UBS Group AG is adding staff to its wealth-management business in Israel as a boom in the country’s technology industry turns a growing number of entrepreneurs into millionaires.
The Swiss bank at the end of October hired two more people to advise clients and now has 60 employees managing the wealth of the country’s richest residents, said Kobi Faigenbaum, vice chairman and chief executive officer of UBS Wealth Management Israel. The bank may add more people to the unit to meet demand, he said.
“The number of Israeli millionaires is rising, almost by definition,” Faigenbaum said in an interview in Herzliya, north of Tel Aviv. “About 40 to 50 percent of the calls we get or the people that we approach are from high tech. It’s not just the entrepreneurs themselves, but it’s also the lawyers and accountants that serve the industry.”
UBS’s wealth management business, which accounted for 65 percent of the Zurich-based bank’s third-quarter revenue, has close to 1,000 Israeli clients, each with at least the $1 million needed to open an account, said Faigenbaum. The number of households with wealth exceeding that amount has risen a fourth year to reach six percent of all Israeli homes, according to Boston Consulting Group.
Last year saw a record number of high tech "exits," when startups sell themselves through either mergers and acquisitions or initial public offerings, according to a PricewaterhouseCoopers LLC report. Among these was Mobileye NV’s IPO, the largest for an Israeli company in the U.S., which briefly made billionaires of founders Ziv Aviram and Amnon Shashua, according to the Bloomberg Billionaires Index.
Israel’s new tech millionaires tend to be young with investment objectives that may be more aggressive than the traditional clients most banking wealth units are used to, said Uri Krausz, founder of Toledo Capital AG, a boutique family office based in Zurich. Their preferred vehicles tend to be what they know best, like private equity projects and investing in other tech startups. “It’s a totally different approach,” said Krausz, who was an executive director at UBS’s private wealth management before starting Toledo. “Someone who is 25 or 30 years old, who rarely had any contact with the world of finance, first has to understand what wealth planning, asset protection and asset preservation is all about. Many of them aren’t yet married and if you haven’t yet been there, it’s hard to understand.”
Krausz takes on clients with a minimum of $5 million. Most of the people he works with are Israeli and almost all his new customers made their fortunes in high-tech industries.
Top Talent Israeli tech M&A deals have reached an estimated $9 billion in 2015, according to the IVC Research Center, which analyzes the country’s high-tech industry. That’s almost twice as high as last year’s tally and approaching the highest level in almost a decade.
UBS, the world’s biggest manager of money for the rich, expects to need more staff to advise a fresh batch of wealthy entrepreneurs, said Faigenbaum, who will be stepping down within the next few months to be replaced as CEO by Udi Dahan, formerly of HSBC Holdings Plc.
“Whenever we have a good opportunity to hire top talent we do it,” he said. “Since Israel is a key strategic market, a growing market and we’ve shown success since we started in 2010, we have a mandate to carry on investing in talented people.”