Julius Baer sale of asset manager stalls over risk of losing staff

[MILAN] Julius Baer Group Ltd's plan to sell its Italian asset manager is stalling on concerns over its price and the lack of agreements to keep top performers from leaving, people with knowledge of the matter said.

The Swiss wealth manager, which values its Kairos Investment Management SpA at more than 450 million euros (S$684 million), may need to consider offers closer to 350 million euros to revive talks, said some of the people, who asked not to be identified because the matter is private. Potential investors also won't submit bids without retention agreements in place, some of them said.

Julius Baer hired Goldman Sachs Group Inc at the end of last year to advise on the sale, the people said. The unit has attracted interest from funds including Apax Partners, TA Associates, Oaktree Capital Group and Helman & Freedman, as well as banks such as Mediobanca SpA and Lombard Odier, according to one of the people.

Chairman Paolo Basilico founded Kairos in 1999 and owned the company with 20 other managers. In 2013, Julius Baer bought an initial stake of 20 per cent with an option to increase it. The company boosted its holding to 80 per cent in 2016 and last year bought the remainder.

A long delay would be another blow for Julius Baer, which has been struggling to retain top bankers since Bernhard Hodler took over as chief executive officer after the surprise defection of Boris Collardi to competitor Pictet Group. Mr Hodler, speaking on Bloomberg TV, said he isn't overly concerned about losing talent to rivals, noting that the bank hired a net 105 relationship managers last year. The shares are up about 16 per cent this year.

Julius Baer has also grappled with reputational issues over its vetting of clients in the past decade. The bank's board of directors has kicked off succession planning for the CEO role in recent weeks, people familiar with the matter told Bloomberg.

Representatives of Julius Baer and Goldman Sachs declined to comment.

BLOOMBERG