De Tijd: Duet sends Merit Capital on acquisition path

Published 25 May 2019 by De Tijd

The British Duet group has completely taken over Antwerp’s asset manager Merit Capital, formerly strongly associated with liberal top politicians.

“Within three years we want to grow to 5 billion euros under management,” says owner Henry Gabay.

Exactly a year ago it was announced that a British investor was interested in the acquisition of Merit Capital.

The Antwerp asset manager, then in the hands of liberal leaders such as Karel De Gucht and Jacky Buchmann, was forced by the National Bank to look for a new shareholder after sustained losses. Three months later, the British Duet Group from Henry Gabay received the green light for a majority stake in Merit Capital. Another three months later, she bought the Bruges stock exchange company Weghsteen, which was chained by the National Bank after malversations. Very recently, Duet also bought out the two remaining minority shareholders: the equine doctor Leo De Backer, the father of State Secretary Philippe De Backer, and the Dutchman Jan Tops. “They are no longer on the board, but the relationship with them remains good,” says Gabay in his first interview.

After the shareholder change, all old servants disappeared from the board. They were replaced by diamond trader Laurent Trau, lawyer Kris Luyckx, former CEO of KBC Private Banking Jan Gysels and Giuseppe Ciardi, an Italian pioneer in alternative investments.

“Merit Capital is a very different company than a year ago,” says Gabay. “We brought our people and technology here and automated and centralized the back office. Before you furnish a house with paintings and furniture, the walls must be strong enough. Now at Merit we have a solid platform to receive new clients and to take over and integrate other asset managers. It is time to start the expansion step by step. We are not running a sprint, but a marathon” says the Turkish-Swiss financier.

Nevertheless, Duet appears to be in sprint mode, with the takeover of Weghsteen so shortly after that of Merit. “It was an opportunity whose timing was not in our hands,” says Gabay. “Now we look at other asset managers ourselves.” With Weghsteen, Merit Capital grew to 1.5 billion euros under management. But the right size in asset management in the next three years is more than 5 billion euros, “says Gabay. “We want to go there. With that size you are not a supermarket like a large bank that cannot provide personalized service, but a niche player who can give customers good service and performance, “says Gabay. He is looking at an additional acquisition in Belgium of more than one billion euros.

But Duet is also looking forward to some files abroad. “We think in Europe there are several options”. The sector has changed fundamentally and not all small players can come along, Gabay thinks: “In the past you could easily earn money by collecting retrocessions, but the MiFID II rules make that more difficult,” says Gabay. “And clients often opted for discretion and confidentiality for asset management in order to pay as few taxes as possible. All that offshore private banking is now almost dead. Now you can only make the difference with two things: the service and the performance. ” “The performance was good in the past. The customers at Merit Capital are always treated well. There were some issues in the past, but only in terms of structure, governance and organization, “says CEO Jan De Coninck, former CEO of SG Private Banking in Belgium. “This year we are going to make a profit, for the first time in almost 20 years. The fact that we are already structurally profitable six months after the acquisition is a small miracle, “says De Coninck. “There was a loss last year, but that is due to the costs of the acquisition. We have also invested a lot. That was necessary, because that has hardly happened in the last ten years. To give an example: my computer is the last to be replaced. It dated from 2006. ” De Coninck has been working in tandem with Paul Reynolds since the acquisition. The British co-CEO of Merit Capital focuses on technology and investments. “Our funds performed very well this year. We followed the market for the first few months, then went against the market. And we won. Great.”

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