LRI Group
Frank Alexander de Boer of LRI Group offers insights into why his company and Apex Group have teamed up, the advantages of their cooperation, and the challenges they may face along the way
Why does it make sense for LRI Group and Apex Group to team up?
At LRI Group, we anticipated that growth would be coming from both German speaking countries, which are our home market, and from international clients seeking to enter Europe within a regulated environment in order to meet investors’ requirements.
Three years ago we committed to a strategy that would enable us to attract and service international clients with a wide range of international solutions, such as management services, central administration, a depositary function and a securitisation platform. This strategy alos explicitly included merger and acquisitions. We were actively looking to join forces with an international service provider to overcome several hurdles more quickly. In these three years, LRI Group increased by over 50 percent growth in both financial assets and real assets whilst increasing profitability. Obviously, the growth of our client base and product range demanded an increase of professional staff and infrastructure. Apex Group provides both resources and we will now, therefore, be able to capture additional growth opportunities.
Through Apex, we gain access to a global network of over 37 locations, to expertise in a variety of asset classes and to an international network to help service and win new clients. Combined, we can offer a wider range of solutions to a wider range of clients than the groups could individually. This and the larger serviced asset base will enable us to approach clients that have not had us on the radar screen before. At the same time, we become an even more attractive employer to international talent. Individually, it would have taken a lot of time to build that up.
LRI and Apex are culturally a very good fit because both companies are client centered, servicing clients locally with flexible solutions. Apex was not previously represented in the German speaking market, so with this transaction that will come into place in Luxembourg with 500 people, 400 of them will be German nationals.
Therefore, it is also a huge commitment to service the German speaking countries, helping both fund initiators from overseas that want to come here as well as those from German speaking Europe that seek support to access international markets.
What are the advantages for LRI Group?
Access to an international network to service clients locally, and access to international solutions that we would not be able to offer without Apex are key.
Access to systems especially on the real asset administration side is another advantage.
Apex already operates IT systems that we do not yet have in place, and that we would otherwise have to invest in.
This combined with a very visible strong asset base will allow us to gain access to clients, that both companies individually would not have been able to acquire, which opens up a lot of new opportunities for the combined group.
How will clients continue to be maintained and supported?
Apex and LRI are very similar in the way that we deal with our clients. Both companies maintain client-oriented, flexible and local services as their core business philosophies.
Consequently, Peter Hughes, founder and CEO of Apex Group, and I have been visiting and speaking to many clients personally before the transaction was made public. The transaction and its rationale were well accepted. We committed that services will continue to be locally delivered to our clients by the same staff, this has been very reassuring to our clients.
It is extremely important for our client base to have a seamless transition. While clients have been informed that things are changing, they should only notice a change in terms of additional services being made available to them after the integration.
How can those involved ensure this merger is a success?
It is really important that clients and staff know what is going to happen, and that the vision is understood and shared. Our strategy was built upon input from the whole organisation to begin with, the willingness to change and make ourselves fit for the future.
In recent years, we have been actively working towards a suitable transaction and have prepared our organisation for this and have been able to grow our business, and at the same time, much faster than the market.
For example, we have installed decision processes closer to the clients, and provided intensive English language courses to make sure that people were mentally prepared and very willing to go this way. It is very important that the spirit and the common goal of creating a very competitive service orientated group come across on our message internally and externally.
As mentioned, together with Hughes we have in person informed our clients about the transaction, the reasons behind it and the next steps. All clients have Hughes and my direct phone number. So should there be any question, should our clients experience anything unwanted, despite all precautions, this can be directly addressed by us.
Again, it is very important that clients and staff understand what is happening and that they have access to the management if they have questions or if they want assurance. This is one of the most important things that we can do to motivate loyalty from clients and staff.
What has changed for both LRI Group employees and clients?
Firstly, the transaction has to be approved by the authorities, which they have been aware of for nine months. Therefore, we expect the approval process to take approximately three months.
We have a very clear vision of what we want to accomplish. We have no reason to quickly rush through this integration process. We will make sure that our clients receive the same level of service throughout the process. Client-orientation is at the centre of our decisions, as client satisfaction has been the reason for LRI and Apex to be able to grow faster than the market.
The integration of the different entities in Luxembourg will take some time. The objective is, to have all business lines, the management company, the central administration and the depositary bank located in one office in Munsbach by the beginning of next year. We have already welcomed the former Deutsche Bank Alternative Financial Services team in our building, our future colleagues of Warburg Invest Luxembourg have also moved to Munsbach recently. This allows for a lot of new, interesting and pleasant exchanges. So the new group is visibly being shaped, and get-togethers are being planned.
Our clients will be able to pick these services individually or as a bundle.
What will be the main challenges in ensuring that this merger is a success?
The main challenge will be to integrate different working cultures and different nationalities. Obviously, we are still a very German company, around 95 percent of our staff are German.
The Luxembourg entities recently acquired by Apex DB Alternative Fund Services, Warburg Invest Luxembourg and M.M. Warburg & CO Luxembourg and Ipes will be merged with LRI Group in Luxembourg.
These represent different nationalities, cultures, and different operating models and cultures. They need to be integrated, which will happen based on our common vision of building a leading, client-focused and competitive organisation in a growing market environment.
We will become more attractive to clients and staff because we will be truly international, will have the ability to provide and deliver more solutions locally around the globe, have more domiciles to offer to clients and will be part of a powerful network.
As we are becoming more attractive, we will be growing even faster and will be more successful than we would be individually, this will open up chances to our clients and staff, which is a core binding element. This is a very motivating vision. If we can continue to bring that message across then it is going to be an exciting journey.
