Hoxton Capital Management has been given conditional approval for a licence in Cyprus, International Adviser can exclusively reveal.
The UAE-headquartered advice firm was previously offering services on the continent through a network – but now it is close to receiving direct authorisation from the Cyprus Securities and Exchange Commission (CySec).
Chris Ball, managing partner at Hoxton Capital Management, said to IA: “We have now set up our own entity, which is Hoxton Capital Management Europe. That’s going to have MiFID investment permissions and a second entity will have IDD permissions.
“We want to expand more aggressively into Europe. We’ve been doing business in Europe, but it’s been remote through the network, which is based in Ireland.
“We want to develop some good bases in Europe. We see it as a big growth area. We heavily service the British expatriate market and there are over a million Brits residing in Europe. There’s great opportunities for us and there is a great client base to service and help going forward.”
European strategy
Ball, who was previously area manager in Qatar for DeVere Group, said that he and fellow managing partner Matt Dean will be initially overseeing the European operation.
But the firm has plans to hire a head of Europe along with a number of advisers – however – the company will be looking to take its time with the recruitment process.
“It’s not something you want to rush into,” Ball added. “We’ve made hires in different jurisdictions before that haven’t necessarily worked well for us. At this time, Matt and I are happy to oversee it from a high-level perspective initially, and then recruit the right person. That could be someone externally or someone within the company.
“We’d look to build up a team over the next 12 to 24 months with five to six advisers servicing Europe, probably from Cyprus. Then, once we’ve got a steady footing in there, we’d look to expand more rapidly in the different markets. I think you could easily have 20/25 advisers based out of Europe.
“The main expat markets of Spain, Portugal, France, Italy and Germany will be a focus for us. Then we will look to go into other countries if there is a market for it. We don’t want to have a million offices in a million different places. We’d rather get a good, centralised hub of people and spoke off of that.”
Brexit
The process of moving to the EU from the UK has become a harder process for expats – but Ball believes the European advice market is still very attractive.
He said: “I think if you want to live in the south of France, you want to live in the south of France. Brexit doesn’t necessarily change your position.
“Europe is difficult to match from a British expat point of view and it ticks a lot of boxes. It’s near, great climate, nice food, you can get back to the UK in an hour or two, you’ve got access to all the rest of mainland Europe and there’s plenty of nice things to do and see.
“It’s definitely a very attractive proposition for the British expatriate still. Obviously, it is slightly harder in terms of residency and getting documents sorted. But for the typical high net worth type of client that we will be speaking with, I don’t see them as huge barriers to entry anymore.”
Small competition
The European advice market is very vast – but competition is still scarce.
Hoxton believes it can become a big player on the continent.
“Our operating model is very different to a lot of other companies,” he said. “We charge in line with how the UK advice process charges. We charge an upfront fee and then an ongoing percentage on the assets under management, typically between 0.5% to 1.5% depending upon what they do and how it looks.
“I think that’s very attractive because it’s a model that a lot of people in the UK are used to.
“There’s a lot of great advisers in Europe and a lot of great companies. But you’ve got over a million people to go and service, it’s not a small target market. I think there’s room for us and we can really expand into Europe and become a presence.”
Global venture
Europe is not the only continent that Hoxton is looking to grow in over the next few years.
It has global ambitions and the Europe licence is one part of its strategy.
Ball said: “Over the last 12 months, we have been consolidating our position. We started the business in 2018 and we had individually owned entities. We have created a group holding structure in the Isle of Man, which is called HCM Trading Holdings.
“At the moment, we’ve got a change in control going through for a UAE entity. We’ve just had our change in control application approved in the UK, so that can now form part of the group.
“Our US entity and our Australian entity is already part of that group holding structure. Now, Hoxton Capital Management Cyprus has received conditional acceptance. We’re just waiting for the last bit of regulatory approval for that licence. But we’ve got conditional acceptance.
“We’ve invested heavily in licences. We believe that, in this day and age, you need to be regulated in all the areas that you work in and your advisers need to be qualified suitably in all the areas that you work in.”
Long-term goals
Hoxton said by 2026 it wants to get to £5bn ($5.72bn, €5.77bn) of assets under management.
“We’re not far off £1bn AuM at the moment,” Ball added. “We feel we’ve got the ability to go further. We don’t think having advisers in every single jurisdiction and lots of offices in huge amounts of different places isn’t necessarily the right way to go.
“We’d rather double down on some of the regions that we’ve got at the moment.”
Ball also said that the firm will look to do more acquisitions alongside its organic growth and it eyes deals in the UK, Australia and the US.
