Surging equity markets have driven the Future Fund’s return higher, but its prediction that inflation will be stickier than expected has been born out and it “remains conscious of the potential for significant deterioration”.
A number of super funds managing less than $10 billion have been slugged with an increase in their restricted APRA levy of more than 80 per cent even as the regulator pushes them to keep costs down.
Ex-Goldman’s Newco getting down to business
(pictured: Dion Hershan)
For TA Associates, the private equity manager with a penchant for funds management firms, the purchase of Goldman Sachs’ Australian equities and fixed interest businesses marks its 20th such deal. Dion Hershan, the new company’s managing director, tells a little about his plans.
Hershan has been the head of the Aussie equities business since he joined Goldmans in 2007. He will continue to focus on large-cap equities while co-head of Aussie equities, Katie Hudson, will focus on small caps. Roy Keenan heads up fixed interest.
TA Associates, it should be recalled, is also the new owner of Russell Investments. It has been investing in funds management businesses for more than 25 years. Last year TA Associates also bought NorthStar Financial Services Group, a US provider which acts as an outsource partner for advisors looking for funds management solutions.
The Goldmans deal announced in September involves management buying 50 per cent and TA Associates buying the other 50 per cent for an undisclosed sum, in what Hershan hopes is a “long-term partnership”. They have $8 billion under management, about 80 per cent in equities and 20 per cent in bonds. The equities is mostly long-only but the manager also has a long/short fund. The fixed income strategies include multi-asset and hybrids.
The yet-to-be-named new business will officially start about the end of this year, after regulatory and other approvals, with a staff of “north of 35”, Hershan says. About 15 of them will be investment professionals.
He is currently looking to hire some more people, particularly in the backoffice areas of risk, legal and compliance, as well as working on new contracts with outsource providers. Because Goldmans is retaining its international funds distribution in Australia, a lot of those sales and backoffice capabilities are remaining behind.
“TA Associates will be a great partner,” Hershan says. “They have a lot of experience and will help us develop our governance framework and also help develop talent.” Michael Berk, a TA Associates managing director who will be joining the new board, said last month that the Australian funds management industry was a large and growing market with increasing barriers to entry, due to rising regulatory and compliance costs, which meant the need for scale. “We’re excited about these market dynamics,” he said.
Hershan said last week that the firm was “not quite there” with the composition of the new company’s board, which would have an independent chair as well as management and TA Associates representation.
The new company starts with a good balance of not-for-profit fund clients and wholesale/retail business, Hershan says.
The potential big benefit for clients, if the team can deliver on the promise, is a manager with strong staff alignment with clients’ interests, focused solely on funds management without the distractions of sitting inside a very big global company, and also agile enough to adapt to market conditions and client demands.
– Greg Bright
