Singer & Friedlander Group plc

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Singer & Friedlander Group plc

21 New Street
Bishopsgate
London EC2M 4HR
United Kingdom
Telephone: (+ 44) 20-7623-3000
Fax: (+ 44)20-7623-2122
Web site: http://www.singer-friedlander.com

Public Company
Incorporated: 1920
Employees: 1,409
Sales: £585.76 million ($874.4 million)(2000)
Stock Exchanges: London
Ticker Symbol: SFL
NAIC: 523110 Investment Banking and Securities Dealing; 522293 International Trade Financing

Singer & Friedlander Group plc is one of the United Kingdom’s last remaining independent merchant banks, providing investment banking services to an essentially private clientele. The firm offers a wide range of services, such as asset management and independent savings accounts, including offshore banking facilities, unit trusts, and financing facilities. In the late 1990s, Singer & Friedlander’s forecast of an extended bear market led it to separate from its Collins Stewart brokerage subsidiary, which was sold back to its founders in 2000. The company also has moved to liquidate its 55 percent share of Sweden’s Carnegie Group, spun off in a public offering in June 2001. Singer & Friedlander’s stake dropped to just 32 percent after the IPO. Although these two units represented the largest part of the firm’s net profits, Singer & Friedlander’s moves have enabled the company to streamline its activity and focus on its core investment banking services. The company also has suggested an interest in stepping up its venture capital investments. Singer & Friedlander is led by chairman and CEO John Hodson. The firm, one of the top 250 listed on the London stock exchange, posted more than £585 million in 2000.

Stockbroker Origins at the Turn of the Century

Julius Singer founded a stockbroking firm in London in 1907. Singer was joined soon after by Ernst Friedlander, a native of Germany, whose family had been a prominent name in Berlin banking since the middle of the previous century. Fried-lander himself had been the founder of the first merchant bank to open in South Africa, and he had been named as chairman of the Johannesburg stock exchange. Friedlander’s background gave the young firm a strong boost into the growing London exchange.

World War I disrupted trading, and the company, possibly because of its ties with Germany, was forced to withdraw from the London exchange. Instead, Singer and Friedlander entered the banking industry. After taking on two new partners, Julius Stern and Max Ullman, in 1920, the company incorporated as a partnership under the Singer & Friedlander name.

Singer & Friedlander established itself as one of the most prominent merchant banks in London’s City. By 1957, the firm was able to go public. The public offering helped make the bank an attractive takeover target, however. Over the next 30 years, Singer & Friedlander was to find itself under a number of new owners.

Yet losing its independence did not stop Singer & Fried-lander from continuing to grow and develop its product portfolio. The bank was one of the first British merchant banks to invest in the booming Japanese market in the 1960s, as that economy shifted from a developing market to that of one of the world’s economic drivers. Singer & Friedlander also became interested in the Spanish market, which, while languishing under the Franco dictatorship, was to see a renaissance after Franco’s death in the mid-1970s. Back at home, Singer & Friedlander was expanding from its London bank, targeting the United Kingdom’s regional markets with satellite office operations, such as an office opened in Birmingham in 1963. Other locations included offices in Bristol and Nottingham.

In 1971, Singer & Friedlander opened its own offshore banking facility. Taking advantage of liberalized tax policies and other opportunities for financial secrecy, Singer & Fried-lander launched a subsidiary operation on the Isle of Man. Geared toward overseas residents seeking to shelter from the often crushing tax burdens of their home countries, Singer & Friedlander (Isle of Man)Ltd. became the first of London’s merchant banks to open facilities on the island. Another diversification for the bank came in the 1980s, when Singer & Friedlander became involved in the international trade of third world debt.

Last of the Independents for the 21st Century

Singer & Friedlander regained its independence in 1987—and soon found itself one of the few remaining independent merchant banks in a rapidly consolidating British banking sector. At the start of the 1990s, Singer & Friedlander returned to its roots, setting up a new stockbroking arm through the 1991 acquisition of Collins Stewart. That firm specialized in both corporate financing and brokerage services and came to represent a major share of Singer & Friedlander’s operating profits, particularly with the stock market boom in the late 1990s. Singer & Friedlander initially bought majority share in Collins Stewart, before acquiring full control in 1998. The brokerage maintained, in large part, autonomous operations throughout the decade, however.

