a world where banks are pulling back from their traditional
funding role, there is an ever-growing number of opportunities
for asset owners to fill the gaps.
number of partnerships between asset owners and asset managers
has been gathering pace over the past five years and
involvement is no longer the preserve of giant pension
the aftermath of the financial shocks of 2008 large funds
decided they wanted more control over their destiny and were
also unhappy with fees, according to Luba Nikulina, global head
of manager research at Willis Towers Watson.
asset owner community became more aware of the overall bias in
the structure where most of the value created goes to the asset
management industry rather than the asset owners," she
was also a realisation that a large tailored deal with a fund
manager, particularly in the private assets space, made more
sense than having an ever-increasing number of manager
entry-level deal involves the direct supply of a significant
sum of capital for an opportunistic deal at relatively short
notice. It often stems from a friendly agreement with a private
helps a fund manager that does not have time to secure a group
of smaller investors to provide the same sum and it can also be
more appealing than partnering with a rival manager.
next stage up is a more formal structured deal. Here, the asset
owner can often be seen to be taking the initiative, accept
more of the risk and have the upper hand.
October 2016, the New Zealand Superannuation Fund became a
significant investor in Boston-based Longroad Energy Holdings,
which focuses on the development of wind and solar energy
generation in the US.
followed the 2014 deal between the Californian Public Employee
Retirement System (CalPERS) with UBS Global Asset Management to
purchase global infrastructure through the creation of a new
fund management firm funded with 97% capital from CalPERS and
3% from UBS.
for the world’s gargantuan funds, such
partnerships are a fact of life. Almost any allocation the
C$300bn Canadian Pension Plan (CPP) makes with a fund manager
is so large it is best structured as a
2016 it formed these relationships at a rate of one per month;
bringing patient long-term capital to the table attracts plenty
of willing suitors. One example was a 25% stake worth $375m in
the Raffles City China Investment Partners III fund, which will
invest in Chinese gateway cities. To help service such deals in
the region, CPP has an office in Hong Kong.
should also be noted that many relationships do not get
publicity, especially those between hedge fund managers and
asset owners. For some asset owners, managers such as
Bridgewater not only offer diversification of returns but
detailed and expert advice on macroeconomic issues.
can smaller funds do such deals? Andrew Drake, a partner in
pensions and investment consulting business at PwC, says that
they typically only start to make sense for funds that are over
$6-7bn in AuM.