Updated Monday, August 31, 2015 as of 3:50 PM ET

UBS Hunts for Hidden Billionaires as It Expands in Africa

(Bloomberg) -- UBS AG, the Swiss bank seeking to boost profit from wealth management, said it plans to expand in Africa as economic growth rates surpassing 5 percent boost demand for banking services from the continent’s rich.

“Wealth management is key to the Africa franchise,” Sean Bennett, the Johannesburg-based managing director of UBS in sub- Saharan Africa, said yesterday in an interview. “That’s what we lead with. We want to increase our physical presence before year-end and then do more in the next few years,” he said.

UBS has 80 people in South Africa and offers investment banking, equities research, debt capital markets services and asset management across the continent. The lender globally wants its wealth-management units to contribute half of pretax profit by 2015, compared with 32 percent a decade earlier, and is targeting African entrepreneurs and high-net-worth individuals who have at least $3 million to invest, Bennett said.

“When countries grow at 7 percent, that’s a lot of people starting to make serious money,” Bennett said. UBS has “hardly touched the tip of the iceberg” when it comes to banking Africa’s wealthiest, he said.

While UBS competes with rivals such as Citigroup Inc. and Standard Chartered Plc in Africa, the Zurich-based bank focuses on managing funds that have been transferred outside the continent, reducing competition with domestic lenders, he said.

Nigerian growth is expected at 7.2 percent this year, according to the International Monetary Fund, while the organization said in April that Ivory Coast and Mozambique will both expand 8 percent next year, the fastest pace in the region.

Hidden Billionaires

The industries contributing most to wealth creation in Africa include resources, retail and consumer products, and telecommunications, Bennett said.“An example would be all the shopping malls going up in Nigeria. If you can get it right, there’s a lot of money to be made.”

Africa may have as many as 200 “hidden” billionaires operating in the unofficial economy who will seek to legitimize their wealth in the future, investor Mark Mobius said in September. Aliko Dangote, Africa’s richest man, is benefiting from the continent’s economic growth, adding $6 billion to his wealth this year, taking him to $20.6 billion, according to the Bloomberg Billionaires Index.

“There are billionaires’ names out there that you wouldn’t recognize,” Bennett said, without saying where the bank plans to expand in Africa. With UBS mostly catering to people who are already high profile, there is scope for growth among the hidden billionaires, he said.

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