The Family Businesses Fund and March Gestión @ Tharawat magazine


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Banca March. La familia que invierte en familias. Artículo sobre Banca March y The Family Businesses Fund (fondo de March Gestion que invierte en empresas familiares) publicado en la revista Tharawat. Banca March. The family that invests in families. Article on Banca MArch and The Family Businesses Fund published at Tharawat magazine. The Family Businesses fund is an investment fund that invest in family businesses, globally

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The Family Businesses Fund and March Gestión @ Tharawat magazine

  1. 1. FEATURES Banca March Family business fund The Banca March was established in 1926 on the Balearic island of Palma de Mallorca by Juan March and his family. The March family quickly expanded across the neighbouring islands and has since become one of the leading banks in Europe. After nearly one century of existence Banca March is still entirely family-owned. Apart from the Balearic Islands, it has branches in the Canary Islands, Madrid, Barcelona, Zaragoza, Valencia, Alicante, Malaga, Cadiz, Luxembourg and London. The March family has always been known to invest into other family businesses. Recently, the family-owned bank has taken this strategy a step further by creating a family business fund. Tharawat magazine explores what makes a family business invest in family businesses. Banca March A Family Business investing in Family Businesses About Banca March The Banca March Group includes a variety of activities such as banking, investment and pension and is one of the largest Spanish financial groups with one of the highest solvency ratios in Europe (Core Capital of 26%). The bank is now in the 26percent fund management, handled by March Gestión, hands of the four brothers and sisters of the third as well as insurance activities. Through its listed March family generation: Carlos, Juan, Gloria and Banca March is one of the holding company, Corporacion Financiera Alba, the Eleonor March. With the fourth generation slowly largest Spanish March group also owns long-term stakes in Spanish taking their place on the company’s board the financial groups with one of the firms. In recent European banking stress tests the family seems to be gearing up for another century highest solvency ratios in Europe Marches came out on top, which in the public eye is of family ownership. (Core Capital of to a great deal attributed to the bank being owned 26%). by a family with conservative values and business Banca March is probably the only family-owned ethics. Banca March has been ranked the first bank Bank in Spain and today employs over 1400 in Europe for two years in a row by the World Bank people. The March family is also known for its26 Tharawat magazine Volume 15
  2. 2. Banca March Family business fund FEATURES1955 philanthropy; it established the Fundación Juan March patrimonial and operative institution bank holds family businesses in most of its private investment portfolios. Taking their committment year dedicated to fostering culture and the arts in to family-owned firms a step further, Banca March In 1955 the 1955. Through the Fundacion, the March family established a unique portfolio that only invests inFundación Juan March was also supports research in its Centre for Advance family businesses. But why are family businesses a dedicated to Studies and sponsors the Banca March Chair of good investment? According to José Luis Jiménez,fostering culture and the arts. Family Business at the University of the Balearic CEO of March Gestión, family businesses are more Islands. profitable than non-family business in the long-1400 run partly because they are more conservative: employees The Family that Invests in Families “Anytime you talk to a family member, they are The March family has always considered family talking about the next generation and what they Banca March employs over businesses a viable investment opportunity. This want to leave them. They are not only talking about 1400 people. strategy has led to considerable success and the short-term results.” Volume 15 Tharawat magazine 27
  3. 3. FEATURES Banca March Family business fund 25 Fact is that more than 15% of the companies listed Most family businesses on the long run perform in S&P 500 and Stoxx 600 are family businesses. much better than non-family business. The Banca Moreover, historically, family businesses have March has experienced this first hand by investing outperformed non-family businesses and also have in them for the last 30 years and carrying out percent a better earning predictability. The Banca March’s specific research on this topic. The research 25% of the family business fund is a vote of confidence that appointed by Banca March aims to explain why company at least must be the intrinsic values of family businesses heighten family businesses perform better than non-family in the hands their odds of survival even during economic crises. business. A first conclusion is that family businesses of one single family. grow and create employment despite the crisis and How Families Qualify that they seem to go for low leverage and controlled For a family firm to qualify as an investment risk in investment. opportunity in the eyes of the Banca March, 25% of the company at least must be in the hands of one Banca March did not only start the fund because single family. Ideally, a senior family business member of its own convictions with regards to family is active in the executive committee or the board businesses but did it in response to investors of directors. The March family feels that a family asking for such opportunities. Many family offices member involved at top level is an advantage because for instance seem to prefer to invest in family- they know their business better than anyone else. owned companies because they are aligned with28 Tharawat magazine Volume 15
  4. 4. Banca March Family business fund FEATURES Through its family business fund, the March family does not only think of the next generation of the family but applies that thinking to the next generation of investors as well. the organisation to the next generation. However, Banca March has found that companies that have reached the third and fourth generation mostly show the greatest potential as they tend to have strong protocols and structures in place. The March family knows from its own decades of family30 their clients’ values and philosophies. Through its history which faced them with many economic and fund the March family has invested in all types of political changes, how crucial such structures are family companies: The core criteria is the quality of and how they increase the odds of survival for years the business model not the origins of the business family businesses. The Banca or even its sectors or market capitalization, as March has confirms José Luis Jiménez. The fund selects the Through its family business fund, the March experienced right businesses through its investment committee; family does not only think of the next generation this first hand by investing a body constituted by the bank’s most distinguished of the family but applies that thinking to the next in family professionals who undertake an analysis of the generation of investors as well. The family has its businesses for the last 30 economic environment, as well as the investment own wealth fund and continues to invest, along years. strategy with regard to the family businesses. with its clients, into family businesses. Certainly, seeing a century-old family business such as the Considering the Stage of the Company Banca March investing and believing in family Whether a family business is a good investment businesses, cannot fail but be credible and, opportunity or not is largely determined by what hopefully, encourage others to do the same. stage it is at. If the company is at a transition IN COLLABORATION WITH stage it can be riskier to invest as not all family businesses have been successful in handing over José Luis Jiménez, CEO, March Gestió Volume 15 Tharawat magazine 29