Superannuation funds invested in Wilshire Private Markets’ locally domiciled private equity funds-of-funds face long and complicated negotiations over the future of their holdings with the manager, which has seen many of its key staff resign recently.
Following a short visit last fortnight by Kevin Nee, the US-based president of Wilshire Private Markets, during which he is understood to have told investors the company will relocate two consultants from the US to Australia to help it recover from the exit of regional boss Ovideo Iglesias, among other key staff, super funds can do little more than wait for further notice.
“It’s up to Wilshire to make the next move,” said Sam Sicilia, chief investment officer of HostPlus, an investor in Wilshire. “Things move much faster in the listed markets.”
Executives at some other investor funds, such as Glenn Davis at Maritime Super and Jim Christensen at Telstra Super, were not too alarmed at the situation because their funds’ investments are quite mature. At AGEST, chief executive Michael Seton preferred to leave the negotiations to asset consultant Frontier Investment Consulting, which is closely monitoring $3 billion of client capital within the Wilshire funds.
But it’s understood that Wilshire’s second Asia-focused fund, which is supported by nine super funds, had drawn down only half of investors commitments by the time Iglesias and director of investment research Bill Humphries left last month.
The departures triggered a clause in the limited partnership agreement preventing the manager from deploying any uninvested allocations. It’s understood this provision applied to most of Wilshire’s products in Australia, and that a 75 per cent majority vote from investors will be required to force Wilshire to make way for another candidate manager.
But investors are not certain of this. “If the trust deed is subject to interpretation in any way, we will need a legal opinion on it. If it says 75 per cent of investors, does it mean investors with discrete mandates, or everyone in the asset pool?” Sicilia asked.