* Surge in proceeds for shareholders selling company stakes
* Rise in assets at wealth managers and banks more muted
* Tycoons favour property, new business ventures
By Chris Vellacott
LONDON, Jan 17 (Reuters) - Tycoons are shunning banks andwealth managers, preferring to put a flood of money from sellingstakes in companies into property and new ventures rather thantrust industries whose reputations have been battered by theglobal financial crisis.
Thomson Reuters data show that proceeds for shareholdersselling stakes in companies, excluding governments, have tripledsince 2008 to $183 billion last year, creating new millionairesand making many wealthy people much richer.
But little of that cash appears to have made its way to thewealth management industry, which specialises in looking after -and increasing - the riches of the world's multi-millionaires.
The average increase in assets run for clients by wealthmanagers and banks was 6.55 percent for the 100 largestinstitutions in the sector, according to the most recentanalysis by finance industry consultants Scorpio Partnershipwhich based its research on published company earnings for 2011.
"Forgetting all the other ways of getting new money (forbanks and wealth management firms), there is a deficit there,"said Cath Tillotson, managing partner at Scorpio.
Wealth managers argue that people enriched by share salesare often serial entrepreneurs, and so more likely to invest inanother business venture than bank the proceeds or put them inthe care of an investment manager.
"They would tend to look for a relatively liquid andshort-term cash position while they look for the next long-termopportunity, as opposed to saying:'I'm an entrepreneur, I'vemade a lot of money, I'm going to cash out and become a typicalwealth client'," said Paul Patterson, deputy chairman at RBCWealth Management's 'ultra high net worth' internationaldivision servicing the bank's richest clients.
However, strong growth in other sectors favoured by thesuper-rich, such as London's property market, suggests there maybe a problem for banks and wealth managers.
Research from property consultant Savills shows theamount spent on London homes worth more than 5 million poundsreached 4.1 billion pounds ($6.6 billion) in 2012, with thenumber of transactions nearly doubling since 2008.
Property in stable jurisdictions appeals more thanconventional investments offered by banks, in part because ofthe reputational damage they suffered in the financial crisis,said Yolande Barnes, a research director at Savills.
"You could put it down to they (the super-rich) just don'ttrust banks to make them or keep their money," Barnes said.
Banks have sought to access new clients through the rush toluxury London property by offering rich buyers mortgages ontheir Mayfair townhouses, but most of the clients at that end ofthe market are cash buyers, she added.
"REMARKABLE GROWTH"
Wealth managers and banks have long blamed the weakness ofequity capital markets for their subdued performances.
But the Thomson Reuters data show that, stripping out sharesales aimed at raising money for companies and stake sales bygovernments, the last few years has seen a boom in money raisedby private shareholders selling stakes in companies.
"In the four years since the market bottom, we've seenremarkable growth in proceeds to selling shareholders - an over30 percent compound annual growth rate, with well over half atrillion dollars monetised since the beginning of 2009," saidStephen Case, global head of deals and private equity at ThomsonReuters.
Equity sales in 2012 that generated big pots of personalwealth for entrepreneurs were dominated by the $16 billioninitial public offering (IPO) of social network Facebook.
The deal generated proceeds of more than $9 billion forselling shareholders including founder Mark Zuckerberg, thoughthe shares subsequently slumped and investors who subscribed tothe deal were left out of pocket.
Also prominent among the 680 transactions in which ownerscashed in by selling their shares last year was the $1.8 billionIPO of Russia's second-biggest mobile phone operator MegaFon, controlled by Russia's richest man Alisher Usmanov.
According to research firm Wealth-X, 28-year-oldZuckerberg's net worth stands at more than $16 billion, whileUsmanov is worth more than $22 billion.
One of the problems for banks and wealth managers is theyhave relatively poor penetration in parts of the world wheremuch of the new money is being made.
"Wealth is being generated much quicker in markets like Asiawhere the banks' ability to convert that wealth into assetsunder management is much tougher because wealth management as aconcept is poorly understood and in many cases less needed,"said James Lawson, a director of Ledbury Research, whichanalyses trends among the world's wealthy.
Banks and wealth managers are pushing hard to expand intoAsian and other emerging markets. But they are also having toinvest time and money in meeting new regulations aimed atpreventing a repeat of the financial crisis and which couldultimately help to rebuild their reputations.
"Banks have been so distracted by regulation, they haven'tbeen able to grow," said Scorpio Partnership's Tillotson.
Savills (SVS)
