One thing is for sure in the European private equity fund managers’ space, a U.S. presence is a must-have if you want to assert yourself as a global player and have credibility with your investors.
This seems to be true for the veteran giants, which have tens of billions in their coffers, such as Netherlands-based AlpInvest, U.K.-based Pantheon and Swiss-based Partners Group, as well as the more modest players, such as Switzerland-based fund-of-funds Adveq and CapVent and London-based Hermes GPE.
Research firm Preqin reported that there are 28 fund of funds managers based in Europe with a U.S. presence, out of a total of 115 registered fund-of-funds.
However, not all of these are actively investing in the U.S. at the moment. Switzerland-based Unigestion, for example has a New York-based office in which the sole focus is fund manager research.
While a U.S. office is essential in establishing a global presence, an Asian base is also fast becoming a prerequisite.
A recent example is global fund manager Hermes GPE, which announced in July that it would set up of its first U.S. office in Boston and, at the same time, a Singapore office that will form the new hub for Hermes GPE’s operations in Asia. Hermes GPE manages more than £5.0 billion of capital in private equity and private infrastructure for institutional investors and pension funds worldwide.
The Boston office will be led by Delaney Brown, Hermes GPE’s Head of the Americas, who was previously based in London. The Hermes GPE team has been investing in the U.S. on behalf of its clients since 1996 and currently manages more than $1 billion in U.S.-based assets.
The Singapore office is headed by Saki Georgiadis, who succeeds Pavan A. Gupte as Hermes GPE’s head of Asia. Georgiadis has been part of the Hermes GPE team since 2005. The Hermes GPE team has been active in this region for over a decade, with current investments of over $600 million in more than 30 private equity funds, private infrastructure funds and co-investments.
Swiss fund-of-funds CapVent, which has some $1.2 billion under management, has invested in Europe and the United States, with U.S. activity accounting for $417 million of its funds under management. But the firm has recently slowed its U.S. investment pace, and is now concentrating on Asia, where it has set up offices in India (Bangalore, Mumbai, Panaji) and China (Shanghai).
CapVent’s U.S. team comprises one professional, Eric Oberfield, who is vice president of investors relations.
CapVent’s most recent U.S. commitment was on behalf of German-based fund-of-funds RWB to lower mid-market buyout firm River Associates. The firm says that its next U.S. investment is planned for 2012.
David Currie of Edinburgh, Scotland-based SL Capital Partners, agrees that, until recently, global for many Euro players simply meant having a presence in Europe and the United States. But he says Asia is increasingly in demand as part of any firm’s global footprint.
We gain benefits from other perspectives from our colleagues in Asia and Europe and avoid the tunnel vision from being focused on one region.
Lee GardellaManaging DirectorAdveq
“We don’t have an Asian office or Asian investments, but we’re keeping an eye on it and it’s very much on the radar,” Currie says.
SL Capital Partners opened its Boston office in 2003. There are currently seven professionals on the ground there and they hope to expand the team soon. U.S. assets represent 10% of the business’ €5.3 billion total assets under management. Currie’s main objective is to grow the U.S. so that it becomes a comparable offering to the European office.
“One of the benefits of being [here in the United States] is being able to offer a broader product suite,” he says. “Our main focus has been Europe and for many clients that remains an attractive option.”
For those firms that have launched a U.S. office, they seem to more or less double their assets under management. Both Adveq and Pantheon report that their U.S. assets under management are about half of their total assets.
Founded in Zurich in 1997, Adveq has had a U.S. presence since 2007 and also has offices in Frankfurt, Germany, and Beijing, China. Managing Director Lee Gardella set up the U.S. office, which now has nine professionals on the ground and is working at full capacity. Of its $4.3 billion under management, Gardella says more than half are U.S. commitments.
“There are benefits of having multiple offices around the world and acting as one globally integrated investment organization,” he says. “We gain benefits from other perspectives from our colleagues in Asia and Europe and avoid the tunnel vision from being focused on one region.”
Pantheon Partner Susan Long McAndrews leads the group’s North American primary fund investments from its San Francisco office. She says although the business has strong roots in the United Kingdom, its U.S. clients think of it as a global business with a strong, U.S.-based investment practice.
Just under half of Pantheon’s $24.3 billion assets under management are invested in the United States. And of the firm’s four offices worldwide, San Francisco is Pantheon’s second largest.
“Our GPs in the U.S. think of us as a U.S.-based team, GPs in Europe think of us as European and in Asia they think of our investment professionals as local players,” she says. “That is very important in terms of really having a deep understanding of your market instead of just setting up satellite offices, often staffed with expats.”
She adds that the best deals come from GP referrals. For example, Pantheon was a lead investor in San Francisco-based mid-market firm Altamont Capital Partners, a spin out of San Francisco’s Golden Gate Capital. Altamont closed its first fund in January this year at $500 million.
“There are only a handful of investors in that fund, all of them knew the team at Golden Gate, and it was not an opportunity to be missed,” McAndrews says.
Angela Sormani can be reached at firstname.lastname@example.org.