Stanhope Capital and FWM Holdings, the investment company that oversees the Forbes’ family fortune, have agreed to merge in a deal that creates one of the world’s largest independent wealth management groups with $24.2bn in assets under management.
The tie-up comes amid increased competition to provide financial advice and services to the world’s growing ranks of wealthy individuals, and as a period of prolonged low interest rates and rising regulatory costs forces consolidation among wealth managers.
The enlarged group aims to compete with established private banks, and offer clients access to private equity, real estate and hedge funds, as well as capital preservation strategies. Terms of the deal, which is expected to close in the first quarter of 2021, were not disclosed.
London-based Stanhope was set up in 2004 by Daniel Pinto and Julien Sevaux, who left three years ago to set up his own private investment firm. FWM was founded in 2009 by Keith Bloomfield to manage the wealth of the Forbes family, which built its fortune during the 19th century through trading tea and opium with China and investments in US railroads.
Mr Pinto, a former UBS Warburg banker, will be the chairman and chief executive of the combined group. He said that the fact that it is independently owned and not tied to any in-house products contrasts with many established private banks that were “overwhelmed with conflicts of interest” because of the pressure to sell their own products to clients.
“Stanhope Capital and FWM share the same DNA,” said Mr Pinto. “Together we offer an alignment of interests between clients and our professionals who invest their personal wealth alongside them. This is crucial to our clients but it is a rare thing in our industry today.”
London-based Stanhope runs $13bn in assets under management and oversees the investments of the Duchy of Lancaster, the £538m portfolio of property and financial assets owned by the Queen.
FWM, which now oversees $11.2bn for other wealthy families, foundations and endowments, will continue to operate under its own name.
“The merger will enhance our investment capabilities in both public and private markets,” said Mr Bloomfield, who becomes vice-chairman of the enlarged group.
He added that the greater firepower of the enlarged group would help it to “secure a seat at the table” with hard-to-access fund managers, and said it would be better equipped to negotiate lower fees on behalf of clients.
“Size matters in wealth management,” said Mr Bloomfield.
As part of the deal Wealth Partners Capital, a Palm Beach-based private equity group, which invested in FWM in early 2018, has sold its stake for an undisclosed cash amount. The investment by Wealth Partners helped FWM to accelerate its expansion through the acquisitions last year of Optima, a $2bn fund of hedge funds manager, and LGL Partners, another multifamily office.
Thomas H Lee, an early pioneer of leveraged buyouts and the founder of two investment managers, Thomas H Lee Partners and Lee Equity Partners, has also joined Stanhope’s board. Other members of the wealth manager’s advisory board include advertising tycoon Sir Martin Sorrell; the former UK chancellor Lord Lamont of Lerwick; and Lord Browne of Madingley, the former head of the BP oil group.