Bilan’s first ‘Man of the Month’ in 1989 has re-built his business three times with Unigestion, has lived in three different countries and divides his time between three passions in life.
Bernard Sabrier was Bilan magazine’s first ‘Man of the Month’ in June 1989, a series profiling captains of industry who have long been its hallmark. Max Mabillard’s 1989 article is reminiscent of the late 1980s ‘raiders’ who inspired the Gordon Gekko character in Oliver Stone’s film Wall Street, released two years earlier.
Although he had just taken control of what was then the sixth largest bank in the country, Banca della Svizzera Italiana (BSI), Bernard Sabrier had almost nothing in common with the Wall Street raider, except for one thing: he did not come from a long line of financiers. Born in 1953 to French parents and having moved to Switzerland at the age of three, he attended school in Annemasse (France) and then in Geneva.
Bernard showed very little interest in finance at first. Rather, he saw himself as a photographer. Nevertheless, he worked at Paribas as a trainee in 1972, then joined the Renault finance department in 1974. There he acquired a taste for finance, but still wanted to be independent.
By Fabrice Delaye – Article published in Bilan on 19 June 2019
In 1976, aged 23, he acquired Unigestion, the finance business his father Henri founded five years earlier, for 500,000 Swiss francs. “I paid half in cash up front and the rest two years later,” he says today. Asked why he did not inherit the business, he replies: “Your parents are there to provide you with values, culture and contacts. Not to give you money.”
So he went on to earn it. He carved out a niche for Unigestion in an area neglected by the banks: bond trading. His intuition proved profitable during the 1980s, when the Eurobond market took off.
In parallel, he developed private wealth management. Above all, he searched out talent and gave them a stake in his business (Unigestion is still more than 70% owned by its management and the Famsa Foundation). Patrick Fenal , a specialist in bonds and later hedge funds, joined in 1978. Two years later, Daniel Olchanski left his position as head of the largest French SICAV to come and support Bernard’s business in Geneva.
Not only did these hires give the young banker credibility, he also discovered his own way of working with his employees. “Some managers work alone, but I work within a team,” he says. “I understood early on that you need to surround yourself with smarter people in order to increase your potential. After that, the challenge is to accept to lose and not to be offended if your solution is not chosen.”
The formula worked. In 1987, Bernard Sabrier floated Unigestion on the Swiss stock exchange, after ten years of exceptional growth. This growth is reflected in the anecdote he tells today: “My father had kept 1% of Unigestion. He sold it after the IPO for far more than the 99% stake he had sold to me ten years earlier.”
In this sunny climate, the October 1987 crash came like a thunderbolt. Bernard Sabrier saw it as a warning. In order to secure Unigestion’s long-term survival, he had to diversify. That was the start of the second phase, with the raid on BSI in 1988.
I WORK WITHIN A TEAM. THE CHALLENGE IS NOT TO TAKE OFFENCE IF YOUR SOLUTION IS NOT CHOSEN
The BSI gamble
Having just 65 employees and a total balance sheet of 437 million francs, Bernard Sabrier set out to acquire BSI, which then employed 1,606 people with a balance sheet of 7.9 billion. Despite this difference in size, Unigestion’s profit (13.9 million in 1988) was one third of the size of BSI’s. Its equity (206 million) was equivalent to 80% of the Ticino-based institution. This gave Bernard Sabrier some leverage. He launched his raid like a private equity transaction (an enduring passion).
Not all went according to plan. Although Unigestion’s teams increased BSI’s cash flow and profit, Bernard Sabrier’s plan was even more ambitious. His idea of selling off the commercial banking arm to build a purely private banking platform was met with resistance from Ticino amid concerns about jobs. Protective of their independence, the managers of BSI sold few of Unigestion’s products.
With interest rates starting to rise in the early 1990s and the United States aggressively targeting Swiss wealth management, Bernard Sabrier decided to put his ego aside. He started looking for a buyer for BSI. As Ticino attracted many private banks with little presence there, he quickly sold 18% to Mitsui Taiyo Kobe Bank before finally selling BSI to SBS in 1992.