Singer & Friedlander made a number of investments and acquisitions in the 1990s, including that of a dog racing track and a participation in Peoples Phone, an early entrant in the United Kingdom’s mobile telephone market. The company stepped up its acquisition activities in the mid-1990s, with the objective of entering markets that were being left behind in the fast-building consolidation of the country’s financial sector, such as car leasing and other financing operations.

An important acquisition came in 1994 when Singer & Friedlander acquired a 55 percent controlling interest in Swedish brokerage Carnegie Group. That firm had its roots in Scotland, when George Carnegie, a member of Scotland’s noble class, came to Sweden. Carnegie’s son David established D. Carnegie & Co in 1803, building the business into one of the region’s largest trading houses. In the 1930s, Carnegie ventured into banking with the acquisition of Langenskiòld, which was placed under the Carnegie name. The company also developed a brokerage division. By the 1950s, as the world’s trading houses faced new competitions from the rise of air-based cargo, Carnegie shifted entirely to banking activities. The deregulation of the European financial market in the 1980s led Carnegie to begin its international expansion, opening offices in Luxembourg, London, New York, and in Southern Europe, while also becoming one of the leading investment banks and brokerage firms in the Nordic market.

Toward the end of the decade, Singer & Friedlander, now led by Chairman and CEO John Hodson, began to reorient its operations. In 1998 the company sold off its capital markets operations in a management buyout, in a deal worth nearly £1 million. Two years later, as the stock market boom, driven by the growth of Internet and other high-technology stocks, appeared to be reaching a plateau, Singer & Friedlander decided to begin an exit of this market. In 2000, the company released Collins Stewart in a management buyout, netting the company some £120 million. At the same time, Singer & Friedlander announced its intention to separate itself from the Carnegie Group—despite that subsidiary’s strong profits.

Nonetheless, Singer & Friedlander, recognizing the onset of a bear market, stuck firm to its decision to spin off the Carnegie Group in an initial public offering on the Swedish stock exchange, which reduced Singer & Friedlander’s holding to slightly more than 30 percent. The IPO, which valued Carnegie at up to $750 million, was scheduled for June 2001. Singer & Friedlander then announced its intention to concentrate on its core investment banking and merchant banking operations.

Company Perspectives:

We are an independent financial services group, involved in merchant banking, investment management, stockbroking and property. We provide a speedy, skillful and innovative service to our clients in all areas of business, via our extensive network of offices throughout the UK and overseas. We constantly look to improve our services to customers, whilst making strategic advances into new product areas. Our aim is that our client service should be second to none.

Key Dates:

1907:: Julius Singer founds London brokerage.
1920:: The company is incorporated as Singer & Fried-lander.
1957:: The company is listed on the London stock exchange.
1963:: Regional expansion occurs; a Birmingham office is opened.
1971:: Singer & Friedlander (Isle of Man)Ltd. is launched.
1987:: Singer & Friedlander becomes an independent bank.
1991:: Collins Stewart is acquired.
1994:: Carnegie Group (Sweden) is acquired.
1998:: The company exits from capital markets operations.
2000:: The company spins off Collins Stewart.
2001:: Carnegie Group is listed on the Swedish stock exchange.

At the same time, the bank began a £64 million property disposal program, enabling it to build a war chest with which to pursue acquisitions to boost its new core operations, a move begun in February 2001. The new direction was meant to make the bank less vulnerable to the volatile markets. Yet, as one of the last remaining independent merchant banks in London, Singer & Friedlander itself remained an attractive takeover target in the quickly consolidating global banking industry.

Principal Subsidiaries

S&F Isle of Man; S&F Investment Funds; S&F Investment Management; S&F Banking Division; The Carnegie Group (Sweden; 32%).

Principal Competitors

3i Group plc; Aberdeen Asset Management plc; AMVESCAP plc; Barclays Plc; Close Brothers Plc; Durlacher Corporation plc; Old Mutual plc; Schroders plc; St. James’s Place Capital; UBS Warburg.