Business

Swiss-based Investor out to replicate Iconiq Holdings

“The last decade has been a supercycle for private banks and asset managers, but the bull market is coming to an end,” says Decisive Capital Management founder Elie Chamat, out to replicate the success of Iconiq Holdings, adviser to a string of US billionaires.

But markets are teetering and volatility is rising: “If you are not strong on performance and not strong enough to embrace alternatives, you are going to have a problem.”

Chamat believes passive funds will be pulled down with the market, as the outlook for active management improves. He points out that Tesla founder Elon Musk has taken a similar view, arguing they own too much of the equity market. 

Elie Chamat

Geneva-based Decisive offers services to billionaires reluctant to invest in their own family offices, particularly in challenging markets when quality advice is hard to hire. Chamat says: “I don’t want to invest with the crowd – or the passive crowd – I want us to be the authority on smart capital.”

Iconiq Holdings is a new-age $83 billion investment office co-founded by Chamat’s friend Divesh Makan, a former Goldman Sachs banker. It is renowned for advising a string of renowned US entrepreneurs, many of whom circle around Silicon Valley billionaires around Facebook’s Mark Zuckerberg. Iconiq’s clients are fast becoming the most important providers of capital on the planet. It provides them with multi-family office advice at an early stage of their careers, aiming to make its services indispensable. Iconiq’s heady growth in a bull market could bring its own challenges, as sentiment turns bearish, but there is no visible sign of Iconiq running out of steam as yet.

Chamat says: “I’ve always had in mind to do something similar to Iconiq.  In fact, I believe we can do better. Our business has $6.5 billion and Iconic is $80 billion – but they are seven years older than us.”

Chamat concedes that Decisive needs to accelerate to catch up. But he stresses: “Our target in the next seven years is no more than $25 billion. Ours will be a long-term story. Here, at Decisive we are a family. And we have set limits on the number of families we take on.”

Decisive, like Iconiq, advises families on deals, serving them up with turbo-charged ideas relating to investment, lifestyle and loans. Where Iconiq advises US billionaires, Decisive seeks business in Europe and the Middle East, whose oil billionaires are fast developing their clout. 

“Our core target is the ultra-high net worth client –  maybe he’s almost a billionaire. But he doesn’t want to have his own office, managing people. He wants to externalise all that,  because it all costs money. We become the family office – the multi-family office.”

Chamat, a Syrian Christian, used to work for Saudi Arabia’s Samba private bank and HSBC in Switzerland. From 2009, he became Deutsche Bank’s head of wealth management in Saudi Arabia, becoming its top producer of business.

Chamat was unimpressed when over-expansion culminated in expensive scandals at Deutsche: “That’s what I learned from banking. You’re always looking for more business. You’re never satisfied. And it’s not our model.

“We offer an endowment approach where we offer 40% direct ownership of technology, real estate, credit opportunities and 60% in a more traditional portfolio where we find the best managers in class. This would include hedge funds and passive, although I would expect passive to shrink.”

Chamat says his clients prefer 60% of their money to be managed through traditional market-driven strategies, including hedge funds. Third-party managers and risk strategies are selected by Decisive affiliate Trajectoire Capital Management, founded by Arie Assayag, former head of alternatives at UBP.

Chamat is excited by the spread of deals which get offered to Decisive due to the size of its client base. He says Decisive hears of 5,000 potential deals a year.

Geneva-based Decisive offers services to billionaires reluctant to invest in their own family offices, particularly in challenging markets when quality advice is hard to hire

Now the stock market is creaking, Chamat believes private assets will multiply. Goldman Sachs recently said they will treble to $30 trillion over five years. Clients get more hungry for advice in difficult markets and Chamaty says he is tooled up to provide it:  “We carry out extensive due diligence before offering opportunities to clients. Only 1% of the deals we get offered are suitable. Direct investing in part of our DNA.”

During the recent boom, family offices often invested in VC through the personal recommendations of their friends. Investors opted for VC funds, SPACs and crypto without always considering their quality, or structure. Many of them backed active funds which went on to lag the market. 

Chamat is confident Decisive can provide the necessary advice. He says: “In direct technology, Decisive targets a triple return in three to five years. In real estate, it wants 20% a year over five years. In credit, it would aim for 8% to 12% over three years. Since 2019 we have achieved an annualised return of 32% with less risk than a balanced portfolio.”

In VC, Decisive does take a view on seed capital, but it believes pre-IPO opportunities are worth a bigger bet, often generating new opportunities at an advanced age. And disruptors would often have better growth prospects than relatively uninspiring companies listed on the stock market. For example, after 64 funding rounds, worth $7.8 billion, SpaceX is a very late stage company but its skills in space are continually generating new opportunities, such as its satellite-based Starlink internet business.

Decisive has lately reviewed companies using tech to build extensive human capital and supply chain platforms. Just because stock market investors say growth stocks are out of fashion, that doesn’t mean the disruption story is over. Decisive itself is a disruptor in the Swiss private banking sector. It recently added to its footprint by buying the Swiss division of Artorius Wealth. 

Recent tech-driven deals, according to Crunchbase, include Aeler Technologies (container shipping) Kilo (a Vietnam retail platform); Solarisbank (platform banking), and Wefox (digital insurance).

In real estate, Decisive is seeking opportunities for a post-Covid bounce back in valuations. It believes that the analysis required in real estate has become incredibly complicated, due to issues like climate change and geo-politics, and repays study. 

The yield adjustment taking place in bonds has also complicated the world of private credit, with greater stress more likely on the quality of borrowers, bearing in mind the strength of their business model. As part of its service, Decisive also supplies loans to clients to finance their deals. It can arrange loans for those who want to make lifestyle purchases.

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