T.Rowe Price will offer a ‘distribution management service’ to local institutions as it continues to rebuild its Australian business under director Murray Brewer.
The distribution management service was becoming more prescient as global private equity continued to mop up investor inflows and major listed companies, according to T. Rowe Price chief executive officer, Todd Ruppert. “;A pension fund will get a milion shares from their private equity managers’ exit strategy for a particular company, and really have no idea what to do with them,”; Ruppert said. “;Our bottom-up analytical skills can determine whether they are better off crystallising a profit straight away or holding on to the stock – private equity IPOs tend to take an immediate haircut once they begin trading.”; At this stage, Ruppert said only a handful of Australian institutions had a private equity portfolio large enough to justify the service, which tends to be utilised over the period where a private equity fund is winding up. However Brewer said it would be offered as an adjunct to the high-conviction global equity fund currently being sold here. The pain of T.Rowe Price’s loss of a $1.7 billion QIC mandate was ameliorated recently by a $250 million-plus assignation from Unisuper, as well as berths on the BT and Macquarie platforms. The global equity fund changed strategy in April 2005, with new portfolio manager Robert Gensler shifting it from a US/ex-US structure with a 2-3 per cent tracking error to a sector-based fund with 8-10 per cent tracking error.
Hostplus chief investment officer Sam Sicilia has declared that for as long as he and chief executive David Elia are overseeing the $110 billion fund, there will be no investment internalisation. However, he acknowledges that if the institutional asset manager business model comes too much under pressure, it poses risks and instability to Hostplus’ externalisation model.
Darcy SongSeptember 10, 2024
