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Farewell to a Belgian stock exchange legend

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An old English proverb says that great winds blow on high towers. The recently deceased Albert Frère was such a high tower and he faced capfuls of wind in his life.

The most frequently heard criticism of Albert Frère, which dogged him for a long time, was that he was said to have held a clearance sale of a number of Belgian gems. Because of him, great Belgian companies such as Bank Brussel Lambert (BBL), Royale Belge, Petrofina and Electrabel ended up in foreign hands.

The question is, of course, whether these Belgian companies would have had any future on their own in this globalised world, where scale is becoming increasingly important. The resulting companies ING, AXA, Total and Engie respectively are now all part of players that are operating on a European or world level.

A true dividend aristocrat

Frère's strategy was to exchange his great interest in Belgian or other companies for a smaller interest in mostly French companies of a much larger size. As an important minority shareholder, he invariably managed to acquire a seat on the board of directors to keep an eye on the operational state of affairs of his interests.

Those interests in European champion businesses ensured a stable dividend flow towards GBL, the listed entity he used to hold his interests. These incoming dividends were then mostly transferred on to GBL's own shareholders, which gave GBL the status of somewhat of a 'dividend aristocrat'. They rarely concerned companies that pay uninterrupted dividends for many years, never reduce them and even increase them year after year. There are barely a handful of them listed on the Brussels stock exchange.

A perfectly controlled legacy

Albert Frère had been preparing the transition to the next generation for about ten years already. He left the chairmanship of GBL to his son Gérald Frère. The day-to-day management of GBL as CEO went to his son-in-law Ian Gallienne. It’s a family affair.

Besides the criticism, there was also appreciation for Albert Frère's achievements. In 1994, King Albert II of Belgium made him a baron. In 2008, French president Nicolas Sarkozy presented him with the grand-croix de la Légion d'honneur, the highest French order of civil merit. The same honour went to his Canadian partner Paul Desmarais. Both Frère's and Desmarais' family have worked together for generations. Once again, a family affair.

Albert Frère perfected the cascade structure: he used holdings that involved a relatively limited amount of his own resources to exercise control over a larger whole. This allowed him to build an empire that invested in many sectors, such as energy (Total, Engie), the media (RTL, M6), building materials (Lafarge, Imerys) and food & beverage (Pernod Ricard, Cheval Blanc).

However, not every investment turned out to be a huge success. When Frère was still in charge of GBL, he was often criticised for not diversifying the investment portfolio enough. Some said he invested almost exclusively in French companies in the energy and construction materials sectors. These sectors did not always perform well, hence the criticism. In his typical style, Frère simply ignored this criticism and succeeded in making GBL one of the largest investment companies in Europe.

Following the introduction of new family blood on the board, the historical interests were reduced in recent years to be replaced with businesses and sectors that showed greater growth potential according to the Frère family. For example, GBL invested in consumer goods companies, such as Adidas and Ontex, and became the largest shareholder of Belgian company Umicore.

Like Sofina - that other leading Belgian holding company - GBL has paid more attention to private equity and venture capital in recent years and has now invested in unlisted companies.

What some people may not know is that Albert Frère was not just a businessman. He was also a great patron of the arts. He founded the Charles-Albert Frère fund in memory of his youngest son, who died in 1999 at the age of 19. The fund, which is also supported by the other members of the Frère family, provides assistance to the homeless and offers palliative care to children who are terminally ill. Albert Frère said that out of everything he achieved in life, he was most proud of the fund.

Albert Frère's life is beautifully summed up in a quote from Winston Churchill, who was an important inspiration to Frère: : “opportunity in every danger”.

Kristof Mertens

Product Manager Investing & Trading

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