Although it heralded profound changes in Unigestion’s activities, the operation was nonetheless profitable. According to Bernard Sabrier, “Once the 500 million loans were repaid, this sale brought in between four and five times the initial capital stake.” A study published by Lombard Odier at the time confirmed that Unigestion came out stronger from the venture. The return on Unigestion’s equity was 9.8%, compared with 6.9% for Vontobel and 5.9% for Sarasin. The balance sheet total was 774 million and assets under management were estimated at more than 3.5 billion. The company employed 110 people.
“Playing with the big boys”
When Max Mabillard wrote Bernard Sabrier’s profile In 1989 for Bilan magazine, the first remark was about his age. At the time, Swiss finance was not used to seeing a 35-year-old playing with the big boys to acquire a bank (BSI). The journalist even speculated that an older player such as Tito Tettamanti might be pulling the strings. This was not the case. However, his intuition that Bernard Sabrier was a pioneer for a new generation of entrepreneurs was entirely correct.
Early signs of the end of banking secrecy
For Bernard Sabrier, there were other lessons to be learned from this experience. During the 1990s, he became convinced that private wealth management was going to become a challenging business due to American pressure.
Not that this business was underperforming at Unigestion. Those years were dominated by investments in large hedge fund managers, a very private club into which Bernard Sabrier began to make inroads with the likes of Julian Robertson, Stanley Druckenmiller and George Soros from the mid-1980s. When Paul Tudor Jones – the trader who predicted the crash of 1987 – came to visit Switzerland, he met with him.
As such, his decision to sell his private wealth management business in 1997 by transferring Banque Unigestion to Edmond Safra’s Republic National Bank – which would itself be swallowed up by HSBC two years later – seemed baffling at first, but proved visionary ten years on, when Swiss banking secrecy came to an end. “At that time, we were wrong,” he said, before coming back to the start of what would become his third life. Once the sale went through, there was not much left of Unigestion. “We had virtually no institutional clients and barely one billion under management. We had to start from scratch.”
Focus on institutional clients
This is, of course, not entirely accurate. Bernard Sabrier and his team relied on experience encapsulated by two traits that still set Unigestion apart: a boutique side as a niche operator, and an avant-garde approach to financial products. They also had a sizeable network. They gave access to this network to their new target: institutional clients. A priority that also led to Unigestion’s withdrawal from the stock market in 2003. “In order to align our own time horizon with the very long term one of our clients, such as pension funds and university endowment funds.”
This strategy served the company well, especially in overcoming the difficult period of the dot-com crash. However, since the financial crisis of 2008, hedge fund returns were no longer as attractive. “Since 2008, there is an elephant in the room called the central banks. This has completely changed the nature of the markets by eliminating the asymmetries exploited by hedge funds,” Bernard Sabrier explains.
OUR BEST IDEAS COME FROM OUR CLIENTS. WE ARE OBSESSED WITH THE RELEVANCE OF WHAT WE DO
The Children Action foundation operates in many countries, including Myanmar
Unigestion drastically reduced its exposure to hedge funds that had reached up to 80% of capacity and diversified into three sectors: risk premia/multi-asset, risk-managed equities and private equity. “Above all, we realised that by understanding risk factors, we could replicate these strategies while avoiding hedge funds’ high management and performance fees.” This internalisation led the company to invest more in technologies whilst moving closer to the academic world (Imperial College, Université Paris-Dauphine, etc.) in order to understand risk. “Today’s research is tomorrow’s performance,” Bernard Sabrier concludes.
He is all the more convinced that Unigestion’s internal research has enabled the development of a “risk-managed equities” division based on an innovative financial instrument. Since 1995, the Head of Equity Management, Fiona Frick, has been developing a “minimum variance” tool. The main criterion of this strategy is the selection of underlying securities, their volatility and sophisticated construction models that optimise performance by reducing risk. “The first rule of making money is not to lose it,” Sabrier points out. He gave this strategy five years to prove its worth before it became a pillar of Unigestion. As a testament to its success, Fiona Frick took over from Patrick Fenal as Group CEO in 2011.
