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UBS Group to Launch Venture Capital Fund to Invest in Fintech

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UBS Group AG (UBS - Free Report) is mulling to launch a corporate venture capital fund to invest $10-$20 million in fintech companies. The bank is said to make the investments with its money set aside for the purpose, per a Bloomberg article.

UBS Group seeks to keep stakes in the companies for at least five years, per the article.

The bank will focus on investments in widely three categories — client engagement, investing and financing platforms, and improving underlying operations. Notably, UBS Group is in the process of screening potential investments and is also hiring a team dedicated to run the fund.

“UBS wants to further engage with and support fintech firms,” Mike Dargan, global head group technology at UBS Group, told Bloomberg. He added, “The new venture investment portfolio is a next step to accelerate our innovation and digitization efforts.”

Also, with the coronavirus outbreak, digital modes have become key investment areas for banks. UBS Group too is mulling to revamp its wealth management unit in order to save costs.

Per the article, the bank is also planning to enter the China wealth market with technology. It is eyeing a digital fund distribution license that would provide a plain-vanilla fund offering to rich China clients. Later, UBS Group seeks to use such a digital license to diversify into the advisory market, according to Edmund Koh, UBS Group’s head for the Asia Pacific region.

Our Take

The company continues to execute restructuring initiatives to free resources and invest in profitable areas to better serve clients. However, the top line remained under pressure due to persistent negative interest rates in the domestic economy.

UBS Group has lost 19.7% over the past six months on the NYSE compared with the 38.1% decline of the industry it belongs to.



Currently, the company carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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DBS Group Holdings Ltd.’s (DBSDY - Free Report) current-year earnings estimate moved north in 60 days’ time. Further, the company’s shares have declined 28.5% over the past six months. At present, it has a Zacks Rank of 2.

Macro Bank Inc. (BMA - Free Report) has witnessed an upward earnings estimate revision for the ongoing year in the past 60 days. This Zacks #1 Ranked stock has depreciated 20.8% over the past six months.

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