Alpha - September 2007 - (Page 71)

Proﬁle Fortis Investments Banking on By Randall Devere Alternatives Shanghai, has no illusions about the next phase of his expansion campaign. “Building a brand name in investment management is an extremely challenging process,” he says. “It’s very difﬁcult to build and very easy to destroy.” With close to $1 trillion in client assets and some 60,000 employees in 50 countries, Fortis Group is one of Europe’s 15 largest ﬁnancial institutions. It’s also that contiFortis Group is nent’s No. 1 credit card issuer, among its top ten insurers and counting on its a world leader in corporate trust, derivatives clearing and acquisition of New fund administration. Fortis York fund-of-hedgePrime Fund Solutions, its hedge fund and fund-of-hedge-funds funds ﬁrm Cadogan administrator, has $284 billion in assets under adminisManagement to tration and $190 billion in assets under custody, second boost its global only to Netherlands Antilles– asset management based Citco Group. But Fortis has lagged behind ambitions. in alternative assets, which are vital to any money manager with global aspirations. Up to its neck in traditional longonly products, the ﬁrm is using funds of hedge funds to gain size and leverage on the alternatives side. “We needed to expand into this area for scale, for experience and for intellectual capital,” says Will Braman, Fortis Investments’ U.S. CEO, based in Boston, who is playing a central role in aligning Cadogan with the larger asset management operation. Fortis is far from alone in acquiring funds of funds. Banks and investment houses began snapping them up during the bear market earlier this decade to attract institutional investors looking for a way into hedge funds. Things SEPTEMBER 2007 • INSTITUTIONAL INVESTOR’S ALPHA • 71 F ortis Investments CEO Richard Wohanka has been running money for decades, but he still thinks like the trader he once was. He began his career in 1975 at European Banking Co. in London buying and selling bonds. “I come from a trading desk,” says Wohanka, 54, who became CEO in November 2001. “And when you’re a trader, you don’t care about an index. What you care about is making money. As a ﬁrm, we are categorically of the opinion that you should use cash as a benchmark. It’s an absolute-return model, really.” Last fall Fortis Investments — the asset management arm of Belgian banking giant Fortis Group — bought a 70 percent stake in Cadogan Management, a relatively small but well-regarded New York–based fund-of-hedgefunds ﬁrm. Cadogan, whose CEO, Stuart Leaf, had long professed an unwillingness to sell the business he had cofounded in 1994, will remain independent from Fortis. Cadogan took charge of Fortis’s fund-of-hedge-fund assets in April and now manages $4.7 billion, more than double the $1.8 billion Leaf ’s ﬁrm brought to the deal. The acquisition of Cadogan is part of a big push into alternative investments by Fortis Group, which is counting on its higher-margin products to boost the proﬁtability of its E131 billion ($179 billion) asset management business. For Wohanka, the deal is a key step toward his goal of transforming Fortis Investments into a global player with the same clout as its parent company’s banking and insurance franchises. To realize this ambition, Fortis must contend with larger rivals like Switzerland’s UBS and Credit Suisse, which have more-established asset management platforms that include hedge funds. Wohanka, who set the stage for future growth by restructuring Fortis Investments into a worldwide network of investment centers from New York to London to

Table of Contents Feed for the Digital Edition of Alpha - September 2007

Contents Letter from the Editor Longs & Shorts Pension Corner: Keeping the Faith The Good Guys: Going Public Interview: Barry Bausano - A Delicate Balance Cover Story: Cruel, Cruel Summer Profile: Phil Cooper - Alternative Flight Plan Strategies: Marshall Wace - TOPS in Its Field Profile: Fortis Investments - Banking on Alternatives Research Center: Top Equity Trading Firms Alpha Bytes: Desktop Duel Unhedged: Commentary - The Taxman Cometh

Alpha - September 2007

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