Editorial: Welcome to global distribution

Richard Jory, Editor, Structured Products

The most extraordinary thing about the sale of Blue Sky Asset Management to Incapital is probably that the same number of structured products professionals in the US knew of Blue Sky as those in the UK that knew of Incapital. And that number is zero.

Incapital is the largest independent distributor of structured products in the US, and Blue Sky is a publicity-hungry newcomer to the UK. Both have made their marks in their respective markets, which is where you can see the attraction of the deal for Incapital. The US distributor has had an office in London since 2003 and there is no question that the acquisition and merger of Blue Sky into the operations of Incapital Europe will enhance the image, and perhaps even the sales efforts, of the US company in Europe.

Other than a recent Latin American deal that Blue Sky completed for a family office, the benefit of the acquisition for Incapital’s US operations is negligible to non-existent. What Blue Sky offers is knowledge of the UK market and some recent experience of distributing structured products in Europe and the Middle East. Most importantly, it has an understanding of what the UK Financial Services Authority now expects in terms of standards of marketing literature and product sales.

The creation of a link across the Atlantic between independent distributors should not be ignored, and should, in fact, be welcomed for the potential it offers. While providers often gloat over the global use of their products, sales, research, support staff and all the rest of it, what they are doing through all of this is building a brand.

Most obviously in the world of selling retail investment products, it is brand building that appears to sap resources, often for so little in return. It can take decades to build a strong retail brand, and Incapital is about 10 years into this game while Blue Sky has been around for just three. If the merged entity in Europe can make the best use of all the synergies now to hand, then rather than falling at regulatory and recessed market hurdles, there may be a new name to grapple with in the UK and Europe. All things going well, this could be a much-needed boost to the structured products business in the region. And if it falls apart, then at least someone has taken the first step.