Viel & Cie - Company Profile, Information, Business Description, History, Background Information on Viel & Cie

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Company Perspectives:

The broker is a completely independent player in over-the-counter (OT C) financial markets. Its role primarily consists of providing a poin t of contact for institutional clients seeking to buy or sell financi al products. Regulatory constraints require the broker to act as a pu re intermediary, taking no positions or dealing risks in the financia l markets. Working at the very heart of the markets, the broker is in continual contact with leading players in the major financial centre s (banks, insurance companies, large private companies, etc.), enabli ng it to acquire a unique, comprehensive knowledge of financial marke ts. Its chief functions are therefore: To ensure market liquidity and respond rapidly to its clients' needs; To respect the confidential n ature of its clients' transactions. The broker receives a commission on each client transaction. The professionalism of its clients demand s sophisticated expertise on the part of the broker in order to meet integrally its clients' needs. This expertise entails: A perfect know ledge of financial markets; A good understanding of its clients' need s and objectives; Providing superior quality, high value added servic e. VIEL & Cie is an acknowledged leader in the rapidly moving wor ld of financial brokerage, adhering to the fundamental principles of confidentiality, expertise, competence and sophisticated service.

History of Viel & Cie

Paris-based Viel & Cie is one of the world's top three over-the-c ounter (OTC) financial brokers; that is, the company acts as an impar tial intermediary brokering major financial deals. Viel has acted as a driving force in the rapid consolidation of this market, which is e xpected to narrow to just a handful of major players in the mid-2000s , and as few as three leader-specialists in each of the financial bro ker segments. Viel, however, has long taken a diversified approach to the financial market, and as such has built up a network of subsidia ries spanning the full range of brokering sectors, including the mark ets for exchange rates, equities, commodities, and interest rates, am ong others. In support of its diversified base, the company has estab lished a globally oriented network of subsidiaries and offices in the major financial cities in 18 countries. Acquisitions have provided t he motor for Viel & Cie, and include the purchase of a 35 percent stake in Singapore's Ong First Pte Ltd. in 2005, and of Chapdelaine & Co. in New York in 2004, among others. The latter purchase has boosted the share of the United States in Viel's overall revenues to nearly 50 percent. The company's other major revenue producers operat e in London and Tokyo. Although financial brokering remains Viel &amp ; Cie's primary operation, the company also has launched its own onli ne brokering subsidiary, Bourse Direct, which operates the web site, one of France's top five online brokers with 9,000 custome rs. Viel & Cie is listed on the Euronext Paris Stock Exchange, an d is led by Patrick Combes, chairman of the board and architect of Vi el's expansion. In 2004, the company posted revenues of EUR 557.2 mil lion ($$704.7 million). The acquisition of Chapdelaine is exp ected to boost total revenues past EUR 700 million ($900 million) in 2005.

Building a Broker in the 1980s

Viel & Cie was founded in Paris in 1920 and operated as a financi al broker, with a specialty as a broker for the Parisian money market . The company went public in 1962. At the end of the 1970s, however, Viel & Cie remained a small-scale operation, with just three empl oyees and annual revenues of less than FRF 600,000 (approximately &#3 6;100,000) per year.

In 1979, however, Patrick Combes, a French native who had spent the e arly part of his career working in the financial sector in the United States, took over Viel & Cie. Then just 27 years old, Combes gav e himself six months to see if he would be able to build the brokerag e into a viable, competitive broker. Of note, Combes decided to break with the brokerage sector's tendency at the time to focus on niche m arkets. As Combes told Entreprendre: "The logic of a niche, es pecially in the financial professions, is very difficult. One might b e able to juxtapose niches, but surviving on just one without having a critical size means taking the risk that at any moment one may beco me a target, or see oneself completely overtaken by the turn of event s. In addition, there are criteria such as scale and minimum product coverage that one must take into account."

Combes established initial strategic goals of gaining market leadersh ip in France and taking Viel & Cie public. To achieve these goals , the company quickly began putting into place Combes's strategy of d iversifying its range of services. In 1982, for example, the company began brokering interest rate options, becoming the first in France t o take on this niche. The following year, the company became the firs t in the market to establish a dedicated currency exchange operation, which formed the basis of a new international department. The compan y continued to boost its currency business, boosting its operations p articularly in the French franc exchange market at the middle of the decade.

