Viel & Cie

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Viel & Cie

253 Boulevard Pereire
Paris
France
Telephone: +33 01 56 43 70 20
Fax: +33 01 55 37 91 99
Web site: http://www.viel.com

Public Company
Incorporated: 1920
Employees: 1,910
Sales: EUR 557.2 million ($$704.7 million) (2004)
Stock Exchanges: Euronext Paris
Ticker Symbol: 50049
NAIC: 523120 Securities Brokerage

Paris-based Viel & Cie is one of the world's top three over-the-counter (OTC) financial brokers; that is, the company acts as an impartial intermediary brokering major financial deals. Viel has acted as a driving force in the rapid consolidation of this market, which is expected to narrow to just a handful of major players in the mid-2000s, and as few as three leader-specialists in each of the financial broker segments. Viel, however, has long taken a diversified approach to the financial market, and as such has built up a network of subsidiaries spanning the full range of brokering sectors, including the markets for exchange rates, equities, commodities, and interest rates, among others. In support of its diversified base, the company has established a globally oriented network of subsidiaries and offices in the major financial cities in 18 countries. Acquisitions have provided the motor for Viel & Cie, and include the purchase of a 35 percent stake in Singapore's Ong First Pte Ltd. in 2005, and of Chapdelaine & Co. in New York in 2004, among others. The latter purchase has boosted the share of the United States in Viel's overall revenues to nearly 50 percent. The company's other major revenue producers operate in London and Tokyo. Although financial brokering remains Viel & Cie's primary operation, the company also has launched its own online brokering subsidiary, Bourse Direct, which operates the Capitol.fr web site, one of France's top five online brokers with 9,000 customers. Viel & Cie is listed on the Euronext Paris Stock Exchange, and is led by Patrick Combes, chairman of the board and architect of Viel's expansion. In 2004, the company posted revenues of EUR 557.2 million ($$704.7 million). The acquisition of Chapdelaine is expected to boost total revenues past EUR 700 million ($900 million) in 2005.

Building a Broker in the 1980s

Viel & Cie was founded in Paris in 1920 and operated as a financial broker, with a specialty as a broker for the Parisian money market. The company went public in 1962. At the end of the 1970s, however, Viel & Cie remained a small-scale operation, with just three employees and annual revenues of less than FRF 600,000 (approximately $100,000) per year.

In 1979, however, Patrick Combes, a French native who had spent the early part of his career working in the financial sector in the United States, took over Viel & Cie. Then just 27 years old, Combes gave himself six months to see if he would be able to build the brokerage into a viable, competitive broker. Of note, Combes decided to break with the brokerage sector's tendency at the time to focus on niche markets. As Combes told Entreprendre: "The logic of a niche, especially in the financial professions, is very difficult. One might be able to juxtapose niches, but surviving on just one without having a critical size means taking the risk that at any moment one may become a target, or see oneself completely overtaken by the turn of events. In addition, there are criteria such as scale and minimum product coverage that one must take into account."

Combes established initial strategic goals of gaining market leadership in France and taking Viel & Cie public. To achieve these goals, the company quickly began putting into place Combes's strategy of diversifying its range of services. In 1982, for example, the company began brokering interest rate options, becoming the first in France to take on this niche. The following year, the company became the first in the market to establish a dedicated currency exchange operation, which formed the basis of a new international department. The company continued to boost its currency business, boosting its operations particularly in the French franc exchange market at the middle of the decade.

Viel & Cie began putting into place a structure for its future public offering at the middle of the decade. In 1986, the company created a new holding company, Viel & Cie Finance. This vehicle, which retained control of a majority share of Viel & Cie, also permitted the company to expand its range of operations beyond Viel & Cie's core business, without implicating Viel & Cie itself. In the same year, for example, the company created a new subsidiary, STAFF, which stood for Société de Transaction et d'Arbitrages sur Future Financiers, and permitted Viel & Cie Finance to extend the group's range of operations into the French futures and arbitrage markets.

Viel & Cie continued expanding its own range of financial products as well. In 1987, the company expanded into the brokering of treasury bills, which required a doubling of the company's size. This necessity, and the need for further capital to expand its operations—notably, to an international level—brought Viel & Cie to the Paris Stock Exchange's Secondary Market in 1988. Viel & Cie Finance nonetheless retained majority control of the business, and continued to hold nearly 55 percent of the company into the mid-2000s.

