Investment Banks
Credit Suisse deal to expand UBS's private markets footprint
March 20, 2023
UBS's rushed acquisition plan for Credit Suisse for 3 billion Swiss francs (about $3.2 billion) puts the financial services powerhouse in a position to bolster its private markets business overnight.
The all-stock deal is poised to create a global wealth manager with combined assets of $5 trillion comprising UBS's $3.4 trillion and Credit Suisse's more than $1.5 trillion.
Terms of the deal call for UBS to retain Credit Suisse's assessment management business, which includes its wealth management, fixed income, commodities, hedge fund, private equity and financial advisory operations. UBS plans to wind down Credit Suisse's investment banking business, which is expected to generate annual cost savings of $8 billion by 2027.
Credit Suisse's asset management arm has invested in at least 62 funds globally across private equity, venture capital and real assets. Like its counterpart in UBS, the division has a private fund business that provides placement agent services.
PitchBook data shows that Credit Suisse has at least $5.6 billion in AUM through closed-end funds that it manages itself or through affiliates. Just over half the $10.2 billion recorded for UBS.
Prior to the deal, Credit Suisse had been planning to fold its private funds group into its First Boston investment banking unit, which had been the target of a possible spinout, with the likes of Apollo Global Management named among possible buyers. In a statement, Credit Suisse said it plans to continue with restructuring plans in partnership with UBS.
Credit Suisse has also been active in venture capital, investing through two separate arms. Its Credit Suisse Entrepreneur Capital unit launched in 2010 to invest in domestic startups. As of 2019, that unit had made 52 investments, including drone maker Fotokite and healthtech startup Ava.
On top of Entrepreneur Capital, Credit Suisse also offers Next Investors, which targets growth equity investments in tech companies related to the financial services industry.
UBS has been ramping up its VC investments in recent years through its corporate venture arm (coincidentally, also called Next), which launched in 2020 with $200 million to invest in fintech and the broader tech industry.
It is not yet clear how UBS will merge Credit Suisse's investment activities with its own. While the two banks' VC units share similar investment strategies in terms of sector focus, at UBS, the emphasis is primarily on early-stage investments.
And it wouldn't be the first time Credit Suisse and UBS have collaborated in venture investing. In 2019, Credit Suisse set up the Swiss Entrepreneur Fund, which is now distributed jointly with UBS. The vehicle, which focuses on growth investments, closed in 2020 after raising 250 million Swiss francs.
UBS and Credit Suisse declined to comment beyond their initial statements.
Leah Hodgson contributed to this report.
Featured image by Daniel Leal/Getty Images
The all-stock deal is poised to create a global wealth manager with combined assets of $5 trillion comprising UBS's $3.4 trillion and Credit Suisse's more than $1.5 trillion.
Terms of the deal call for UBS to retain Credit Suisse's assessment management business, which includes its wealth management, fixed income, commodities, hedge fund, private equity and financial advisory operations. UBS plans to wind down Credit Suisse's investment banking business, which is expected to generate annual cost savings of $8 billion by 2027.
Credit Suisse's asset management arm has invested in at least 62 funds globally across private equity, venture capital and real assets. Like its counterpart in UBS, the division has a private fund business that provides placement agent services.
PitchBook data shows that Credit Suisse has at least $5.6 billion in AUM through closed-end funds that it manages itself or through affiliates. Just over half the $10.2 billion recorded for UBS.
Prior to the deal, Credit Suisse had been planning to fold its private funds group into its First Boston investment banking unit, which had been the target of a possible spinout, with the likes of Apollo Global Management named among possible buyers. In a statement, Credit Suisse said it plans to continue with restructuring plans in partnership with UBS.
Credit Suisse has also been active in venture capital, investing through two separate arms. Its Credit Suisse Entrepreneur Capital unit launched in 2010 to invest in domestic startups. As of 2019, that unit had made 52 investments, including drone maker Fotokite and healthtech startup Ava.
On top of Entrepreneur Capital, Credit Suisse also offers Next Investors, which targets growth equity investments in tech companies related to the financial services industry.
UBS has been ramping up its VC investments in recent years through its corporate venture arm (coincidentally, also called Next), which launched in 2020 with $200 million to invest in fintech and the broader tech industry.
It is not yet clear how UBS will merge Credit Suisse's investment activities with its own. While the two banks' VC units share similar investment strategies in terms of sector focus, at UBS, the emphasis is primarily on early-stage investments.
And it wouldn't be the first time Credit Suisse and UBS have collaborated in venture investing. In 2019, Credit Suisse set up the Swiss Entrepreneur Fund, which is now distributed jointly with UBS. The vehicle, which focuses on growth investments, closed in 2020 after raising 250 million Swiss francs.
UBS and Credit Suisse declined to comment beyond their initial statements.
Leah Hodgson contributed to this report.
Featured image by Daniel Leal/Getty Images
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