Swiss derivatives specialist Leonteq is working to reduce its operating costs after a difficult period that prompted its share price to plunge. The company now seems to have turned the corner.
Leonteq seems to have reached calmer waters again. The derivatives specialist had been in the headlines for all the wrong reasons around year-end, with a set of bad results and an unfortunate communication strategy.
Rainer-Marc Frey, a Swiss billionaire, came to the rescue and acquired a stake of at least 7.5 percent in the Zurich-based company. His presence helped the company back on its feet and the share price, which had fallen to almost 25 francs at the beginning of the year, recovered steadily since. Today, the company’s stock is worth 44 francs apiece again. Which provided Frey with a healthy book profit.
Turning the Corner
The share price has soared in the past three weeks, with gains of as much as 4 or 5 percent a day. Some of the reason behind the gains were talks between the company executive and Frey. Leonteq also has returned some healthy figures in the first couple of months, according to sources within the company.
Leonteq is working to reduce its operating costs as planned. The company previously said it would cut annual spending by 30 million Swiss francs. To reach that amount, Leonteq has to reduce its workforce and re-evaluate the various branches it operates.
Office Space for Rent
In London, the Swiss company asked Cushman & Wakefield, a U.S. real estate advisor, to find a tenant for office space it doesn’t need.
The reason why Leonteq is burdened by unused office space is down to a misperception about its growth potential. Based on its estimates, it agreed to contracts for office space for which it will have no use for the foreseeable future.
Singapore and London Branches
Apart from London, Leonteq is faced with this problem in Singapore, where the company in May 2016 opened its new offices in grand style. A sizeable amount of the new offices however have never been used and will probably have to be let as well, according to a spokesman at the company.
Despite its problems, the company maintains its commitment to Asia, the spokesman added. Asia was still the region with the strongest growth. While business is developing nicely, the company is working on a reduction of its operating expenses. Leonteq has been able to conclude some first trading transactions in Japan.
Co-Founder Takes Charge in Asia
Leonteq has decided to send Sandro Dorigo, one of the company’s founders, to Asia as chairman of the local branch, surveying the work in the region.
Analysts said that given the progress the company has made this year so far, the share price may reach 50 francs or more later in 2017.
