Alpha FMC eyes global expansion amid revenue boom

13 June 2018 5 min. read
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After a successful IPO and a meteoric rise in revenue, consulting firm Alpha FMC has turned its gaze on global growth, mulling new locales in Zurich, Frankfurt and Hong Kong. The financial markets focused organisation benefitted from a financial sector looking to reposition itself ahead of Brexit – something the firm is banking on ramping up in the future.

Founded in 2003 in the UK, Alpha Financial Markets Consulting provides independent advice and expert insight to asset and wealth managers, boasting a suite of proprietary benchmarking data and other technology solutions in order to cater to the rapidly changing needs of its clients. It’s pure-play focus on the asset and wealth segment within the financial services landscape has helped the consulting firm differentiate itself from more generalist management consultancy businesses and build a strong track record in the field – Euan Fraser, the firm’s Chief Executive Officer, has even spoken previously of “an unrivalled track record” in the landscape.

In the firm’s pursuit of continuing prosperity, the Alpha FMC launched a public offering in October 2017, with a valuation of £163 million. Now, in its first set of results since the company listed on the London Stock Exchange, the firm’s gambit seems to have paid off, with revenues rising by 51.5% to £66 million. As a result, Fraser called the year “the most successful" in the group's history. After stripping out IPO costs, adjusted cash profits were up more than two thirds to £13.9 million.

Alpha FMC eyes global expansion amid revenue boom

British businesses accounted for the lion’s share of revenue, but the group also made a concerted foray into international markets, opening its first Asia office in Singapore and in Switzerland. According to the firm’s CEO, however, the US market offers the biggest growth opportunities and to this end, Alpha added offices in four locations, including LA, on top of its existing operations in Boston and the global financial hub of New York. Geographical expansion also meant group headcount grew more than a quarter, and the group has been overhauling back office systems and working on M&A integration – such as the recently purchased German data business TrackTwo – in order to make sure the true potential of Alpha FMC’s growth is realised.

One of the major factors supposedly behind the boom in Alpha FMC’s revenues is said to be the increasing regulatory burden, which has ratcheted-up a notch or two for asset managers over recent months. Commonly cited as a driver for consulting fees in the financial services sector, the Mifid II reportedly resulted in a spike of income for many firms – however according to Fraser, a much bigger driver of new business has been rising cost pressures on the industry, linked closely to the great unknown of Brexit.

Fraser said that rather than navigating regulatory changes such as Mifid II, the company spent much of 2017 advising fund houses on cutting costs. "One of the questions asked on our IPO roadshow was are we seeing a Mifid II spike - the answer is not at all," he said. "The percentage of revenues from that is very low. Cost pressure is a significant driver of change, our clients are working very hard to preserve their operating margins, leading to a whole host of different projects."

Asset management

Services which have been most popular for Alpha FMC in this period include advising companies on how to save money following a merger or showing firms how to outsource different functions. As margins continue to face pressure from heightened competition, while new innovative rivals digitise further to reduce their costs, operational excellence remains key for those looking to ward off new challenges. With the asset management sector coming under mounting pressure to cut expenditure as investors move away from actively managed funds to cheaper, automatic tracker options. As a result, cost efficiencies have been cited in a number of recent tie-ups in the industry, including the £11 billion deal between Standard Life and Aberdeen Asset Management, which Alpha FMC is advising on. Fraser expects demand for advice of this kind to continue to ramp up in the near future, as companies prepare for Brexit.

The financial sector of the UK is still in a state of flux, as it weighs up an uncertain future on an island seemingly determined to sever its ties with mainland Europe. With the threat of trade tariffs with the EU still a real possibility after March 2019’s conclusion of negotiations, and resultantly some 75,000 jobs in the financial services sector could make their way out of London alone, while those which remain will potentially face even greater strains to find efficiency savings.

While Alpha FMC is strengthening to assist clients in the UK, the firm is also considering steps to best help asset managers on the continent, and further afield, as well. The business is reportedly considering potential office launches in Zurich, Frankfurt – which is said to be a key contender to take on London’s mantel as the financial hub of Europe post-Brexit – and Hong Kong, along with further plans to grow in the US. Management is also planning to launch a FinTech and innovation division, which will partly focus on the use of block chain in the asset management industry – another major route toward cutting costs, and finding time efficiency savings by automating previously manual processes.

Related: Alpha FMC named Consultant of the Year in asset management.