Bulgari's Trapani bets on wealth management
It is the ultimate client referral: a wealthy customer likes a product or service so much they buy a stake in the company that provides it.
Francesco Trapani has done exactly that with Geneva-based wealth adviser ElyStone Capital.
The 51-year-old chief executive of Bulgari, the listed Italian luxury goods company, has been a client of ElyStone for five years, forming a good relationship with Luis Palacios, who founded the business as LP Partners.
Trapani said his portfolio has returned between 6.5% and 10% a year at a consistent rate. “Each month, the volatility of returns has been up or down only a fraction of a percentage point,” he added.
“Last year, in a very tough market, my portfolio did 9%. This is why I decided to invest in the business.”
Trapani has taken a minority stake and become chairman, although he has the option to increase his holding over the next few years.
He sees plenty of potential for growth: “As people are getting richer they are discovering new problems.
Perhaps they want to optimise their corporate structure, or their fiscal position, or their insurance portfolio, or manage cashflows.Seeking professional advice is essential.”
Palacios founded LP Partners in 2002, having previously worked at Lombard Odier Darier Hentsch, and set up Morgan Stanley’s private wealth business in Geneva. Most of the firm’s 10 staff are based in Switzerland, with other offices in London and Bermuda.
ElyStone is essentially a multifamily office, serving relatively few, very wealthy individuals. “We are looking for a small number of new clients with large, liquid portfolios,” said Trapani.
Europe, and Italy in particular, will be the focus – although he is also eyeing Asia. “In five years, we will still be talking about tens of clients, not hundreds,” he added.
The firm has particular expertise in hedge funds. Trapani’s personal portfolio is divided between funds of hedge funds and bonds, with his only direct equity holding being his stake in Bulgari. “I get my equity exposure through the hedge funds,” he said.
ElyStone will look at private equity if it suits clients’ risk appetite. The firm charges a flat annual management fee of up to 1% of assets although it can be lower for larger portfolios: “But at the same time, you are saving on the fees you previously paid to various banks and advisers,” said Trapani. “All the other services – insurance, tax, cashflow management – come for free.”
Trapani, a member of the Bulgari family, became chief executive of the family business in 1984 aged 27, leading its flotation in 1995.
He also sits on the boards of Banca Nazionale del Lavoro, furniture-maker B&B Italia and private equity firm, Opera.
His contact book should prove fertile ground for ElyStone.
But he cautions against over-emphasising the links between the luxury goods industry and wealth management: “Some synergies are there because the clients are often the same, so you can think about crossmarketing activities,” he said. “But the client is obviously in a very different state of mind when acquiring luxury goods.”
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