Odysseus Investments, the private equity arm of Reech Corporations Group, recently announced a significant investment in Whitebox Services AG, an independent financial advisory firm using advanced Artificial Intelligence (AI) technology to offer tailor-made investment services to retail clients.
The investment makes Odysseus the largest external investor in the company. Christophe Reech (pictured), Chairman of Reech Corporations Group, explains that he established Reech after a lengthy career as a serial entrepreneur as a financier, principally working in supporting and developing established businesses as well as identifying new business opportunities.
One of his ventures, subsequently sold to SunGard in 2004, was a fintech company before what Reech calls ‘the buzzword’ had been invented.
“In 2006 I decided to create my own group of investments based on financial services technology linked to the financial services and real estate world,” Reech says.
“We invest as a principal but de-risking by scaling it up with other families who do what we do and other sophisticated investors,” Reech says. “It’s the old-fashioned model of finding a deal, putting your money in first and then syndicating everything else. It’s the model for the entire group.”
Reech’s private equity arm, Odysseus, is designed to take stakes in companies that he likes and where he feels he has something to contribute. “I find talented people and do it with them,” he says.
“Our philosophy of investment is that we are not venture capitalists. We don’t put a tiny amount of money in hundreds of different companies – that is not how we operate.
“I identify the segments we want to be exposed to where I believe there is a huge wave of disruption going on, identify teams with the edge we are looking for and I look for unfair competitive advantage – the team has to have something that others can’t have – and then we either bring our network to bring deals or we bring firepower.
“The way we are investing is to be extremely involved. Once we have identified the targets, we either take the between 10 to 40 per cent of the company as a significant investor and help them reach a certain level and bring in other larger investors.”
The latest investment target, Whitebox was founded in 2014 by former financial adviser and industry consultant Salomé Preiswerk, and Dr Birte Rothkopf, an expert in the application of behavioural finance to retail financial services.
Their aim was to offer a low cost, transparent and user-friendly platform for clients to save and invest at appropriate levels of risk. Whitebox entered into a partnership with Volkswagen Bank in August 2017 enabling it to tap into VW bank’s extensive client base.
Whitebox offers customers with from EUR5000 to invest, access to the full range of asset classes, with a universe ranging from real estate to commodities that has previously been seen as the exclusive preserve of institutional investors.
The portfolios are managed in cooperation with Morningstar/Ibbotson. Investors are able to invest in 35,000 individual instruments in 60 countries giving them access to a total of 23 asset classes overall.
The firm operates B to B and B to C and uses artificial intelligence (AI), another buzz word, to profile investors and their investments.
“We don’t want to profile if it is aggressive or conservative but more importantly to try and see what appetite for pain they have and AI allows you to do this on a more dynamic and structured basis,” Reech says.
Other investments from Odysseus have included Moola, a UK-based wealth management business using advanced robotic technology to provide a low cost and way for savers to access investment products: Grid Finance, an Irish-based provider of wealth management and credit services to Small and Medium-sized enterprises; Bankify, a Finnish based shared finance app; FinanzRitter, a German AI-based insurance broking app and Proptech Capital, a dedicated pan-European fund that invests in innovative property technology companies.
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