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Magazine Issues » September 2019

Sponsored feature: Two become ONE

Merging_blocksTwo CEOs from Luxembourg’s fund governance and third-party management company (ManCo) sector have joined forces to launch what they believe is a new revolutionary enterprise: ONE group solutions.

Previously competitors, former Carne Group Luxembourg CEO Steve Bernat and ex-group CEO of FundRock Management Company Revel Wood, have set aside past commercial rivalries to create what they intend to be a new generation of solutions for the asset management, insurance and asset servicing sectors.

Even when rivals, it is clear that the two founding partners had a lot of respect for each other. The relationship grew from a game of pétanque in Monaco in 2013 – a ‘big four’ consultancy firm had invited a group of its senior industry contacts at FundForum, the annual asset management conference, to test their prowess at the Provençal sport. Bernat and Wood were paired together in the same team – and proved to the competing field that they could work well together as allies, rolling out as winners at this game of throwing precision.

This, they mused, might be a prelude to what could be possible should they find opportunity to team up in future. And winding the clock forward six years, this opportunity is now taking shape in the business world.

“It has rarely happened in the asset management industry that chief executives of two leading management companies in Europe, previously fierce adversaries, have decided to partner up,” says Bernat. “That is a personal story. Business is about people and it is the professional respect that we have for each other, but also the admiration that has grown on a personal basis, that has provided the foundation for this new venture.” Indeed, even when running their respective businesses at Carne and FundRock, the two made opportunities to spend off-duty time together during trips promoting Luxembourg with ALFI and Luxembourg for Finance.

“The strength of our association”, says Wood, “is that we both have different and complementary talents”. He describes Bernat as the best commercial CEO in Luxembourg, with a rare ability to build deep relationships with clients and prospects – a virtue he’s always admired.

For Bernat, Wood’s strategic vision, combined with his strong values and client focus, has led to his success as a senior executive – a skill that was evident in abundance when he steered FundRock’s business safely through the RBS exit in 2015, expanding the business into three new geographies, establishing new alternative investment solutions and expanding its assets under management (AuM) fourfold in three years.

This combination of Bernat’s eye for a transaction and Wood’s strategic vision - and their common conviction about building long-term relationships with their teams and clients - provides a powerful mix. But both are adamant this is not just about individuals. “It is about creating and sustaining a successful team and building trusted relationships with clients, underpinned by delivering on promises,” says Wood.

As word got around that these two respected figures were putting a new venture together, experienced specialists started to get in touch to inquire whether they could be part of the action. This has enabled ONE group to build a talented and motivated group of staff across its four component companies, without having to go to market.

“Our view is that one can learn skills and gain experience, but it is not possible to teach attitude and aptitude. We have had the luxury of being approached by the best talent in the market and we have therefore been able to hand-pick a team. This is highly unusual in the currently overheated employment market in Luxembourg. We expect to have about 20 team members in place across the four companies by the end of this year, starting with 15 today. We have been overwhelmed by the level of interest,” says Wood.

Group structure
ONE group solutions is majority-owned by its management team, but it has also raised funding from a selected group of institutional and private investors. Believing in the two founders, these provided the seed capital and were selected by the founders for their strategic importance as partners in key target markets and product solutions.

ONE group solutions is a group of complementary companies with a clear focus on fund and corporate governance in Luxembourg. The first of these is a third-party fund management company business (“ONE fund management”), a Luxembourg-based “Super ManCo” business supporting both UCITS and alternative investment fund products.

The second is “ONE Corporate”, a corporate secretary business. For many fund governance, third-party management company groups or fund administrators, the corporate secretary arm is often something of an ‘add on’, observes Bernat, and, as a non-core service, it is not delivered especially well. For ONE group, there is a commitment that this will be one of its core businesses, applying advanced technology and the experience of its senior staff to deliver significant advances in service quality, by being very focused in this niche area.

The third corporate entity, the regulatory and compliance consulting business (“ONE regulatory”), is a NextGen tech-enabled regulatory consulting business, meeting the demand of customers for guidance through the complex and ever-moving sea of regulation applied to asset management companies, distribution agents and asset owners in Luxembourg and worldwide.

Underpinning each of these companies is a fourth arm, a technology company (“ONE technology”), that applies what the owners intend to be a “Next Generation” of technology to drive innovation and service efficiency.

A common thread running through each of these business lines is that they are all focused on fund governance. “All four companies in ONE group centre on supporting the board of directors and ensuring we enhance the quality of governance which Luxembourg is well known for,” says Wood. “We provide management company services to the board. The corporate governance solutions target the board of directors, and so do our regulatory advisory and technology solutions. This positions our services right at the heart of decision-making within the client organisations that we serve.”

For the founding partners, this understanding of client requirements is fuelled by an involvement with the fund governance and third-party management company segment in Luxembourg since its early days. “With this experience, we have seen what works well and we have an understanding of where we can improve on the sector’s shortcomings,” says Wood.

A deficiency, perhaps, is that some firms in this sector are providing a wide array of services – management company services, fund administration, custody and fund depositary, company secretarial, regulatory advisory and others – to a wide community of clients and this has sometimes resulted in conflicts, a lack of focus and concerns over service quality. ONE group solutions offers modularised products delivered by segregated individual companies, enabling the customer to buy on a component basis according to their needs and buying behaviour. By segregating these functions into four distinct companies, the group aims to avoid potential conflicts resulting from failure to maintain clear separation between business lines.

Importantly, the venture starts with a clean slate and is not weighed down by challenges of legacy technology or outmoded organisational structures. “Everything that we build is adapted specifically to today’s regulations and customer requirements,” says Wood. “For example, these are already adapted to Circular 18/698 in the Luxembourg market, enacted last August, which provides guidance on fund governance and ‘substance rules’ for Luxembourg investment management companies. We have both worked primarily in large organisations in the past with established technology and business structures and this now provides a unique opportunity to design a business and technology framework that aligns exactly with our own vision, tailored to our clients’ needs.”

The goal, notes Bernat, is to offer next-generation solutions. “That starts with how we recruit and motivate teams, the way we have built our technology and how we have implemented the most efficient processes, allowing us to excel in client excellence,” he says. “We don’t sell services, but we offer solutions that add value to our clients’ businesses.”

Next generation
In summarising their ambitions, the pair indicate that their goal is not to be an ‘industry disruptor’, but to revolutionise by continually and proactively evolving with clients’ needs. “We focus on our clients’ business, their pressures and the demands of their customers, combining technology and top talent to deliver service excellence and value for money,” says Wood. The focus is on quality and on building long-term relationships. Customers, team members and investors in the company must benefit from the values of the company, rather than being simply contributors of value in preparation for a future ‘exit’.

In building these foundations, the two founding partners express a message of gratitude to service partners across the Luxembourg industry that have helped them to reach this point – to technology partners (soon to be announced publicly) that have worked with ONE group to deliver “NextGen” technology, consultancy firms that have helped with registration and legal advice, through to investors that have provided financial backing, business expertise and support in extending the customer network. “Our goal,” they say, “is to be credible and to offer quality and value from day one. We have been deeply grateful for the support we have received across the industry in meeting this objective.”

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