Newly-merged global financial advisory business AHR Private Wealth has agreed an M&A deal with London-headquartered AXG Group, subject to regulatory approval.
This comes weeks after the formation of AHR following the merger of UAE-headquartered Arlo Wealth and Harrison Rowe in June 2020.
The AXG Group of companies will integrate into AHR, while continuing to provide advice and a centralised investment proposition for financial advisers operating in the international market.
Offering
AHR Private Wealth said its clients will now benefit from AXG Group’s operations in Europe and Latin America; as well as its platform, which offers a 24-hour service.
As part of the merger, AHR Private Wealth will now offer a Financial Conduct Authority (FCA)-regulated discretionary fund management service, via its teams in London and Windsor, to its global client base.
Following the deal, the pension report business is staying as AXG, but the rest of the company will be rebranded.
European expansion
Daniel Dickinson, chief executive at AHR Private Wealth, told International Adviser: “AXG are regulated in Dublin and Liechtenstein, and they have DFM permissions. Our immediate ambitions are in Europe.
“The main things that we liked about them was the Dublin entity. We felt that, following Brexit. if the passporting permissions with the FCA were to change, which I don’t think they will, we’re now very secure in Europe via Dublin.
“That was one of the major attractions and the Liechtenstein licence allows passporting into Switzerland, so that was very attractive as well.”
Asad Sheikh, director at AHR Private Wealth, also told International Adviser: “The relationship has been there for a while, via the firm’s pension report writing service. It was important to us to enhance our regulatory proposition.
“It allows us to enter into markets easier and quicker.”
Latin America
AXG also has a wider presence, with entities in Brazil and Mexico.
“I don’t know whether we do anything with them in the short term, but they exist and there’s actually people on the ground with quite a lot of assets under management,” Dickinson added. “I couldn’t really comment as to what we would hope to achieve there.
“In six-to-12 months, we certainly will have a presence there without question, because it is attractive. It’s definitely a market that we’re going to explore.”
Sheikh added that a lot of firms have tried to enter LatAm but “failed”.
“It’s important for us to really understand what it is that we’re dealing with before we jump in, because we don’t want to be one of those firms who do try to attack everything at once, and then ultimately end up landing flat on their face,” he said.
“It’s important to understand exactly what we’re dealing with, what we can and can’t do.
“Then, I think once we feel more comfortable, we certainly will deploy more devices there and see how we make that possible.”
DFM offering
The AXG merger has also brought a UK-based DFM proposition into the firm, so what does that mean for the firm?
“We’re moving towards the DFM because it gives us a better control over the assets,” Dickinson said. “It allows us to create stringent in-house models. It allows us to control costs for the client and it’s a very robust machine.
“We’ve all met colourful characters who think you are mad for running a DFM in the UK.
“But we’re moving towards regulation. Other businesses, that will remain nameless, from what I see are moving away from regulation.
“What we’re trying to do is professionalise it. We’re trying to take the offshore ability to amass assets, and put them in the most robust locations.”
Sheikh also spoke about the long-term prospects of the DFM, with the “ultimate goal” being to allow external firms to use the operation.
However, he said “initially, it’s going to be probably more targeted for our existing clients”.
“We will streamline that proposition and make sure that it’s watertight; and then, certainly I think, why not expand it.”
UAE vs other hubs
The various M&A deals have given AHR Private Wealth plenty of opportunities away from its roots in the UAE.
So, does the firm still believe it is a main hub for the business?
Sheikh said: “I think there’s a lot of business still in the UAE. There’s a lot of people who maybe had advisers who have left and there’s still new people that come to the UAE.
“I think it’s always going to be a big part of our business. But Europe certainly poses a great opportunity, because there’s a lot of business. We want to also get involved in the region and build a book of clients.
“There’s probably a lot of AuM business there, which is ultimately kind of the goal in terms of where we want to get to.”
Serious business
Dickinson added: “The depth of the UAE market is huge. I don’t think there’s any service provision at all for your £5m – £10m ($12.5m, €11m) client in the UAE.
“I don’t know where they go because the private banks aren’t interested unless they get to £20m – £25m.
“And with the reputational issue of the IFA market, that would restrict those people going there.
“I do believe in the UAE hugely, but I think in terms of building a business, it’s probably easier in those regulated markets simply because it’s so well established and so trusted.
“And if we can repatriate the $1bn (£800m, €890m) we’ve got offshore into the UK, you’re seen as a serious business.”
Further deals
With two deals in quick succession, it would be naïve to think that the firm is stopping there.
AHR Private Wealth told IA that it hopes to get between $3bn- 5bn by July 2023.
“We have something in Asia that we think is interesting,” Dickenson added. “They’ve got about $200m in AuM.
“They don’t have any real way of extracting the full value of that and I think that we can help them with that.”
Sheikh said: “I think there’s probably going to be more of these types of conversations because we want to create value for everyone. If there is a discussion to be had, we’ll certainly entertain it and have a look if it enhances our proposition.
“The doors are open when it comes to business. But it’s about making sure we make the right decision.
“We don’t want to make hasty decisions and where we see value like AXG, then we will certainly go ahead and make that.
“We will expand into different areas in the future, but when that will be, I don’t know.”
