The foundations for ZEDRA’s culture of independence and innovative thinking were laid in 2016 when the core of the current business was acquired from Barclays by an independent investor group with a significant combined history of trust, corporate and fund industry experience. Under family ownership, ZEDRA defined its strategy, ensuring it always brought fresh thinking to client challenges, no matter how complex.
Recognising the potential this unique approach offered, late last year Corsair Capital, one of the longest-standing private equity firms focused on the financial services industry, purchased a majority share of the business (pending full regulatory approval). With Corsair’s significant financial backing, the business is now well positioned to embark upon the next phase of its planned growth. The characteristics of ZEDRA which appealed most to Corsair included its differentiated value proposition, blue-chip client base, and long-term prospects, all of which will continue to be delivered through Corsair’s backing of ZEDRA’s existing ambitious management team.
Based in key jurisdictions across Asia, Oceania, the Americas and Europe, the firm’s team of nearly 500 industry experts aims to create and deliver bespoke solutions to its client base, which includes high-net-worth individuals (HNWIs) and their families, international corporations, institutional investors and entrepreneurs seeking diversified active-wealth solutions. The principal business lines include corporate clients and business owners, family wealth, employer solutions, and fund solutions.
“Our commitment to delivering bespoke solutions to our clients is at the forefront of what we do,” says Deconinck. “And our mission is to seamlessly anticipate the evolving needs of our clients’ businesses and wealth by expanding and strengthening services we can offer, so our clients are free to focus on their ambitions and do more of what they like”.
He explains that the backbone of the ZEDRA business lies in the strong commitment and long track record of a highly experienced team, building trusted relationships and encouraging an entrepreneurial spirit at the firm. “Our motto is ‘Do More. Achieve More’ and this commitment underpins everything we do,” he reports. “Whilst at the same time, we strive to expand our clients’ horizons and also maintain the highest standards of corporate governance.”
Deconinck explains that the firm has a long history in Asia but that in his role at the centre of the firm’s strategy he recognises that the level of sophistication in the region is now shifting very rapidly and therefore that demand for ZEDRA’s offerings will also increase apace.
”There was talk about this sort of shift some 10 years ago,” he comments, “but it is now happening and we see growing demand for higher value services, such as bespoke trustee services where we basically take care of the families, their businesses, their investments, all from structuring point of view, all in a very sophisticated manner, far more so than in the past out here.”
ZEDRA and AIA join forces in trust
On March 25, ZEDRA announced a new alliance with AIA Hong Kong to launch a trust referral service for AIA Hong Kong’s selected HNWI customers. AIA has the highest number of insurance policies in Hong Kong, serving over three million customers and is the first insurer in Hong Kong to offer the referral services of ‘Standby Trust’ and ‘Tax & Legal Advisory’ for its HNWI clients. The new trust referral service is designed to support the legacy planning requirements of these clients.
The ‘Standby Trust Referral Service’ will be offered to selected premium customers of AIA Hong Kong and ZEDRA will assist eligible customers by setting up and administering a Hong Kong Law governed Standby Trust for the family or provide other trust planning solutions as needed. The move is especially relevant as it addresses particularly prevalent succession planning needs amongst HNWIs clients Hong Kong and further afield in the region.
Deconinck puts this move in context by explaining that Asia’s HNWIs and their families and businesses are now also more willing to pay appropriately for these services, evolving their protection and management levels from straightforward structures, such as a shelf company, or BVI company, into real estate planning, avoidance of probate, asset protection, and so forth.
“A lot of people from the PRC are also structuring their affairs now in a more elaborate way,” he observes, “and therefore using all types of techniques available. All this amounts to the biggest change we have seen here, away from like the run-of-the-mill into truly bespoke services for HNWI and ultra-HNWIS families, which are this firm’s sweet spot.”
Three core challenges for Asia’s HNWIs
Deconinck offers further insights into the motivations and the needs of these families. “They really have three key challenges, as we see it, and where we offer clear solutions,” he reports. “Succession planning is one, with the families typically large and spread out. And if you talk about the family business, the challenge is who is going to run it, who is going to have the power and obviously structuring this in a more organised way to balance needs and preferences is one of the big drivers right now, especially aiming to professionalise these family businesses so they can endure.”
The other challenge, he observes, is risk diversification, which is especially crucial for people living in certain countries, including China. “You don’t want to keep all your eggs in one basket, so how are you going to diversify your risk especially if you still have a big business, for example in China. How can you structure that so that you are diversified so that your country risk is no longer entirely China or another jurisdiction? We have solutions for that.”
The third challenge is reducing complexity for the HNWI families. “There are often many family members involved, with lots of different roles, so the challenge is to help them to administer their affairs, to be their bookkeeper so to speak so that we take a lot of these administrative burdens out of their hands. We are not investment managers, but we can alleviate a lot of these core administrative requirements from their lives.”
Building on the pedigree
Deconinck notes that the ZEDRA business which emerged out of the Barclays stable had enjoyed a solid history and pedigree going back to the 1960s. “Since the buyout, we have roughly doubled the business, and now have 500 people now worldwide, with 90% of them only working on the trustee and private client businesses.”
He explains that the differentiation comes from combining corporate services, trust services, and fund administration. “We say that we look at the client, the family, and we decide how we can best employ our capabilities to serve that client. In short, we are not like a corporatised business, organised along business unit lines that each have their own P&L. Instead, we have only one business unit, the client. And in reality, compared with the main competition, that makes a big difference.”
Trends reinforcing the ZEDRA proposition
Deconinck also comments on some of the key trends the firm observes. “In the new world of regulation, we live in a world of transparency,” he observes. “The firm can build structures that help the clients organise for privacy, and for confidentiality, but not for the hiding of assets and income from the tax authorities. Transparency is here to stay.”
The second trend he sees is geopolitical dislocation. “Look at what’s happening in the world,” he says. “We had the Arab Spring and its aftereffects, we have Brexit going on, we have things happening in parts of Africa, we have Venezuela with all its problems, and so forth. This is all leading to geopolitical dislocation and to massive immigration flows, not just the well-noted mass immigration, but also immigration by choice by very wealthy people and wealthy families. That is a super important trend.”
He explains that as families with wealth move around the globe, they need structuring, for example, often it is the pre-immigration trust, then other structures are required, and careful attention to tax treaties depending on where the family lives, where they want to invest, and on several other factors. “This type of geopolitical dislocation is a very central trend that is also driving our business,” he adds.
And the third trend Deconinck sees is increased complexity in legal matters, tax matters, regulatory matters. “Where things used to be very simple, where you had people buying a BVI off the shelf and bringing their own director, that is all over,” he reports. “It has to be different from now on.”
Deconinck closes the discussion by commenting that ZEDRA is defining itself today not as a trust and corporate services firm or a fiduciary firm, but as a service provider for people with active wealth. “Active wealth is basically what we are talking about here,” by which we mean families with active investments in real estate, businesses, private equity, and so forth. That is where we make a difference, we are at our best when things are more complicated and when sophisticated solutions are required.”