Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Calastone throws ownership to private equity giant
Global fund back-office connector, Calastone, has sold a majority stake to US private equity player, The Carlyle Group.
In a release last week, the UK-headquartered Calastone said the deal would see Carlyle acquire most current shares including those held by venture capital firms Octopus Ventures and Accel.
Post the takeover, Calastone management, headed by Julien Hammerson, would retain minority stakes in the business founded in 2007. Since launch, Calastone has expanded to several jurisdictions, establishing a Sydney office several years ago to service Australia and NZ. The business, which smooths communication lines between managed funds and various interconnecting services, landed its first NZ clients in 2016 – MMC and Public Trust – ahead of stitching up agreements with most of the investment platform players.
In Australia Calastone has captured almost all platforms and over 60 per cent of the funds management market. While the firm now operates in over 40 countries, it has a smaller presence in the US that could be expanded under Carlyle ownership.
According to a Calastone spokesperson, “the backing of an investor of the calibre and reach of Carlyle will be hugely supportive to us as we expand into US markets – particularly as we engage with leading liquidity fund providers and portals following our entry into the money market landscape”.
JP Morgan Asset Management struck a deal with Calastone this May to run an automated settlements process for the group’s money market fund platform. The JP Morgan ‘Morgan Money’ trading platform has about US$1.9 trillion under management. Calastone also switched over to a distributed ledger technology – colloquially known as ‘blockchain’ – system last May.
“Leveraging this technology innovation, Calastone has scaled and diversified its strategy to develop from purely Mutual Fund services to offer automated fund services to the Money Market Funds sector,” the release says. “Today, the company serves over 2,300 clients in 43 countries and territories processing £200 billion of investment value each month.” Hammerson said Calastone still had “huge potential for growth”.
The storied Carlyle Group is also part of a takeover bid for the ASX-listed investment administration firm, Link, as well as a rumoured buyer of at least part of the in-play AMP business.
Earlier this year the NZ Super invested almost NZ$380 million in a Carlyle strategy targeting insurance and financial services. Carlyle reported more than US$220 billion under management as at June 30 this year.
– Investment News NZ
