From prey to predator: Arca’s turnaround boosts its profile
Until recently, Arca Asset Management was the subject of several takeover attempts. Then Ugo Loser took control of the firm, turning it into a predatory force in the market.
Offence is the best defence. This neatly sums up the strategy of the new management at Milan-based Arca Asset Management Sgr.
Having been the subject of a number of takeover attempts, the Italian group this year has turned its strategy to the offensive, having already announced and completed a number of industry acquisitions to consolidate its market position this year.
Arca was founded in 1983 by 12 Italian co-operative banks, and has about 120 distributors across Italy. It manages €16bn assets both for institutional and retail clients, as well as more than €1bn for pension funds.
But in mid-2011, the asset management company was at a crossroads, facing two options for its future if it wanted to survive: either accept a takeover by a competitor, or frame a painful but drastic restructuring strategy to relaunch its business.
A new direction
Ugo Loser (pictured) was appointed chief executive of the company in May 2011, in his own words “to make Arca one of the main players in the Italian asset management industry”.
As part of this strategy, Loser has implemented a number of changes to the structure of the company to enable it to meet the demands of the current challenging market conditions.
The product focus has shifted to fixed income and to total return assets strategies. Meanwhile, the company’s operating cost has been cut to just above 50% of the revenue from the initial 90%. Cost saving has been implemented through a strong restructuring of the personnel organisation, with the number of employees reduced from 180 to just 70 over the past 12 months.
Most functions that were previously performed in-house are now outsourced to six different providers that are in charge of the control chain and of most support services.
“The success of the restructuring is to be attributed to the severity of the situation. The staff were aware that without this plan the company would have been sold or, in the worst scenario, gone bankrupt,” Loser says.
Following the restructuring, Arca is now moving into the second phase of its business plan: growth through acquisition. In September, Arca negotiated the acquisition of the mutual funds business of Optima Sgr, part of the Banca Popolare dell’Emilia Romagna (BPER), based in Reggio Emilia.
According to the agreement, 13 harmonized open-ended mutual funds of the Optima Funds System, with assets €940m at the end of November 2011, have merged with the corresponding mutual funds of Arca. BPER also signed a ten-year commercial agreement for the distribution of Arca’s mutual funds, strengthening the partnership with the company.
More recent and more relevant is the agreement signed on 26 April with for the acquisition of the mutual funds business of Vega Asset Management, which Arca expects to finalise by the end of September.