Towards the end of 2017, we finally got confirmation of the marriage we had long been waiting for. No, not Prince Harry and Meghan Markle, but BNP Paribas Real Estate and Strutt & Parker.
It was a flirtation that had been talked about at several MIPIMs but always denied. But in August last year, the two companies finally confirmed that they were indeed merging, that BNP Paribas Real Estate UK boss John Slade was stepping down and that Strutt & Parker’s Andy Martin (pictured), who had been preparing to follow partnership rules and retire, would lead the merged company.
But while Slade had an office to himself while trying to grow the French bank-backed firm, Martin shares his with deputy chief executive and Frenchman (although you won’t necessarily know it from his accent) Etienne Prongué. Could buying a traditionally British partnership and physically sitting an Englishman and a Frenchman together be the solution to BNP Paribas Real Estate’s long-held dreams of finally cracking the UK?
There is no denying that BNP Paribas Real Estate has struggled to establish itself as a major player in the UK market. Or that despite splashing the cash (not always successfully) on big hires over the years, it has failed to become as recognisable a brand as its peers. It may have managed to bump itself up the league table in terms of deals advised on, but will the merger with what one insider called the “more British than the British” Strutt & Parker be able to turn the business into a truly global and universally recognised player?
Expanding presence
“BNP Paribas has been looking at ways to expand its presence here in the UK since before I joined the company in 2005. It has bought a number of companies in the past to expand its business but it really wanted to be more ambitious and have something that would give it a little more equilibrium to the business in continental Europe,” says Prongué, explaining the rationale behind the Strutt & Parker acquisition. “This seemed to be a really good opportunity for the company to immediately get a lot more market presence, specifically here in central London. The UK is the largest market in Europe, it is the third-largest market in the world and without having a powerful business here in the UK, we would never really achieve our ultimate ambitions.”
Combining the two firms has created a business that employs more than 1,500 people in the UK, 900 of which are fee earners, turns over some £165m and operates from 67 offices across the country. It is, at least, a decent base on which to grow its ambitions.
“We knew as a partnership that we needed to have a more global reach, a more international presence,” says Martin of Strutt & Parker’s motivation for the deal. “We knew that we had a challenge with the increasing digitisation of the market, disruption perhaps of our market, and that that was going to involve investment. We needed a business that would look at that and had the strength to see that.”
He adds: “We didn’t just want to go up the league table, we wanted to be in a business that was very different from everybody else.”
Different. It is a word that some – perhaps many – may well use to describe the two businesses and their cultures.
“There has always been a view that there is perhaps a culture clash between the two [the French and the English]. It goes back over many years and centuries,” says Martin. “However, I think that the thing that brings cultures together is ambition and the most important thing I have seen here is an ambition that runs all the way through the business… Ambition gets over any cultural issues we may have.”
Synergies
Not that Martin admits to there being any issues, of course. For him, it is less about cultural differences and more about synergies.
Strutt & Parker is one of the leading practices when it comes to rural consultancy, while BNP Paribas has one of the largest wealth management operations in Europe, with some €364bn (£323bn) in value.
“Rural consultancy is very much about wealth management,” says Martin.
And the link between the two in the rural sphere does not end there. The pair are linked via the Tattinger family. The French wine dynasty is a client of BNP Paribas and Strutt & Parker just so happens to be advising on the vineyard in Kent where the first UK-grown Tattinger grapes will be grown. Salut.
“We see ourselves as a being a business that reaches into all aspects of real estate. It is not just about commercial growth, we see opportunities in the residential market and rural consultancy – and not only in this country but in Europe as well,” says Martin.
“If we go to France there is no doubt who is number one. If you look at transactions in Germany, there is no doubt who is number one. There is no doubt that we want to grow our position in the UK, that is part of the challenge that has been set,” he adds. “But it is about offering clients a different approach, a fuller approach, a more holistic approach where we can start talking about the way that they are diversifying their asset allocation. Real assets are the talk now, alternatives is the talk. These are all new and growing marketplaces and I believe that as a result of having this broader understanding of the asset classes and investment we do now have a market advantage.”
Prongué is clearly proud of BNPPRE’s market-leading position in France and Germany, where it transacted €8bn and €11bn respectively last year, but is adamant its standing in the UK is not yet good enough. It transacted on £5.7bn in the UK last year.
Investment teams
He says the biggest opportunity the firm has to deliver on its ambitions is linking the investment teams in the UK business to its European, Dubai, Hong Kong and (most recently) Singapore networks and using its wealth management division to link high-net-worth investors to opportunities across the real assets spectrum and across the globe.
He says: “We can’t really say we are a market leader if we haven’t really established ourselves in a strong manner here in the UK. It is by merging the businesses – and S&P has considerable strength within central London – that we will be able to show our clients that we can do the same here in the UK as we have in France and Germany.”
With less than six months passed since the pair finally tied the knot, it will be hard to predict whether it will be a marriage of convenience with little impact on the UK market, or a more passionate affair that will continue to grow its family and its spread across the country.
