BHF's Lenny Fischer

A Dream Deferred

BHF banker Lenny Fischer is already planning his comeback, sources say. Credit: Bloomberg
BHF banker Lenny Fischer is already planning his comeback, sources say.
  • Why it matters

    Why it matters

    Once a major name in German private banking, BHF has been undermined by repeated takeover battles in recent years.

  • Facts

    Facts

    • Mr. Fischer’s plans to create a small upscale bank centered around BHF have ended with a hostile takeover bid.
    • Regardless of how the deals shake out, Mr. Fischer will be denied any operational role and will, at best, be offered a seat on the supervisory board.
    • Still, banking industry sources say Mr. Fischer’s entrepreneurial thirst remains unquenched and he is plotting a comeback.
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    Audio

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Lenny Fischer’s vision was within reach.

The charismatic German banker wanted to build a small but upscale European financial conglomerate with the venerable Frankfurt-based BHF Bank at its core. But his dream was deferred when the merchant bank became the object of an ugly takeover battle between the chairman and a member of the board of directors at BHF Kleinwort Benson Group Holding, which Mr. Fischer himself initiated.

Two major shareholders are squaring off in the fight for the holding company, which is the parent of BHF Bank. They are Shanghai-based Fosun International Ltd. and Paris-based Oddo Group, both of which hold about 20 percent of the shares. Now, in the wake of Fosun’s hostile takeover bid and the higher counteroffer by Oddo, Mr. Fischer’s career appears to be coming to an end.

That’s because there will be no hands-on role for Mr. Fischer if the French are successful in their bid. Philippe Oddo, managing partner of the Oddo Group, left no doubt in a conversation with Handelsblatt when he said Mr. Fischer would “have an operative role only as long as is necessary,” but added that he planned to retain Mr. Fischer as a member of the supervisory board.

Already there is talk in Frankfurt that Mr. Fischer is tinkering with his next business idea and his next career.

It appears that Mr. Fischer won the battle against Fosun, but lost the war for BHF. The only place for him will be on the sidelines if Oddo takes the reins in Frankfurt.

But this is nothing new for the German executive. His career has always been something of a rollercoaster ride. At 36, the investment banker was the youngest to ever hold a senior position at major German bank when he was at Dresdner Bank. Not only was he faster and more charismatic than the average German banker, he was also louder and more colorful – a diva in a traditionally gray industry.

He lost his position as chief investment banker with Dresdner when the new economy bubble burst, but rebounded by turning around the insurance subsidiary Winterthur for Crédit Suisse. He hoped to emerge with a directorial position at Crédit Suisse, but didn’t succeed.

In 2007, Mr. Fischer joined the private equity firm RHJ, looking to create a European financial conglomerate. He acquired British asset manager Kleinwort Benson from Commerzbank and, in 2009, bought into Quirin Bank, a private German bank. His masterstroke, however, was the takeover of BHF from Deutsche Bank for €340 million, or $367.9 million. For two and a half years, Mr. Fischer grappled with the German federal financial supervisory authority, BAFIN, over the deal. He was also forced to put down two shareholder revolts before completing the purchase.

But then came a major breach with Fosun International Chairman Guo Guangchang, an early capital investor in the holding company. Conflict erupted in June when BHF Bank’s supervisory board, under Mr. Fischer’s leadership, relieved Chief Executive Officer Björn Robens of all duties. Mr. Robens was considered a confidant of Mr. Guo.

Mr. Fischer accused Mr. Robens of acting arbitrarily, of cronyism and an autocratic leadership style, allegations the CEO denied. Fosun not only made it clear that it considered the sacking of Mr. Robens a bad decision, but Mr. Guo launched a takeover bid of €5.10 per share. The bank has been engulfed in conflict ever since.

How badly BHF’s business is suffering can only be assumed. Although the bank reported an operating profit of €5.2 million, earnings have been buoyed by special items of almost €17 million. So the earnings equate to a loss in the third quarter since the bank had hoped for a gain of €8 million in the second quarter.

 

194 wtb BHF Bank-01

 

Oddo’s counterbid could be an end to the standoff. The bank has offered owners of the BHF holding €5.75 per share, which would put the value of the group at €760 million. Other shareholders including the U.S.-based fund Franklin Templeton and BMW heir Stefan Quandt have already agreed to the takeover bid. This would give Oddo a 50.5 percent share of capital, but even with that slight majority, Fosun is not yet out of the game.

The Chinese already have been given approval to purchase another 9 percent of the holding shares, but supervisors still have to agree to the deal. The block of shares ensures Fosun carries plenty of leverage at the next general meeting of shareholders.

Mr. Fischer refuses to discuss the new constellation of power. If he had his way, he would go it alone without new majority owners, but that option is no longer viable after the painstakingly assembled coalition of shareholders was shattered.

If Oddo succeeds with the takeover, Mr. Fischer’s work goes up in smoke. Oddo would gain BHF Bank and sell Kleinwort Benson to the large bank Société Générale to partially finance the takeover. Knowledgeable sources at the bank say a future for BHF no longer is conceivable. Oddo’s takeover represents the best of all remaining options.

Still, Mr. Fischer can be comforted by one fact: The acquisition by Fosun now is far less probable.

Meanwhile, his entrepreneurial spirit appears unbroken. Already there is talk in Frankfurt of him tinkering with his next business idea and his next career.

 

Michael Brächer is a financial editor in the investment team in Frankfurt. Thomas Hanke is a correspondent in Paris. Michael Maisch is the deputy chief of the finance desk in Frankfurt am Main. To contact the authors: braecher@handelsblatt.com, hanke@handelsblatt.commaisch@handelsblatt.com

 

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