Privately-owned property and investment firm Bennelong Group is looking to build its funds management division by partnering with a suite of investment managers in a fund incubator type of relationship.
Ex-IOOF head of retail funds management Jarrod Brown joined Bennelong Group last September as chief executive of the funds management arm to head the new push. Brown said the Melbourne-based investment firm is looking for managers who want to focus 100 per cent on funds management and outsource the rest – “the licensing, compliance, marketing, the works”. “It is a holistic solution as opposed to just providing seed capital,” he said.
The Wilson HTM Investment Group-owned fund incubator Pinnacle Investment Partners is most like the model Bennelong is looking to build, he said. Brown said the plan is to set up two or three boutiques this calendar year, beginning with the hunt for a manager with large cap Australian equities expertise – “one that can run deep scale strategies”, he said.
A similar search is underway for a manager of Asian equities. On that front, Brown said Bennelong is in discussions with “a few potential global alliance partners”. However, in the long term Bennelong wants to build a suite of non-correlated assets. The incubator model was chosen to build funds management capabilities rather than directly employing fund managers as it facilitated shared-equity arrangements. “Equity participation of the asset management team is a critical factor driving alignment of the team with the investor and in retention of the [portfolio] manager,” he said.
The division of equity ownership will vary depending on factors such as the boutique’s capital requirements, the size and depth of the team, profile, and marketability, among other things, according to Brown. Bennelong Funds Management currently has around $420 million in funds under management. It has $60 million in a large cap Australian equities hedge fund managed by Richard Fisher, which Brown said is the only “pairs” strategy in Australia – a conservative hedge fund strategy quite common in the United States.
The major part of the FUM is in two funds investing in commercial property, together managing around $360 million. Bennelong Group is owned by Jeff Chapman, a Melbourne-based entrepreneur. The total value of the group is valued at around $500 million, according to BRW Magazine’s Rich List 2007.
