In changing times for the financial services sector, there are significant opportunities for those who can show adaptability and relentless client focus says Punkaj Gupta, Joint Managing Director and Group CEO, Essel Group ME.
Banking is an incredibly fast-paced industry, constantly evolving with the sectors it services, economic change and geopolitical events. It is now a decade on from the start of the global financial crisis, the biggest change in several generations, which provides a good opportunity to step back and review the state of the sector. Regulation and commercial pressures have driven significant change during this time, leading to improved capitalization and asset quality, with focus on different service lines and products. Fintech is also having a huge impact, and there has been wave upon wave of mergers and restructurings.
Morgan Gatsby, formerly known as Sidra Capital, was acquired by Essel Group ME in April 2017, and specializes in providing wealth management, investment banking and corporate advisory services to a range of clients, including family offices, ultra-high-net worth individuals and small to medium-sized businesses.
The wealth management sector continues to expand and mature rapidly, and we are in a market with ever increasing competition. In this environment, what really gives us a competitive edge is our personalized approach. This enables us to fully understand clients’ needs and provide a highly tailored and disciplined approach to asset allocation, in line with their exact requirements and risk profile. For instance, know your customer (KYC) is not just a legal requirement for Morgan Gatsby. Rather, the concept is at the center of everything we do, encompassing the need to get to know each client as an individual. This philosophy has served us well, enabling us to make better investment decisions to meet clients’ exacting needs.
The wealth management industry is also experiencing significant geographic diversification. Previously concentrated in Switzerland, business is moving to newer centers of wealth. Dubai and Singapore are becoming key hubs, and London, New York and Frankfurt have also grown. Morgan Gatsby’s location in Dubai has enabled us to take advantage of these structural changes, benefitting from a strong domestic market, while also acting as a gateway between the more established capitals of Europe and the growing economies of Asia. As a result, we have made great inroads into the sector in a very short period of time, and our track record in private wealth management is turning the company into a strong emerging player in the field, both locally and internationally.
Mergers and Acquisitions (M&A)
In terms of investment banking, traditional activity has slowed in the Middle East and we are seeing a shift in capital markets business. Mergers and acquisitions are becoming the real growth driver in the region, with a shift from traditional IPOs or debt rising towards private M&A deals and placements.
In line with the changing nature of dealmaking, Morgan Gatsby has adjusted its focus accordingly, which is why 75% of our deals in 2017 are M&A deals, in order to capitalize on this trend.
The latest deals we have worked on reflect the move towards private capital. For example, we recently advised MealsOnline, a start-up catering company. MealsOnline was growing rapidly and needed $2 million to drive further expansion and meet the needs of its customer base. Traditionally, it would have raised money in the public markets or borrowed from banks, but this would have taken too long. Instead, it appointed Morgan Gatsby, and we approached the private equity markets for capital. By taking this approach we raised $5 million in just three months, and by the end of the funding period investors owned 60% of the company. We had also met two objectives – exceeding funding targets in a short timeframe, while also avoiding taking on any risk.
In addition to working with small and medium-sized businesses, Morgan Gatsby advises on a number of large transactions. We have almost reached financial close for a $1 billion food park joint venture in the U.A.E., and recently secured over $200 million of equity investment for a Swedish nuclear technology company LeadCold Reactors, enablingit to develop its ground breaking small-scale nuclear power production technology.
The world of corporate advisory, the third string to our bow, is also experiencing unprecedented change and Morgan Gatsby is right in the middle of it. Our corporate advisory offering supports our banking business, providing a range of client services including legal advice, trustee services, citizenship advice, operational advisory planning, retirement and estate planning. The industry itself is still fragmented and transactional, forcing clients to go to a number of separate advisors, so it is ripe for consolidation. At Morgan Gatsby, we have been successful in making corporate advisory a comprehensive business under one roof, providing a one-stop shop to our clients to help achieve their financial goals.
Three Tams, One Goal
By offering wealth management, investment banking and corporate advisory, Morgan Gatsby is unlike any other financial advisor, providing a full-service offering for our clients. This joined-up approach really sets us apart, with the different arms of the business working closely together. For example, we are currently raising the Essel Africa Natural Resources Fund, to invest in oil and gas and mining assets on the continent. Around $250 million of the $350 million target is already committed, with the investment bank structuring the fund and the wealth management arm raising the capital, supported by the corporate advisory business.
At Morgan Gatsby, we are always looking at how to best support our international client base, targeting a commercial banking license in the EU and planning to open two new international offices in New York and Los Angeles. Meanwhile, the investment bank continues to go from strength to strength and is on the verge of executing several major transactions. Although the industry has changed beyond belief, for those who can adapt to this change, the opportunities are significant. As a dynamic, full-service business, Morgan Gatsby is seizing these opportunities with both hands—proof that the rewards are there for those willing and able to take them.