Mike Davis had been at Tyndall Investment Management less than two months yet has already got his former employees to work with him at the $22.5 billion asset manager.
Davis and Tim Martin started Causeway Asset Management in 2003 to invest in private debt. Now Martin and five others will join their old colleague June 4 at Tyndall’s Sydney offices on George Street.
“A lot of boutique money managers can have a lot of good strategies, but if it’s not a core strategy it comes down to manager risk,” says Davis.
Tokyo-based Nikko Asset Management, Tyndall’s parent, will not pay anything for the Causeway business, says Davis. Rather, both parties get what they want: Nikko adds a so-called alternative manager to its Australian business and Causeway gets some security by being under the Nikko umbrella.
Nikko has been talking to Causeway since last year. Davis and Martin went to Japan in 2011 to try and get Nikko’s parent Sumitomo Mitsui Trust Group interested in selling its loan products.
The planned 2011 initial public offering by Nikko, derailed by volatile markets, stymied Causeway’s Japanese plans.
In January Nikko’s Charles Beazley called up Davis and told him Tyndall’s then-managing director Craig Hobart planned to leave.
“I told Charles I wanted to give him some names,” recalls Davis. “Charles said: ‘Actually, we’re thinking of you for the job.’”
Davis started work in April. On May 24 Tyndall announced it planned to acquire the Causeway team.
Causeway plans to raise a second fund that will invest in senior secured loans and may also raise a fund to invest in water assets.
Its first fund, a $130-million investment vehicle raised in July 2007 to invest in senior secured loans and mezzanine debt, will “return all its capital to investors,” says Davis. The collapse of Lehman Brothers in September 2008 “impaired effective long-term returns,” he says.
Tyndall now has a staff of 73. Davis is keen to add institutional-sales people to sell not only Australian, but also Nikko’s Asian funds.
“I see Nikko’s business as different from larger money managers because of its focus on Asia,” says Davis. “There is a huge opportunity for us to be linked to that, to get your product into Asia and Asian product into Australia.”