What does the future hold for UBS and Credit Suisse’s private funds groups?

By the time you read this, it’s possible that UBS’s acquisition of Credit Suisse will have taken another unexpected turn. Market sources have been quick to point out to Private Equity International that this is very much a live situation, with a report this week that a February deal to spin Credit Suisse’s Private Fund Group off to CS First Boston may be unwound.

What will the acquisition mean for both banks’ private funds groups? It’s a question that remains very much up in the air until the transaction closes.

Credit Suisse’s private fund group has historically been a force to be reckoned with. Its team is one of the more established placement agents and advisory firms in private markets, having launched almost three decades ago – prior to UBS’s. According to Credit Suisse’s website, its team boasts 77 professionals – a figure slightly higher than UBS’s nearly 70-member Private Funds Group.

The team’s services comprise private placement – including for directs and co-investments – and secondaries advisory. On the fundraising side, Credit Suisse has raised more than half a trillion dollars across 380 funds since 1994, and the team is known for working on one of the largest numbers of live primary fundraising mandates at any given moment in time, compared with peers. In 2018, PEI recognised the unit’s co-head, Michael Murphy, in the Rainmaker 50 list of most influential fundraisers, noted for having worked with many first-timers, including some of the earliest secondaries and private debt funds, helping to break ground in markets that have since grown considerably.

On the secondaries side, its team has advised on $37 billion’s worth of transaction volume, and ranked fourth by deal volume among intermediaries who responded to affiliate title Secondaries Investor’s most recent Secondaries Advisory Survey. In 2020, the bank combined its GP-led secondaries and direct and co-investment capabilities under one umbrella named Capital Solutions.

So what exactly is UBS acquiring and what could the future of the combined private funds units look like? That’s a question that even insiders at the bank don’t appear to know yet, with one telling PEI that the bank is still figuring that out.

“Who would they allow?” says the source. “What will happen to any overlap? Would some of [Credit Suisse’s PFG team] still get spun out? It’s possible. All that work is being done [in] real time. The [acquisition] got put together in three-to-four days. Now we’re scrambling to see what we’re actually buying.”

One thing is clear: while a combined private funds group at acquirer UBS will lead to a bigger team, it will be the calibre of the people who’ll define the group’s position in the market. Longstanding Credit Suisse execs such as Paul Van Hook and Jeremy Duksin, former co-heads of the Capital Solutions group, have already exited the business, with Duksin joining Milwaukee-headquartered mid-market bank Baird this year. Van Hook’s current status is unclear.

In the words of one GP who has worked with both banks: “It’s all about the people, not about the brand.” UBS private funds execs will be keeping this front of mind over the next few months as they figure out the future of the two units.