Viel & Cie began putting into place a structure for its future pu blic offering at the middle of the decade. In 1986, the company creat ed a new holding company, Viel & Cie Finance. This vehicle, which retained control of a majority share of Viel & Cie, also permitt ed the company to expand its range of operations beyond Viel & Ci e's core business, without implicating Viel & Cie itself. In the same year, for example, the company created a new subsidiary, STAFF, which stood for Société de Transaction et d'Arbitrages sur Future Financiers, and permitted Viel & Cie Finance to extend the group's range of operations into the French futures and arbitrag e markets.

Viel & Cie continued expanding its own range of financial product s as well. In 1987, the company expanded into the brokering of treasu ry bills, which required a doubling of the company's size. This neces sity, and the need for further capital to expand its operations--nota bly, to an international level--brought Viel & Cie to the Paris S tock Exchange's Secondary Market in 1988. Viel & Cie Finance none theless retained majority control of the business, and continued to h old nearly 55 percent of the company into the mid-2000s.

Acquiring Scale in the 1990s

The public offering provided Viel & Cie with greater name recogni tion. Combes also welcomed the constraints imposed by opening the gro up's shareholding structure to outside investors, telling Entrepre ndre: "It's a good thing to live with the worries of a listed com pany--whether in good times or bad times, it's necessary to develop s olutions." Following its public offering, Viel & Cie expanded its range of operations again, into securities, in 1990, establishing a dedicated subsidiary, MIA, in that year.

With its new capital backing, Viel & Cie began acquiring scale in France in the first half of the 1990s. The company bought out part o f the operations of interbanking specialist Degez in 1991, then acqui red control of the banking intermediary specialist Julien Olivier &am p; Cie. The following year, the company was merged into Viel & Ci e's operations. At the same time, Viel & Cie Finance returned to Degez, buying up that company altogether. In 1995, the company redeve loped its government securities business into a separate, dedicated s ubsidiary, Viel Eurovaleurs.

By then, Viel & Cie had established itself as the number two play er in the French financial broker market. Yet on a global level, with annual sales of the equivalent of just EUR 34 million, Viel & Ci e remained a minor player. Indeed, the global financial broker market had long been dominated by British and, to a lesser degree, American brokers.

Combes, however, became determined to guide Viel & Cie to the top ranks of the global markets. Recognizing that establishing its own o perations from scratch into the various financial capitals would requ ire an extreme investment, in effort and financial capital, the compa ny developed an expansion strategy based on acquisition of existing c ompanies. Viel & Cie took its first step internationally in 1995, when it acquired fellow French firm Maison Debeausse, giving it cont rol of its New York-based subsidiary, Debeausse Inc. The company also moved into the Luxembourg market that year, acquiring Arbitrage Chan ge S.A. that year.

Viel's most significant acquisition came the following year, with the purchase of a 61 percent stake in Switzerland's Compagnie Financiere Tradition (CFT), then the world's sixth largest broker. CFT had been founded by André Levy in 1959 as Compagnie Financiere et de C redit, and had originally specialized in eurodollar deposits. The com pany quickly became international, opening a subsidiary in London in 1961. In 1968, the company changed its name to CFT, and in 1973 went public with a listing on the Geneva Stock Exchange. In that year, CFT opened an office in New York as well. The company continued to expan d internationally in the following decades, adding an office in Hong Kong in 1978, in Singapore in 1979, and in Italy in 1980, as well as operations in Tokyo (through its share of the Meitan Tradition Co. jo int venture) in 1985 and Luxembourg in 1987.

In 1988, CFT itself became part of Banque Pallas Stern (BPS), which a cquired a 61 percent stake. Yet that company's bankruptcy in 1995 gav e Viel & Cie its opportunity, and in 1996 Viel acquired BPS's 61 percent of CFT. The takeover immediately boosted Viel's international presence and CFT became a major subsidiary in the Viel & Cie gro up. Viel & Cie continued buying up shares of CFT, boosting its ho lding to 74.5 percent in 1997. The takeover of CFT also gave the comp any control of Tradition Financial Services (TFS), a market-leading p rovider of OTC brokerage services.

