regional head of Luxembourg, at a really exciting time for the group” he said. “I am still in discovery mode. What’s also important for me is to better understand the Apex world, and from there, especially for Luxembourg, we look forward to how we can align all these different brands in order to deliver the single source model.”
The addition of Sanne alone brought 2,500 new people into the group and added six new locations in Denmark, Japan, Serbia, South Africa, Spain and Sweden. The deal closed in August. Maitland’s acquisition, first announced in May, with close expected to be announced early in the new year.
Dual branding
Weimerskirch said the firm has opted for a dual-branding strategy. Apex will be the parent brand therefore subsidiaries will always be co-branded. Its management companies LIS and LRI will become one brand under FundRock, which will also always be co-branded with Apex Group. Sanne and Maitland will both be rebranded as Apex Group in January.
Rebranding Sanne and LIS was one of the first topics of discussion in Weimerskirch’s conversations with founder and CEO Peter Hughes. “If we want to improve brand awareness, consistency and simplicity in branding, we cannot speak all the time about three or four different brands, that does not make sense,” the Luxembourg country head said. “So the Luxembourg market can expect to see much more of the familiar orange logo and a refreshed visual identity for the FundRock business.”
Asked about synergies between the different brands, Weimerskirch was quick to dismiss the possibility of job cuts. “That’s not the story. Apex doesn’t buy businesses just to add scale or clients, for us, it’s about the value their capabilities and people bring to the group,” he said.
Instead, Weimerskirch sees synergies in being able to offer a broader set of services: “It is really about having now a much bigger, broader platform on which we can leverage for the benefit of all clients. For example, from the fund side we have clients which had a separate banking relationship, but now, as we have a much broader suite of services, they also can now have a banking solution from Apex Group.”
‘Stronger base’
Thanks to the acquisitions, the firm said it now can leverage a network of 80 offices in 40 countries, giving it “a stronger base” for developing business with clients and delivering services on a global scale, via local teams. And finally, synergies can be achieved in terms of technology.
“Let’s be very clear here: we are still a people business, however we will be continuing to invest in technology and innovation going forward,” he said. “If you have a bigger, larger company doing these investments, you can achieve greater economies of scale than if you are a smaller company.”
In recent years it has become clear that technology investments are proving a challenge for many of the smaller fund services companies in Luxembourg. Not only is it because existing systems need to be upgraded; it’s also because financial regulation, ESG requirements and supervisory requirements in the asset management business are becoming increasingly tight. Against this backdrop, more and more asset services firms are looking towards consolidation.
More acquisitions expected
As a private-capital backed firm - next to Genstar, capital has also been committed by TA Associates, Carlyle and Mubadala – Apex is widely expected to continue to make further acquisitions in the asset services business. Weimerskirch indicated these will likely not be in Luxembourg, although it could be foreign firms who already have part of their operations in the grand duchy.
“I am pretty sure there will be more,” Weimerskirch said. “Where? That’s difficult to say. We are already the largest service provider in Luxembourg. There are some markets where we see opportunities to further evolve. We’d rather expect in these jurisdictions that the acquisitions will take place.”
“The consolidation trend is still going on in this servicing industry. And we will continue to be a major disruptor in shaping this industry.”
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