Bernard himself focused on a third strategy in an area he has been passionate about since his raid on BSI: private equity. “I like the intellectual and macro-economic challenge of hedge funds, but private equity is more in touch with reality.” With the profits from the sale of BSI, he started investing in private equity funds such as Carlyle, CVC, Cinven and Blackstone, before one of his employees suggested that he should structure this portfolio into a fund of funds in the mid-1990s. Since the acquisition of the Zurich-based private equity fund Akina four years ago, private equity has become a pillar of the company and represents one third of the funds under management.
In order to support these developments, Bernard Sabrier also embraced globalisation. In 1998, he moved to London. “I thought it was important to be on site to manage our expansion there. At the end of 2007, I did the same thing in Asia, where seniority is decisive for clients.” He has been living in Singapore ever since.
For him, this move away also marked the beginning of the transfer of the company. “This coincided with the idea of giving Unigestion continuity. By moving away from the centre, I’ve given my colleagues Fiona Frick and Régis Martin more freedom.” Bernard Sabrier remains involved as Chairman of the Board, the Strategic Committee and various investment committees.
With nine offices around the world and 240 employees, Unigestion has become global. Its strategic choices have resulted in the doubling of funds under management in ten years, to 23.2 billion francs (including around 7.5 billion in private equity and 12 billion in risk-managed equities funds). Institutional clients account for 94%*.
“The market has split in recent years,” Bernard Sabrier notes. “On the one hand, you have the huge shopping centres, such as BlackRock and Amundi. On the other, there is room for specialised boutiques that provide tailored services, such as Unigestion.” He notes that “90% of our assets outperformed their benchmark indices by 2.1% or more and 100% had lower volatility than their benchmark*.”
Bernard Sabrier has thus survived three radical transformations of his business, as well as three major financial crises. When asked how he did it, he replies: “Our best ideas come from our clients,” before adding, “we are obsessed with the relevance of what we do. However, what ultimately keep us going, is the rigour of our investment processes and a ceaseless curiosity, more so than good ideas.”
Three passions that feed off one another
While he has had three careers with Unigestion (trader, private banker and finally, asset manager), Bernard Sabrier also has three constants in his life: his family, Unigestion and Children Action. Founded 25 years ago to help prevent teenage suicide, this foundation has not only supported some 15,000 teens and their loved ones via Malatavie, in partnership with Geneva University Hospitals (HUG), but has also worked with 14,000 children in Vietnam, Myanmar and Cameroon (among others) and with teenage and underprivileged mothers in Argentina, Peru and Romania. It has created 16 schools and distributed over 4 million school meals. In total, more than 100,000 people have received support estimated at over $100 million through Children Action.
For Bernard Sabrier, who, just a few weeks ago embarked on a three-hour drive, a one-hour boat trip and 25 minutes on a scooter to support one of the 40 volunteer surgeons he helped enlist in Vietnam, Children Action is a key part of his life as an entrepreneur.
This does not stop the businessman from remaining critical of philanthropy. “It is still the most wasteful economic sector. Just because you’re doing good, doesn’t mean that you’re doing it well,” he says. He therefore uses the main quality for this activity that he sees in a manager: “Distinguishing the essential from the superfluous.” For example, by fully covering the foundation’s administrative fees, so that 100% of the funds raised are actually distributed.
Of course, these various lives represent a huge personal investment. If there is one leadership quality that shines through Bernard Sabrier, it is his enthusiasm. “I don’t count my time and my idea of a schedule is very flexible,” he explains. “I draw strength from my various activities and I find a balance in my imbalance. But ultimately, isn’t this what life is all about?”
In Geneva, Malatavie is saving lives
Although he lives in Singapore, Bernard Sabrier remains very involved in Geneva, not only through the headquarters of his company but through the work of his Children Action foundation and the Malatavie entity for adolescents in crisis. In 1995, Professor François Ladame, a psychiatrist specialising in youth suicide, received support from Bernard Sabrier to set up a state-of-the-art centre within the Geneva University Hospitals, comprising a crisis centre, a prevention unit and a day care centre. Its work includes campaigns to raise awareness of youth suicide, for example the Fepalcon 500 campaign, or those led by friends of Bernard Sabrier, such as Catherine Deneuve, Michel Boujenah and Dany Boon. With a team of 24 people, including six doctors, Malatavie also provides medical care.
*Data correct as at June 2019