(June 4): The Singaporean state has built up a stake of about 3% in Julius Baer Group, providing a major boost for the Swiss wealth manager as it struggles to reach its targets on attracting new money and reining in costs.
The acquisition -- through wealth fund GIC -- will come as a relief for Chief Executive Officer Bernhard Hodler after Julius Baer’s stock fell the most among Switzerland’s biggest companies last year. Blackrock Inc. and Wellington Management are also among the company’s top shareholders.
Hodler is under pressure amid a prolonged stretch of lacklustre returns as he works through cost cuts and purges riskier accounts. Last month, the bank reported new client money that fell short of its targets. Julius Baer has put together a shortlist of both internal and external candidates to replace him as CEO, and may make a decision by the third quarter, according to people familiar with the matter.
It’s not the first time GIC has invested in Swiss banks. The fund purchased debt in UBS Group AG early in the financial crisis and became the bank’s biggest shareholder when the debt was converted into stock. GIC then cut its ownership by almost half two years ago, saying it was “disappointed” that it lost money on the investment.
Private Holdings
GIC doesn’t disclose its total holdings, saying only that it manages “well over” US$100 billion ($137 billion) in more than 40 countries. The London-based Sovereign Wealth Center has put its total holdings at US$398 billion, making it one of the world’s biggest state funds.
Julius Baer shares were little changed at 39.09 francs ($54) in early Zurich trading.
For the year ended March 31, 2018, it achieved a 20-year annualised rate of return of 3.4%. As of that date, its portfolio was split 37% in bonds and cash, 23% in developed-market equities and 17% in emerging-nation stocks. Private equity and real estate comprised 11% and 7% respectively, while inflation-linked notes accounted for 5%.
Julius Baer isn’t the only Swiss asset manager attracting the attention of big-name investors. GAM Holding AG, which has been rocked by client redemptions after a fund manager scandal, saw billionaire investor George Soros build a 3% stake through a subsidiary of his family office recently.
