26 Tharawat magazine Volume 15 www.tharawat-magazine.com

FEATURES Banca March FaMily Business Fund

The Banca March was established in 1926 on the Balearic island of Palma de Mallorca by Juan March and his family. The March family quickly expanded across the neighbouring islands and has since become one of the leading banks in europe. after nearly one century of existence Banca March is still entirely family-owned. apart from the Balearic islands, it has branches in the canary islands, Madrid, Barcelona, Zaragoza, Valencia, alicante, Malaga, cadiz, luxembourg and london. The March family has always been known to invest into other family businesses. recently, the family-owned bank has taken this strategy a step further by creating a family business fund. Tharawat magazine explores what makes a family business invest in family businesses.

Banca MarchA Family Business investing in Family Businesses

About Banca MarchThe Banca March Group includes a variety of

activities such as banking, investment and pension

fund management, handled by March Gestión,

as well as insurance activities. Through its listed

holding company, Corporacion Financiera Alba, the

March group also owns long-term stakes in Spanish

firms. In recent European banking stress tests the

Marches came out on top, which in the public eye is

to a great deal attributed to the bank being owned

by a family with conservative values and business

ethics. Banca March has been ranked the first bank

in Europe for two years in a row by the World Bank

and is one of the largest Spanish financial groups

with one of the highest solvency ratios in Europe

(Core Capital of 26%). The bank is now in the

hands of the four brothers and sisters of the third

March family generation: Carlos, Juan, Gloria and

Eleonor March. With the fourth generation slowly

taking their place on the company’s board the

family seems to be gearing up for another century

of family ownership.

Banca March is probably the only family-owned

Bank in Spain and today employs over 1400

people. The March family is also known for its

26percent

Banca March is one of the largest Spanish financial groups with one of the highest solvency ratios in Europe (Core Capital of 26%).

27Volume 15 Tharawat magazine www.tharawat-magazine.com

FEATURESBanca March FaMily Business Fund

philanthropy; it established the Fundación Juan

March patrimonial and operative institution

dedicated to fostering culture and the arts in

1955. Through the Fundacion, the March family

also supports research in its Centre for Advance

Studies and sponsors the Banca March Chair of

Family Business at the University of the Balearic

Islands.

The Family that Invests in FamiliesThe March family has always considered family

businesses a viable investment opportunity. This

strategy has led to considerable success and the

bank holds family businesses in most of its private

investment portfolios. Taking their committment

to family-owned firms a step further, Banca March

established a unique portfolio that only invests in

family businesses. But why are family businesses a

good investment? According to José Luis Jiménez,

CEO of March Gestión, family businesses are more

profitable than non-family business in the long-

run partly because they are more conservative:

“Anytime you talk to a family member, they are

talking about the next generation and what they

want to leave them. They are not only talking about

short-term results.”

1955

1400

year

employees

In 1955 the Fundación Juan

March was dedicated to

fostering culture and the arts.

Banca March employs over 1400 people.

28 Tharawat magazine Volume 15 www.tharawat-magazine.com

FEATURES Banca March FaMily Business Fund

Fact is that more than 15% of the companies listed

in S&P 500 and Stoxx 600 are family businesses.

Moreover, historically, family businesses have

outperformed non-family businesses and also have

a better earning predictability. The Banca March’s

family business fund is a vote of confidence that

the intrinsic values of family businesses heighten

their odds of survival even during economic crises.

How Families QualifyFor a family firm to qualify as an investment

opportunity in the eyes of the Banca March, 25%

of the company at least must be in the hands of one

single family. Ideally, a senior family business member

is active in the executive committee or the board

of directors. The March family feels that a family

member involved at top level is an advantage because

they know their business better than anyone else.

Most family businesses on the long run perform

much better than non-family business. The Banca

March has experienced this first hand by investing

in them for the last 30 years and carrying out

specific research on this topic. The research

appointed by Banca March aims to explain why

family businesses perform better than non-family

business. A first conclusion is that family businesses

grow and create employment despite the crisis and

that they seem to go for low leverage and controlled

risk in investment.

Banca March did not only start the fund because

of its own convictions with regards to family

businesses but did it in response to investors

asking for such opportunities. Many family offices

for instance seem to prefer to invest in family-

owned companies because they are aligned with

25percent

25% of the company at least must be in the hands of one single family.

29Volume 15 Tharawat magazine www.tharawat-magazine.com

FEATURESBanca March FaMily Business Fund

the organisation to the next generation. However,

Banca March has found that companies that have

reached the third and fourth generation mostly

show the greatest potential as they tend to have

strong protocols and structures in place. The

March family knows from its own decades of family

history which faced them with many economic and

political changes, how crucial such structures are

and how they increase the odds of survival for

family businesses.

Through its family business fund, the March

family does not only think of the next generation

of the family but applies that thinking to the next

generation of investors as well. The family has its

own wealth fund and continues to invest, along

with its clients, into family businesses. Certainly,

seeing a century-old family business such as the

Banca March investing and believing in family

businesses, cannot fail but be credible and,

hopefully, encourage others to do the same.

José Luis Jiménez, CEO, March Gestión

IN COLLABORATION WITH

Through its family business fund, the March family does not only think of the next generation of the family but applies that thinking to the next generation of investors as well.

their clients’ values and philosophies. Through its

fund the March family has invested in all types of

family companies: The core criteria is the quality of

the business model not the origins of the business

or even its sectors or market capitalization, as

confirms José Luis Jiménez. The fund selects the

right businesses through its investment committee;

a body constituted by the bank’s most distinguished

professionals who undertake an analysis of the

economic environment, as well as the investment

strategy with regard to the family businesses.

Considering the Stage of the CompanyWhether a family business is a good investment

opportunity or not is largely determined by what

stage it is at. If the company is at a transition

stage it can be riskier to invest as not all family

businesses have been successful in handing over

30years

The Banca March has

experienced this first hand

by investing in family

businesses for the last 30

years.