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.
Another big manager climbs aboard the alts express
PGIM has consolidated its alternatives units and appointed current real estate boss Eric Adler to head it up as it looks to shop a range of capabilities – including private credit, real estate equity and debt, and agriculture – to a yield-hungry institutional client base.
“Together the formation of PGIM Private Alternatives and Eric’s appointment reflect our firm belief in the importance of offering our clients seamless access to the full suite of capabilities across PGIM’s affiliates, particularly as institutional clients continue to increase their allocations to private alternatives,” said PGIM CEO and president David Hunt.
“Eric is uniquely qualified to lead PGIM Private Alternatives, having grown PGIM Real Estate into one of the largest real estate investors globally and leading a team of more than 1,200 investment professionals overseeing $210 billion in assets. I’m thrilled to see the next generation of PGIM’s growth in alternative investment strategies under his leadership.”
The move will see its existing real estate business – the third largest real estate investor and one of the largest agriculture investors globally – sharing a stable with the private capital business, which manages around $98 billion in private credit. Under the new structure the underlying investment strategies and portfolio and originations teams will remain separate, with each affiliate maintaining its own governance.
PGIM started expanding its private market capabilities with the 2021 acquisition of private equity secondaries specialist Montana Capital Partners and the purchase of a majority interest in Deerpath Capital in May this year. Its trajectory follows that of similar large asset managers, including BlackRock, which acquired private debt manager Kreos Capital in June and reshuffled the leadership of its alternatives unit in May to capture growing client demand it predicted would materialise in its 2021 investor presentation.
As active managers continue to lose market share to passive products, embracing the alternatives boom is one way back to the soaring profitability they’ve enjoyed in the low rates area. Closer to home, Franklin Templeton is looking to expand its Australian alternatives capability, while Magellan and other managers have flagged that they’ll open alternatives strategies or buy established businesses to round out their offerings.
