Blackstone and Paradice: two sides of the same coin

Australian institutional mandates are the shared goal, but US private equity giant Blackstone Group is setting up a Sydney office to get them, while Paradice Investment Management is extending the other way, establishing a beachhead in Denver, Colorado. Blackstone has tapped Phil Levinson, most recently of DB RREEF in Singapore, to establish a Sydney office both to service existing clients such as Telstra Super, and also raise money for subsequent Blackstone funds. Levinson was last month understood to be in the process of getting an Australian Financial Services Licence. Meanwhile with all its existing funds soft-closed, Paradice Investment Management has set up an office in Denver, Colorado, staffed by three analysts formerly of Artisan Partners, to launch a global small-mid cap capability which has already found seeding of AUD$200 million from an existing Australian client.

It is understood the seeder is the AUD$16 billion REST Super, a supporter of Paradice IM since its establishment in 1999. The reputed AUD$200 million will be through a mandate structure, expected to be live by the end of February. It would represent the bulk of the US$300 million initial cap for the capability, which will be offered to Australiabased investors only at this stage. The portfolio manager of Paradice IM’s global small-mid cap product will be Kevin Beck, who spent three years on Artisan’s International Value Fund (which won the shop Morningstar’s International Fund Manager of the Year prize in 2008) prior to six years as a senior analyst at Denver Investment Advisors, where he first met Paradice IM founder, David Paradice.

“It was round the time I set up the boutique and I wanted to travel to the US and talk to people about small cap stocks. Kevin returned my calls, and we’ve been in touch ever since,” Paradice said. Beck and the two fellow Artisan International Value Fund analysts who’ll join him as Paradice employees, Anand Vasagiri and Jane Danziger, shared Paradice IM’s value-seeking and contrarian approach, Paradice added. “Our Australian clients have found it really hard to find a good global small cap manager, so they’ve encouraged us to set one up ourselves. We spoke to Kevin about doing this three years ago, but we all ended up deciding small caps were too expensive at the time,” Paradice said.

An attraction of the move for Beck was that the Paradice IM branch office would be based in Denver, where he lived for many years prior to a shift to San Francisco with Artisan. “Denver has a really vibrant funds management community, you’ve got Marsico here, Janus are two blocks from the Paradice office, so you get a good flow of company executives coming through. It’s in a great time zone because you get the close of Europe and the open of Asia, plus it’s a direct hub for United Airlines so it’s easy to get to Europe. And the fact it’s my wife’s home town doesn’t hurt,” Beck said. The Paradice global small-mid cap capability will initally be capped at US$300 million, a fraction of what Beck’s Artisan fund was managing, allowing him to drill deeper for value in the sector.