Acquiring Scale in the 1990s

The public offering provided Viel & Cie with greater name recognition. Combes also welcomed the constraints imposed by opening the group's shareholding structure to outside investors, telling Entreprendre: "It's a good thing to live with the worries of a listed company—whether in good times or bad times, it's necessary to develop solutions." Following its public offering, Viel & Cie expanded its range of operations again, into securities, in 1990, establishing a dedicated subsidiary, MIA, in that year.

With its new capital backing, Viel & Cie began acquiring scale in France in the first half of the 1990s. The company bought out part of the operations of interbanking specialist Degez in 1991, then acquired control of the banking intermediary specialist Julien Olivier & Cie. The following year, the company was merged into Viel & Cie's operations. At the same time, Viel & Cie Finance returned to Degez, buying up that company altogether. In 1995, the company redeveloped its government securities business into a separate, dedicated subsidiary, Viel Eurovaleurs.

By then, Viel & Cie had established itself as the number two player in the French financial broker market. Yet on a global level, with annual sales of the equivalent of just EUR 34 million, Viel & Cie remained a minor player. Indeed, the global financial broker market had long been dominated by British and, to a lesser degree, American brokers.

Combes, however, became determined to guide Viel & Cie to the top ranks of the global markets. Recognizing that establishing its own operations from scratch into the various financial capitals would require an extreme investment, in effort and financial capital, the company developed an expansion strategy based on acquisition of existing companies. Viel & Cie took its first step internationally in 1995, when it acquired fellow French firm Maison Debeausse, giving it control of its New York-based subsidiary, Debeausse Inc. The company also moved into the Luxembourg market that year, acquiring Arbitrage Change S.A. that year.

Viel's most significant acquisition came the following year, with the purchase of a 61 percent stake in Switzerland's Compagnie Financiere Tradition (CFT), then the world's sixth largest broker. CFT had been founded by André Levy in 1959 as Compagnie Financiere et de Credit, and had originally specialized in eurodollar deposits. The company quickly became international, opening a subsidiary in London in 1961. In 1968, the company changed its name to CFT, and in 1973 went public with a listing on the Geneva Stock Exchange. In that year, CFT opened an office in New York as well. The company continued to expand internationally in the following decades, adding an office in Hong Kong in 1978, in Singapore in 1979, and in Italy in 1980, as well as operations in Tokyo (through its share of the Meitan Tradition Co. joint venture) in 1985 and Luxembourg in 1987.

In 1988, CFT itself became part of Banque Pallas Stern (BPS), which acquired a 61 percent stake. Yet that company's bankruptcy in 1995 gave Viel & Cie its opportunity, and in 1996 Viel acquired BPS's 61 percent of CFT. The takeover immediately boosted Viel's international presence and CFT became a major subsidiary in the Viel & Cie group. Viel & Cie continued buying up shares of CFT, boosting its holding to 74.5 percent in 1997. The takeover of CFT also gave the company control of Tradition Financial Services (TFS), a market-leading provider of OTC brokerage services.

Company Perspectives:

The broker is a completely independent player in over-the-counter (OTC) financial markets. Its role primarily consists of providing a point of contact for institutional clients seeking to buy or sell financial products. Regulatory constraints require the broker to act as a pure intermediary, taking no positions or dealing risks in the financial markets. Working at the very heart of the markets, the broker is in continual contact with leading players in the major financial centres (banks, insurance companies, large private companies, etc.), enabling it to acquire a unique, comprehensive knowledge of financial markets. Its chief functions are therefore: To ensure market liquidity and respond rapidly to its clients' needs; To respect the confidential nature of its clients' transactions. The broker receives a commission on each client transaction. The professionalism of its clients demands sophisticated expertise on the part of the broker in order to meet integrally its clients' needs. This expertise entails: A perfect knowledge of financial markets; A good understanding of its clients' needs and objectives; Providing superior quality, high value added service. VIEL & Cie is an acknowledged leader in the rapidly moving world of financial brokerage, adhering to the fundamental principles of confidentiality, expertise, competence and sophisticated service.

