Julius Baer Group Ltd., the third- biggest Swiss wealth manager, agreed to acquire 20 percent of Kairos Investment Management SpA and sell an onshore Italian advisory business to the Milan-based firm.
Kairos Julius Baer, holding the combined Italian wealth management operations, will be overseen by Paolo Basilico, president and chief executive officer of Kairos, and have two Julius Baer representatives on its board, the Zurich-based bank said today, without disclosing the terms of the transaction.
Swiss private banks are building onshore networks in Italy and Germany as a crackdown on tax evasion pushes wealthy clients to repatriate money from offshore accounts in Switzerland. Julius Baer, which had 184 billion francs ($194 billion) of client assets at the end of August, declined to disclose how much is managed by its Italian business, while Kairos has about 4.5 billion euros ($5.7 billion) under management.
“Household wealth in Italy is still very high so it’s an attractive market,” said Christian Stark, a Zurich-based analyst at Credit Agricole Cheuvreux SA, who recommends buying Julius Baer’s shares. “In case of any further tax amnesties in Italy you want to have a strong position in the country.”
Baer rose 0.6 percent to 32.92 francs in Zurich as of 1:05 p.m., valuing the company at 7.1 billion francs. The stock has declined 8.5 percent this year.
Julius Baer expects to add as much as 72 billion francs of client assets with the acquisition of Bank of America Corp.’s Merrill Lynch wealth management units outside the U.S. The firm plans to publish an interim management statement for the first 10 months of the year on Nov. 14.
Julius Baer expects the Kairos deal to close in the first half of next year and said the combined entity will apply for a banking license to focus on onshore wealth management.
“The Italian market is somehow missing a state of the art private bank,” Kairos’s Basilico said in a phone interview, adding that it may take about 12 months for the license to be approved.
Buying the Kairos stake won’t necessarily boost the managed assets reported by the Swiss bank, said Jan Vonder Muehll, a spokesman for Julius Baer.
The Kairos deal is a “strategic participation” to increase Julius Baer’s presence in the domestic Italian wealth management market, Julius Baer Chief Executive Officer Boris Collardi said in a statement.
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