The cost of the acquisition wasn't disclosed but it will increase London-based ARCH GroupÆs holding in FPG to 49%. FPG plans to use the capital injection to expand its presence in Asia and the Middle East through organic growth and mergers and acquisitions. ARCH will use the acquisition to expand its investment product offerings through FPGÆs existing presence in Asia and the Middle East.
ôAs a result of the alliance FPG will aggressively grow by organic means in its existing and affiliated offices,ö says FPG general manager Ian Jackson. FPG currently has offices or affiliates in China, Hong Kong, India, Indonesia, Japan, Malaysia, Thailand and the United Arab Emirates.
ôPlans are already in place to develop in Singapore, Vietnam and also for further growth in China,ö says Jackson.
Hong Kong-based FPG currently has over 10,000 clients and specialises in financial advice to expatriates, new individual wealth and small- and medium-size enterprises. The firm intends to use the capital injection to increase funds under advice to $4 billion by 2011 from $1.4 billion at present.
ARCH Group CEO Robin Farrell emphasises the two firms' complementary nature as the reason for the investment. ôThis acquisition further demonstrates our strategy of activist investing in innovative financial businesses. It is a transformation investment for their business and one which provides opportunities for ARCH to expand into their territories.ö
Farrell has been appointed as a director at FPG and the groupÆs representatives hold seats on FPGÆs board of directors.
While ARCHÆs acquisition of FPG gives the firm a sizeable cash injection, it does not come without inherent risks. Analysts, executives and investors agree that as the credit crunch intensifies it is a good time to focus on your own business and capital flows. Global recessionary trends and volatile stockmarkets increase the risk of investment losses.
ARCH and FPG have worked together on a private equity China energy fund. The fund invested in energy businesses in China and the Middle East.
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