Martin Bellamy, founder and chief executive of Salamanca Group, is looking to expand into wealth management, and has taken the decision to focus purely on advisory.
‘The big dilemma for us is that we want to be involved in the wealth management space and we want to be able to advise our clients. But do we need to be executing in that area?’
Probably not, he says. ‘We will not build an asset management business per se, because there are people out there that do it much better than we could, yet we should be good at selecting managers that do it really well.’
While he admits it is still early days, he is already on the lookout for a wealth management business to acquire to provide an entry point into the market.
‘The wealth management service is something we have our sights on. It is early days but we know what we are after,’ Bellamy says.
‘While we have a lot of private clients, and do a lot of things for them such as private equity and real estate, we don’t do the actual wealth management side for the moment.’
The group offers a range of investment services across real estate, private equity, along with corporate risk management and advisory services, including mergers and acquisition, capital restructuring and capital raisings. It also provides research and intelligence, and a standalone private clients service.
The latter involves what Bellamy describes as ‘basic services’, such as providing advice on schools, immigration services, luxury asset acquisition, security services, and property and staff advisory, typically for overseas clients moving into the UK.
It is into this service that the wealth advisory business will be integrated.
The group’s clientele is as diverse as the services on offer. On the risk management side, Salamanca’s services are used by multinationals, but on the investment side, the firm works with ultra-high net worth clients. ‘We have a lot of clients who feel that the wealth management space is sometimes not that well covered,’ Bellamy says.
‘When we came out of the crisis [in 2009], it was clear that private banks and investment banks were not prepared to build really close relationships with their clients and offer them basic services.
‘Investment banks were very thick, and the way they created value for themselves was so far removed their clients that a lot of clients out there didn’t get the service they wanted. That was to our advantage.’
Despite not having yet entered the wealth management market per se, Bellamy already knows what qualities he wants in a potential acquisition.
‘What we will look at in a wealth manager is his track record, the type of business he operates in and the way he interacts with his clients. The question we need to answer is whether or not the manager fits the profile of the client you are representing.’
Recently, and after acquiring Investec’s trust service and its £4.5 billion in assets under management in October, the CEO had the opportunity to go back to a more old school-type of business model.
In the process, the group’s different businesses were rationalised, and put under the same roof under the Salamanca Group brand.
‘The mission was to thread all our businesses together and create a business model that would be valuable. Part of that idea was to acquire a trust business, which would be the glue to hold our clients,’ Bellamy explains.
He says the trust business is expected to continue growing – full incorporation is forecasted for 2015 – but that it will not change direction.
Through the acquisition, Salamanca has added complex and vanilla trust services, foundations and company structures, multi-family office services, and a philanthropy offering, but the business remains standalone.
It was rebranded Salamanca Group Trust Services, and currently has offices in Jersey, Switzerland, South Africa and Mauritius employing around 100 people.
‘Pretty much all of the services we have added are relevant to our existing clients,’ he says. ‘Rather than having to go to lots of different places, they can stay with us.’
That said, he admitted the 500 clients acquired with the trust business means ‘more requirements’, which could impact on the way wealth managers are chosen in the long run.
One example of this is that Salamanca will be looking to offer consolidated reporting, which Bellamy describes as ‘extremely important’.
When asked if he thought product launches could be in the pipeline, Bellamy is adamant Salamanca has chosen to steer clear from offering its own in-house products.
‘The key thing is that we want to make sure we’re not conflicted as a business. Other areas such as cash management or treasury pooling are the types of space we should be in,’ he says.
‘But if we start, for example, to run a hedge fund strategy or various different asset managed strategies ourselves, then we’re always going to be conflicted. So the route for us is to manage wealth and assets on the basis that we are looking for the best of breed solutions and selecting the best managers on the market.’
Instead, Salamanca will continue to offer private equity or real estate services, which Bellamy sees as different because the firm invests alongside the client.
‘In that way, we cannot be criticised for being conflicted,’ he says, adding offering private equity or real estate was different because the firm invests alongside the client.
Currently, Salamanca Group has $2 billion (£1.22 billion) in assets under management, $8 billion in assets under trust for 700 client private clients, 200 corporate clients and 20 institutional clients.
While he claims there is ‘no glass ceiling’ in terms of how the business can grow, he says there is a limit to the number of clients the firm can serve well.
‘You cannot add value if you have tens of thousands of clients,’ Bellamy stresses, explaining that being a middleman dealing with both the asset and wealth management industries could limit the scope of business possibilities.
That said, he added he will be looking to build up the group’s private equity business.
‘Contrary to investment banks, which are shedding their private equity businesses and will try and rebuild their division in five years, ours is here to last.’
Additionally, he points out the benefit of Salamanca’s global footprint.
It uses contractors and works with 15 field officers, reaching most of Europe, Asia and South America.
‘This is an advantage over family offices.’ Just over a decade after its launch, Salamanca Group has a staff of 250, including 96 trust personnel inherited from the Investec trust business.
Part of the group’s growth plans have been to expand geographically, although Bellamy still considers London the centre of all activity.
In December, the group opened its first North American office in Houston to help advise its oil and gas clients.
So what has driven its success? Bellamy says a large part of his mentality is down to the time he spent in the British army. He trained at Sandhurst, before spending a decade as a Rifles officer.
He left aged 29, and worked as an executive director at business process outsourcing firm Williams Lea Group and later as an associate director at advisory and marketing company WPP, before deciding he wanted to launch his own business.
Initially he had a tough time after leaving the armed forces. ‘In the end, the army is an institution; and you leave it institutionalised. It wasn’t easy for the other founders and me being former officers.’
Bellamy met co-founders David Livingston and Tom Welsh in the army and in 2002, they launched the business. Livingston is chief operating officer and Welsh is now at Lloyds, having left in 2005.
Bellamy describes the army as ‘a great grounding for anybody. It has amazing resonance when you start getting into business, especially the money business, because you can take a lot of transferable skills’.
Also, they brought with them the skills of leadership and the ability to disseminate information. ‘Without good communication it is difficult to be successful,’ Bellamy says.
The trio raised money from private clients and structured deals ‘in a way that was slightly alternative’.
At the time, the emphasis was on real estate, because it was the ‘easiest’ to start with. After developing this and the private equity business, the focus switched to the mining sector, with services initially designed for multinationals.
Today, Bellamy said their business model is best suited to working with ultra-high net worth clients, entrepreneurs, financial and professional intermediaries and family offices, who he says, should continue to benefit from the firm’s extensive range of services.