Global Top Three in the New Century

The takeover of CFT and TFS established Viel & Cie as the leading financial broker on the European continent, and gave the company a place among the world's top five. As the new century approached, Viel became determined to crack the top three. Part of the group's strategy for this effort was to position itself as a global technological leader. To this end, in 1999, the company acquired 47 percent of Infotec, boosting the company's technological capacity. Viel also recognized the Internet as an important brokerage tool for the future, and in 1999 created a new subsidiary, Bourse Direct, which launched an online brokerage, Capitol.fr. That site grew into one of the top five in the French online broker segment by the mid-2000s.

Viel also maintained the pace of its acquisitions. In 1999, the company bought up nearly 90 percent of Prominnofi, a specialist in European government debt transactions. In 2000, Viel added voice recognition capacity when it bought a stake in Vecsys, as part of its effort to position itself as a technology leader. Also in that year, the company boosted its New York presence through the acquisition of Asiel & Co. LLC. Created in 1878, Asiel had been a founding member of the New York Stock Exchange. Following its acquisition by Viel, the company was renamed Tradition Asiel, becoming part of CFT/TFS.

Viel's expansion continued into mid-decade. The company increased its technology capabilities with the creation of a joint venture with Volbrokers in 2001. In 2004, Viel acquired BCV Finance France from the Banque Cantonale Vaudoise. The company also purchased 10 percent of spread-betting specialist IFX Group plc, based in the United Kingdom. By the end of 2004, the company further enhanced its U.S. presence through the acquisition of Chapdelaine & Co., based in New York, with offices in Chicago, Palm Beach, and Long Island.

Viel established a presence in the South American market as well, opening a subsidiary in Santiago, Chile, at the beginning of 2005. Also in that year, the company boosted its presence in the Asian markets, buying 35 percent of Ong First Pte Ltd., a leading broker in Singapore. By the end of that year, Viel & Cie had grown into one of the global financial brokerage leaders, with a presence in 18 countries and annual sales expected to top EUR 750 million ($900 million).

Principal Subsidiaries

Arbitrage Change S.A. (Luxembourg; 99.93%); Arpège Finances; BCV Broking; Bourse Direct; Capitol; Compagnie Financiere Tradition (Switzerland; 70.42%); Elite Broker S.A. de C.V. (Mexico); Finacor & Associés S.A. (Belgium); Finacor Belgique S.A.; Finacor Deutschland GmbH; Financière Vermeer B.V. (Netherlands); Fincor SGPS (Portugal; 20%); Meitan Tradition Co. Ltd. Japan; 55.34%); Monecor (London) Ltd.; SCS Gestion Privée; SP Angel & Co. Ltd. (United Kingdom); TFS (Switzerland; 98.79%); The Recruitment Company Holdings Inc. (United States; 79%); Tradition (Asia) Ltd. (Hong Kong); Tradition (North America) Inc. (United States); Tradition (UK) Ltd.; Tradition Argentina S.A.; Tradition Asiel Securities Inc. (United States); Tradition Australia Pty. Ltd. (Australia); Tradition Bond Brokers Ltd. (United Kingdom); Tradition Chile Agentes de Valores Limitada; Tradition Financial Services GmbH (Germany); Tradition Financial Services Inc. (United States); Tradition Italia Sim S.p.A. (Italy); Tradition S.A. (Switzerland); Tradition Service Holding S.A. (Switzerland); Tradition Singapore (Pte) Ltd. (Singapore); Tradition Wertpapierhandel GmbH (Germany); VIEL Debeausse and Co. Inc. (United States; 91%); VIEL Tradition S.A.

Principal Competitors

ICAP (Garban Intercapital); Maxcor; Cantor Fitzgerald; Prebon; Tullett & Tokyo; GFI.

Key Dates:

1920:: Viel & Cie is created in Paris.
1962:: Viel & Cie goes public on the Paris Stock Exchange.
1979:: Patrick Combes takes over Viel & Cie, then a three-person firm, and leads its diversification and expansion.
1982:: The firm launches interest rate options brokering.
1986:: A new holding company, Viel & Cie Finance, is created.
1988:: Viel & Cie goes public on the Paris Stock Exchange.
1996:: The company acquires control of Compagnie Financiere Tradition of Switzerland and becomes the top continental European broker and one of the top five worldwide.
1999:: The company establishes the subsidiary Bourse Direct and launches Capitol.fr online brokerage.
2004:: The company acquires Chapdelaine & Co. in the United States.
2005:: The company acquires 35 percent of Ong First Pte Ltd. in Singapore.