In this IO Talks podcast interview, Peter Hughes, CEO and founder of Apex Group, and Pierre Weimerskirch, the firm’s Luxembourg head, discussed strategic ambitions in Luxembourg, highlighting the region’s increasing dominance in the global investment landscape.
Hughes noted that despite Apex’s global presence with over 100 offices, Luxembourg stands out in its strategic significance. “People want Luxembourg structures,” he stated plainly, emphasising the jurisdiction’s ascent in the investment world over the past decade.
Discussing the operational intricacies, Weimerskirch characterised Luxembourg as an essential “inbound jurisdiction.” The increasing volume of inbound business mandates a robust platform in Luxembourg, which integrates seamlessly with major financial hubs.
“Luxembourg is really an inbound jurisdiction for the business. We have to be best friends, with our colleagues in London, in New York, in Singapore, or wherever in the world. As Peter just said, it’s just a global business. And Luxembourg is a platform for doing this global business,” said Weimerskirch.
Yet, with growth comes challenges. Hughes pointed to a potential hurdle: securing qualified staff to cater to the escalating demands of high-expectation asset managers. With 1,200 currently employed in Apex’s Luxembourg operations, more might be needed.
In recent years, Apex Group has made a string acquisitions, evolving its business model in- and outside the Grand Duchy. European Depository Bank (EDB), LRI, Fundrock, Maitland and Sanne are among familiar Luxembourg names that have been absorbed into Apex.
Hard work ‘almost complete’
“All the hard work we’ve put in over the last five years to really create the comprehensive model we were looking for, is now almost complete,” Hughes said. “We’ve bought, I suppose six or seven good businesses. And we’ve really put them together and made them cohesive. “That’s really a combination of having the right people, the right leadership, the right messaging, and the right technology.”
Three brands now are left for Luxembourg, with each targeting distinct businesses: EDB for banking, Fundrock for management company - popularly known as ‘manco’ - services, and Apex for fund services, including corporate services and distribution.
“We’re trying to have that whole connected solution for our clients,” Hughes said. “If you have a manco brand, it really helps you with your clients’ distribution too. That’s an area we are really focusing on, being able to add that value to clients globally in different markets.”
Two types of ManCo businesses
Weimerskirch pointed out that Luxembourg’s manco business has become substantial and now is divided into two separate businesses. One platform is focused on liquid financial assets and another one on private market funds. “That’s the two businesses we are building in Luxembourg for the management companies.”
Hughes cited the acquisition and subsequent restructuring of EDB as an example of Apex’s methodical integration approach. Weimerskirch noted the robust governance structures now at EDB, a firm which has undergone a significant transformation under Apex’s oversight, including its digital banking segment.
‘It’s not about underperformers’
Looking ahead, Hughes hinted at Apex’s expansion plans. While the firm remains open to acquisitions, Hughes underscored the importance of regulatory alignment, suggesting that any future moves would be made with the utmost respect for regulatory guidelines.
Apex’s acquisition strategy isn’t about turning around underperformers. “We’d like to find good businesses and make them better,” Hughes stated, emphasising a preference for firms that align with Apex’s operational model and vision, and that are in good standing with the supervisors. When asked about Fuchs Asset Management, a Luxembourg AIFM that was up for sale at the time of the interview, Hughes said: “They are not on our radar screen.”
“We will still look opportunistically, if there are good businesses to add in,” Hughes said. “But only with - I wouldn’t say pre-approval, but being in good standing with the regulators is the most important thing for us here.”
‘Perpetual commitment’
Hughes said Apex’s backers, including Genstar Capital, Carlyle, TA Associations, and Mubudala, have expressed their continued support, potentially setting the stage for a longer-term vision that might culminate in an IPO in London or the US.
“They’re giving us a lot of timeline and runway, and actually, the strategic exit for them is an IPO probably in London or the US,” he said. “So whatever we’re committed to our clients, or our staff, you know, it becomes perpetual. We’re in a very strong position where we can give perpetual commitments to clients and our staff.”
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