Wunderkind Steers Winterthur’s Private Equity Strategy –

Christoph Manser is one of those rare people who have guided and grown an institutional limited partnership from its onset. That’s pretty remarkable considering that the LP in question is Winterthur Group, the insurance arm of venerable Credit Suisse Group. Winterthur, as one of the world’s largest insurers, manages more than $100 billion in insurance funds. Given Manser’s relative youth-he’s just 34-it’s even more remarkable that he was asked to become Winterthur’s Head of Alternative Investments in 2000. At that time, the group’s alternate investment portfolio had assets valued at just $200 million. Since that time, the portfolio’s assets have grown to about $4 billion. As one might imagine, Manser has seen his life as a Swiss Banker take on the kind of hectic pace that his predecessors just a generation ago would never have imagined.

Born and raised in Switzerland’s St. Gallen, a lovely resort city near Lake Constance in the east of the tiny country, Manser went to school at the Swiss ETH, or Federal Institute of Technology, where his love of physics and mathematics almost propelled him into a career of research. Indeed, he spent his last months of university in research at the United States’ Argonne National Laboratories in Chicago. Despite that, Manser says that he knew that he would end up in consulting or in banking, so when he saw an opportunity to join a training program for UBS in Zurich he signed up.

His very first role as a trainee, in the portfolio management realm, established his life and career to date. Less than a third of the way into the program, he left to start a job as a fixed income analyst and portfolio manager. When UBS and SBC (Swiss Banking Corp.) merged and his group at UBS was shut down, he moved on to his second and only other employer to date at Winterthur. The insurer was looking for an analyst to work in its asset liability management group, where Manser’s background made him perfect for a role figuring out how the insurer should make allocations across asset classes. That position gave Manser a first look at hedge funds and collateralized debt obligations, at a time when both of those asset sub-classes were still being evaluated by insurers and banks worldwide.

When Winterthur decided to take its alternate investing management more seriously in early 2000, Manser was in the right place at the right time with the right qualifications. He was asked to take responsibility for Winterthur’s Alternative Investment Portfolio, which was created in 1996 and had grown to about $200 million in commitments in 10 blue-chip investment firms. He remains in that position today, where he oversees a group of seven professionals that manages about $4 billion in alternative investment funds.

Manser’s first task was to formulate a strategy for hedge funds and to implement the group’s exposure to the asset sub-class. “The reason we invest in hedge funds, is the need for stable income and hedge funds characteristically produce steady returns with a low volatility,” he says. “We need current income as an insurance firm, that’s why we need an asset allocation balanced between stable returns and capital gains. We’ve said that PE is interesting, but we can’t go too far into the J curve. We have to produce returns relatively quickly, hence our interest in hedge funds, secondaries and mezzanine funds.”

Today, Winterthur’s commitments to hedge funds are about $2.6 billion.

As for the $1.4 billion Winterthur has allocated to private equity, 55% is in buyouts, 25% is in venture capital and 20% is in secondaries and mezzanine funds. Those allocation percentages are likely to remain for the near future, as is the firm’s preference for European buyouts, although it does participate in U.S. buyout funds as opportunities arise, Manser says. Similarly, if opportunities arise to participate in top VC firms, Winterthur will participate. Manser says his group is looking at Asia, but at present it invests only through global players with a well-established presence in the region.

Among the venture firms that Winterthur invested in this year are Canaan Partners and Mission Ventures. “We came out of the [Internet] bubble years light on VC and started to allocate to the sub-class in 2002 and continue to allocate funds to VC today,” Manser says.

Winterthur is also an LP in such venture funds as MPM Capital’s $900 million MPM BioVentures III LP, which closed in 2003; Techno Venture Management’s $158 million TVM V Information Technology Gmbh & Co., which closed in 2002; and Thomas Weisel Venture Partners LP, a $255 million early stage fund launched in 2001.

On the buyout side, Winterthur placed bets this year on funds from Apollo, Charles Bank, Electra Europe and BC Partners, as well as Elevation Partners, a new media technology fund that counts rock singer Bono as one of its general partners. “We inherited a presence in U.S. buyout funds, so when we started a program in 2000 we over-weighted for buyouts in Europe,” Manser says.

In 2001, Manser’s group was absorbed into Credit Suisse’s banking unit, only to be spun out to the insurance arm once again in 2003. During that transitional period, “We had to defend and refine our alternate investing strategy several times to make our private equity strategy quite compelling,” Manser says. It can be stressful having a group of Swiss bankers constantly evaluating your work, but it nevertheless proved useful. “Management decided that instead of ending our commitment with private equity, as other banks did, that we would continue and even expanded in alternate investing,” Manser notes. It turned out to be a smart decision: “2003 was a good year for us, ’04 was fantastic, and’05 looks good, as well, so far.”

Christoph Manser

Head of Alternative Investments

Winterthur Group

Age: 34

Education: ETH Zurich, Switzerland, 1996.

Work History: UBS, 1997-98; Winterthur Group,

1998-present.

Family: Married with two children.

Down Time: Spending time with family.

Last Book Read: RMF

Favorite Book: HomoFaber

Favorite Movie: Kill Bill

Best Investment: Investment in a Swiss fund-of-hedge-fund company.

Worst Investment: A personal investment in Finnish telecom Sonera. “I went long on the stock before the Telco bubble burst.”

If I weren’t an LP, I’d Be: “A physics researcher.”

Advice for Fund Managers: “Don’t try to bullshit us.”

Email: Jerry.Borrell@Thomson.com