Consultants Hewitt Bacon & Woodrow are entering the French investment consulting market with the purchase of the investment advisor Finance Arbitrage for an undisclosed sum.
France’s investment consulting industry lags way behind those of the UK and Netherlands. French institutions have typically bypassed consultants when outsourcing portfolios and they tend to employ balanced managers, meaning little work for investment consultants.
Nick Fitzpatrick, global head of investment consultancy at Hewitt Bacon & Woodrow, believes this is set to change. “Legislation in France has changed in such a way that it is going to encourage saving and the growth of financial consulting both in terms of monitoring and the general issue of constructing a portfolio and picking who you have to manage it. The market is young and the changes are relatively recent but it’s an exciting area,” he says.
Fitzpatrick is keen to stress Finance Arbitrage’s operational independence. “It would be quite inappropriate to attempt to deal with this from an Anglo Saxon viewpoint. It is not our intention to try and impose a grand central strategy that fits the US.
“It’s our intention that the people there will be responding to the local market as they see fit with the minimum bureaucracy from London or Chicago.”
As elsewhere in Europe, disappointing results from balanced managers has led to French institutions to opt for specialist managers, a move that has produced work for foreign investment advisors.
Electricité de France, the state-owned electricity company decided earlier this year to employ specialist managers for a e2bn fund it is launching to pay for decommissioning nuclear power stations. Three other companies that build nuclear power plants are thought to be doing much the same later this year.
The acquisition comes just after the merger of Hewitt Associates and Bacon & Woodrow and the combined company’s IPO in New York.