Global Top Three in the New Century

The takeover of CFT and TFS established Viel & Cie as the leading financial broker on the European continent, and gave the company a p lace among the world's top five. As the new century approached, Viel became determined to crack the top three. Part of the group's strateg y for this effort was to position itself as a global technological le ader. To this end, in 1999, the company acquired 47 percent of Infote c, boosting the company's technological capacity. Viel also recognize d the Internet as an important brokerage tool for the future, and in 1999 created a new subsidiary, Bourse Direct, which launched an onlin e brokerage, That site grew into one of the top five in t he French online broker segment by the mid-2000s.

Viel also maintained the pace of its acquisitions. In 1999, the compa ny bought up nearly 90 percent of Prominnofi, a specialist in Europea n government debt transactions. In 2000, Viel added voice recognition capacity when it bought a stake in Vecsys, as part of its effort to position itself as a technology leader. Also in that year, the compan y boosted its New York presence through the acquisition of Asiel &amp ; Co. LLC. Created in 1878, Asiel had been a founding member of the N ew York Stock Exchange. Following its acquisition by Viel, the compan y was renamed Tradition Asiel, becoming part of CFT/TFS.

Viel's expansion continued into mid-decade. The company increased its technology capabilities with the creation of a joint venture with Vo lbrokers in 2001. In 2004, Viel acquired BCV Finance France from the Banque Cantonale Vaudoise. The company also purchased 10 percent of s pread-betting specialist IFX Group plc, based in the United Kingdom. By the end of 2004, the company further enhanced its U.S. presence th rough the acquisition of Chapdelaine & Co., based in New York, wi th offices in Chicago, Palm Beach, and Long Island.

Viel established a presence in the South American market as well, ope ning a subsidiary in Santiago, Chile, at the beginning of 2005. Also in that year, the company boosted its presence in the Asian markets, buying 35 percent of Ong First Pte Ltd., a leading broker in Singapor e. By the end of that year, Viel & Cie had grown into one of the global financial brokerage leaders, with a presence in 18 countries a nd annual sales expected to top EUR 750 million ($900 million).

Principal Subsidiaries: Arbitrage Change S.A. (Luxembourg; 99. 93%); Arpège Finances; BCV Broking; Bourse Direct; Capitol ; Compagnie Financiere Tradition (Switzerland; 70.42%); Elite Bro ker S.A. de C.V. (Mexico); Finacor & Associés S.A. (Belgiu m); Finacor Belgique S.A.; Finacor Deutschland GmbH; Financièr e Vermeer B.V. (Netherlands); Fincor SGPS (Portugal; 20%); Meitan Tradition Co. Ltd. Japan; 55.34%); Monecor (London) Ltd.; SCS Ge stion Privée; SP Angel & Co. Ltd. (United Kingdom); TFS (S witzerland; 98.79%); The Recruitment Company Holdings Inc. (Unite d States; 79%); Tradition (Asia) Ltd. (Hong Kong); Tradition (Nor th America) Inc. (United States); Tradition (UK) Ltd.; Tradition Arge ntina S.A.; Tradition Asiel Securities Inc. (United States); Traditio n Australia Pty. Ltd. (Australia); Tradition Bond Brokers Ltd. (Unite d Kingdom); Tradition Chile Agentes de Valores Limitada; Tradition Fi nancial Services GmbH (Germany); Tradition Financial Services Inc. (U nited States); Tradition Italia Sim S.p.A. (Italy); Tradition S.A. (S witzerland); Tradition Service Holding S.A. (Switzerland); Tradition Singapore (Pte) Ltd. (Singapore); Tradition Wertpapierhandel GmbH (Ge rmany); VIEL Debeausse and Co. Inc. (United States; 91%); VIEL Tr adition S.A.

Principal Competitors: ICAP (Garban Intercapital); Maxcor; Can tor Fitzgerald; Prebon; Tullett & Tokyo; GFI.


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