Business

Barclays goes back to its roots and challenges the big US investment banks for family office business

Crippled by the 2008 credit crisis and rescued by its Middle East clients, Barclays, the UK banking group, has reinvented itself.

Rather than squeezing clients to cover the cost of bonuses and leverage during the credit boom, its drive is more closely aligned with client services sustainability and tech-driven innovation. 

By chance, or otherwise, its ethos has moved closer to its Quaker founders John Freame and his brother-in-law Thomas Gould who set up their business in 1690 to act responsibly. Which was why it thrived for centuries.

Family offices get a better crack at deals and associations developed by the bankers at Barclays than during the credit boom

Effie Datson became head of family offices at Barclays fifteen months ago. She sees the importance of using the past to inform the future, and carries the belief into her client work. 

“We need to know our origin stories and the people who start a family legacy want their values to carry through, through family members, sometimes for generations. It’s useful in dispute resolution. It helps you make decisions in a governance-orientated way rather than a personal view.”

Barclays often helps its clients draw up a family charter – a narrative describing their past and their aspirations, using input from every stakeholder.

Effie Datson

“It anchors the family wealth, and activities, in line with purpose, values and belief. It’s not a legal document. It’s a mission statement – a statement of principles – which can be amended through a consensus view.”

Datson is big on communication, as is new Barclays chief executive Jes Staley, a believer in teamwork and technology since his time at JP Morgan. Unusually, he has taken to Linkedin to explain his viewpoint, just as Freame and Gould drew the attention of customers to their bank by hanging the sign of a black eagle outside their first branch on Lombard Street. 

She says: “There’s been an enormous push within the bank to increase internal collaboration between different divisions and geographics. It’s made an enormous difference.” To back this up, Barclays website contains an avalanche of user-friendly personal and corporate narratives. Its wealth service offers investment products tailored to suit client behaviour. Diversity is embraced, though Barclays is not alone in this. 

Family offices get a better crack at deals and associations developed by the bankers at Barclays than during the credit boom. 

A Barclays client survey revealed that investors who went into 2021 were wary of market volatility and keen to invest in hedge funds. 

Datson used to run hedge fund platforms at Deutsche and UBP. Barclays started its own service for family offices earlier this year, offering access to quality hedge funds. The first to go the platform is an equity product from award-winning Hudson Bay Capital.

Barclays recently reopened its family office service to Singapore and Italy. It added bankers in France and acquired a banking licence in South Africa.

In pitching for family office business, Barclays is challenging heavyweight banks like JP Morgan and  Goldman Sachs, rather than an open goal.

So Datson likes to make a virtue out of Barclays’ position as a global investment bank with appropriate expertise in loans and mortgages, as well as venture capital. The bank offers a full range of structured products including third-party deals.

Datson also flies the flag: “Sometimes the British nexus matters to clients. The UK has a jurisdiction families feel able to trust. Many of them keep assets here.”

Last, but not least: “We have a deep commitment to sustainability which brings an entire ecosystem of opportunities.”

Barclays wants to be a bank with net-zero carbon emissions by 2050. It wants its investment portfolios to comply with the Paris agreement to cap temperature rises to two degrees.

Family offices share its concerns. In another Barclays survey, 83% of 300 family offices were fretting over climate change and 90% see it as relevant to their investing. 

Some family offices/businesses are going further. According to Datson: “A family we know well have transformed their entire oil refining business to green energy, as the younger generation took over.”  She points to a proactive approach by NextGen. 

Barclays applies ESG principles to its active investment portfolios. The private bank has introduced a green variant to its flagship multi-asset class strategy which has benefited from its exposure to quality growth stocks. Partly thanks to a tech exposure, its green equivalent has performed even better, since inception, with a carbon footprint 80% lower than bond and equity indices. Barclays aims to get it lower still through a carbon offset programme.

It can also provide opportunities to get stuck into green bonds. It recently led a $10 billion green bond issue for the UK government: “We can also help companies issue them after using a green screen.”

Datson adds: “One of the things that blew me away with our survey was that 70% of our respondents believe the transition to a net-zero economy is the greatest commercial opportunity of our age.”  

She notes Barclays has been selling an investment in a luxury yacht business that uses climate-friendly electric power, rather than diesel motors: “We’re looking for ten times the original money. I don’t think we’ll have to look for long.”

The Barclays venture ecosystem 

There is no shortage of VC initiatives at Barclays. For example, it backs 27 Eagle Labs focused on accelerating the growth of new ventures. It has developed Rise which helps the fintech community to grow. 

It supports Unreasonable Impact, in investor social and environmental solutions.  It has set aside $200 million to invest in sustainable ventures of its own. It has links with Future Planet Capital which puts a commercial spin on MIT-sponsored social impact ideas. It is backer to Impact Agora, a digital platform that facilitated co-investment deals worth $1.3 billion in the year to July. 

We allow our family offices to co-invest in some of the companies we have invested in. We might, for example, put $5 million in and make a Series B fundraising available to our clients

It also raises funds for third parties, most recently G Squared, a top private equity firm that seeks to back ventures before they go global.

Ellie Datson says a thousand startups are participating in accelerator labs across the world. Barclays commercial and investment bankers advise hundreds more growth companies: “They would be rapidly growing innovative companies. It could be AI or health tech – it could be anything.”

Many of these opportunities are nascent but could become VC equity deals for family office clients, as well as loan prospects: “We allow our family offices to co-invest in some of the companies we have invested in. We might, for example, put $5 million in and make a Series B fundraising available to our clients.”

As regards fundraisings in September, according to Crunchbase, it backed AlphaSense, an AI platform for professionals; Form3, a payment service and Econcrete, offering green building solutions; 80 Acre Farms, a Cincinnati-based vertical farming company, and debt for Eurostar. 

It helped raise a $1.2 billion hydrogen fund launched by Jo Bamford, whose family owns the JCB excavation group. Going further back, it was backer to on-line financial services group Revolut. Exits have included THG, the online retailer, Uber and Zeta Global, a marketing firm.

Its family office clients also have the chance to invest in hedge funds. According to Datson. “Our prime broking clients have a capital introduction service. So we have clients who invest in hedge funds which we connect to our colleagues in prime brokerage. They can have bilateral discussions about interesting new hedge funds.”

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