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Wealth Manager: Crossbridge Capital’s CIO is targeting emerging wealth from the UK to Singapore

Wealth Manager: Crossbridge Capital’s CIO is targeting emerging wealth from the UK to Singapore

Crossbridge Capital’s head of investment Manish Singh has a passion for economics that dates back to his childhood and led to him spending stints advising both the then shadow chancellor George Osborne and the Treasury at different junctures.

A member of the Institute of Economic Affairs, Singh’s first degree was actually in chemical engineering before he moved to the UK from his native India and went on to complete a master’s in finance and management.

‘I studied engineering but it was really macro-economics that I loved,’ he says.

‘When I was young I used to read all of the newspapers and it got to the point that my mother would take them away and stack them up because she was worried that I wasn’t doing my homework.

‘I’ve always had a fascination with numbers and how the world and markets work. The history is very important because people think things are new but they have actually happened before and it is essential to have an understanding of this when you are looking at the pros and cons of printing more money, for example.’

Singh started out an intern at UBS working on its European securitisation desk before moving over to Hong Kong for a spell in its interest rate derivate structuring team. He joined Société Générale Corporate and Investment Banking in 2005 as a quantitative equity research analyst in its global equities and derivative solutions division, moving on to head the structured product team at Société Générale Private Banking Hambros.

At the private bank he was later made an investment director in a role that saw him chair the asset allocation committee of its $200 million VolCap fund.

Singh joined Crossbridge Capital in January 2011 as a director and head of investment, a position that enables him to fully use his experience across multiple asset classes.

Chief executive and former Wealth Manager coverstar Tarek Khlat explains: ‘Manish provides a centralised investment voice for Crossbridge. It means we have someone who has always got their eyes on the market who can ensure our managers know everything they need to.’

In its short life, the firm has already seen a wild variety of market conditions.

 

The company was launched into the height of the bear market back in September 2008 by co-founders Khlat and Jean-Pierre Aoun, who is group managing partner.

The pair had left Credit Suisse where they had built up its $2 billion Middle Eastern wealth management business in order to strike out alone.

‘When you work at a large firm you tend to get pigeon-holed, which can hold you back,’ Khlat says.

‘For us, it was the Middle East, if you get a client outside of the region, we had to pass them on to the relevant team. We had got to the stage where we had built a $2 billion business in the Middle East and we thought that if what we do resonates in Riyadh and Cairo, why not in Singapore or Moscow?’

Crossbridge’s client base remains predominantly Middle Eastern, with the vast bulk having moved across with Khlat and Aoun when they launched the firm. The move to diversify the client base is proving successful, however, with the group having opened a Singapore office in November 2010 with a six-strong team.

The overall client split is now 80% Middle Eastern, with 20% residing in other domiciles. Assets under advice now top $3 billion from 125 clients.

‘We started with six people taken from Credit Suisse and three and a half years on we have 30 people across London and Singapore,’ Khlat says.

‘We have added people as quickly as we can and we would love to add more.’

The group is very much focused on wealthy families and entrepreneurs in emerging markets, particularly first or second generation money, and believes that its office locations enable it to service any individuals between London and its Asian base. New staff being taken on typically have existing clients and experience in certain key markets, such as Russia or India.

‘The frustration we face on a daily basis, having grown the headcount to 30, is how we go on to grow it to 100. The problem is finding the right people,’ Khlat says.

‘The good ones are already employed and the really good ones have set up their own Crossbridges. We are very careful, the person has to be the right fit and buy into our principles.

 

‘Not everyone that has been a success at a big bank can be successful at a boutique. They have to have entrepreneurial flair and be willing to work in a much less structured environment. The big institutions can spoon-feed you clients and products and although we do provide support, you need to be a self-starter and get on the phone.’

The lure of the boutique was certainly strong for Singh. He says the position came about after a conversation with Khlat.

‘I was part of a big organisation and there were probably three more layers of management above me,’ he says. ‘Here it is a flat structure and we are not selling research or products and we can take a view on anything.’

The business is predominantly advisory with a handful of fully discretionary clients with Singh saying that with most of them being business owners, they prefer to be more actively involved in the decision-making process.

He says that being ultra-high net worth, most use multiple banks and many come to them for more specific mandates, such as shorting bunds.

‘We customise asset allocation for all of our clients and are small enough to be able to do that,’ he says. ‘One of the benefits of being independent is that we can see the holdings they have with portfolios run by different banks, which you never can when you work at a rival bank.

‘We don’t have our own products and I’m from a sell-side background, so it is very easy to see products the banks are trying to push. For example, with a synthetic index we can see how they make money and whether there is an investment rationale for our clients. If it is over-structured, we won’t recommend it.’

Singh says that the team holds formal market meetings on a Monday morning and an investment ideas session on Wednesday. The investment team covers all asset classes taking a truly global view, particularly given the international nature of its client base.

The clients are sourced by relationship managers, but Khlat insists they are fully trained by Singh and so have a strong understanding of both the prevailing market conditions, how this affects various asset classes and the pros and cons of accessing them through different product types.

 

After an initial meeting with a client to establish the relationship and find out about their needs, they will typically be invited in to meet Singh, who can then devise an appropriate portfolio or recommend a suitable product for them.

Crossbridge also has a merchant banking arm, which can provide a range of services and has transacted deals in diverse sectors ranging from real estate to waste management to a restaurant chain.

‘We are not trying to be a boutique advisory like a Lazard or a Rothschild, but as our clients are still running businesses we would almost be missing a trick if we didn’t have someone that can talk about it with them,’ Khlat says.

‘It resonates with them and whereas some are not very comfortable talking about money, the business is their passion. It strengthens the core of our business and will always be an incremental source of revenue.’

He says that the fee structure depends on what services the client takes, which could be a charge for advice or a transaction.

‘The goal is to increase the percentage of revenue we receive from annuity rather than transactional fees, as with any business,’ he says.

‘Some clients just take advantage of the transactional offering and they can be quite sophisticated, whether it is an options strategy or buying volatility. The pricing we can get for clients is much better and more transparent than what they would get by going direct, we negotiate as a $3 billion client.’

He is tight-lipped on margins but says the group was profitable from the first month as it brought over its client base. Swiss private bank Julius Baer also took a 10% minority stake in the business as a silent partner, which provided early working capital.

Staff own 85% of the business, with a couple of large clients owning around 6%. Crossbridge has also just brought in a share-ownership scheme, with Khlat saying that he wants partners who care about the business as much as he does rather than employees. 

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