Allco Finance Group will today signal its intentions to expand in institutional funds management when new managing director, David Clarke, backgrounds investors on an upcoming wholesale alternative fund.
Clarke, who joined Allco last month, will address a gathering of NAB Custodian Services clients in Sydney – and later this week in Melbourne – on investing in a mix of transport leases. Allco, which has been financing large leveraged leases for about 20 years, is building a fund – the Allco Alternates Fund – which will combine investments in the three main transport classes of aviation, shipping and rail. Dominic Corrigan, Allco’s director of distribution, said yesterday that the move was part of the transitioning of Allco, formerly a private structured finance house, into a globally diversified financial services company. Clarke, a former head of Westpac Financial Services, has stepped in to the new role of managing director. Corrigan said that the new fund represented the first time that Allco would blend its main alternative assets into an unlisted fund. Testing had shown that the fund should deliver equity-like returns or higher, with lower volatility and at an almost zero correlation to the major markets. He said that the fees would be competitive in line with institutional offerings. Allco had also committed to having a majority of independent directors on the boards governing each investment entity. The company will also be a co-investor in the fund. “The underlying assets are global; there is market depth, solid cashflows and the assets are liquid. There’s about $US600 billion in operating leases over transport assets written each year,” he said. There was also a backlog of demand for assets, he said. “China needs more airline capacity over the next seven years as a result of strong passenger demand than currently exists in all of Europe and America.” The fund’s diversification – correlated most closely to world trade – comes from the three transport asset classes and also a diversity of lease terms and expiries. There are different types of planes, for instance, each with different returns characteristics. Shipping tends to be the most volatile of the three transport asset classes. Allco was formed in 1979 and since then has organised about $64 billion in transactions for transport assets. It has over 400 staff in offices including New York, London, San Francisco and Singapore as well as Australia. Patrick Liddy, NAB Custody’s director of marketing, said the group had arranged the client briefings with Allco because of the growing interest in new types of investments.
Since taking over the top job at the $44 billion Funds SA more than a year ago, chief executive John Piteo has ushered in an investment function overhaul and wrapped up an important stage of the fund’s five-year data transformation program. It pledges to recentre around investment performance and more efficient processes, as the “missing piece” has been found in incoming CIO Con Michalakis.
Darcy SongJanuary 10, 2025
