The vigilantes aren’t back – yet. But the United States’ fiscal position is worse and the spectre of inflation has returned, and this time they would have a much stronger case, according to Ruffer’s Steve Russell.
The amount of money rushing into private markets asset classes has made them more efficient, and investors will need to be more selective – and peruse different opportunity sets – if they want to meet their great expectations.
Park Square Capital sets up shop down under
Park Square Capital has its sights set on the land down under, opening a Sydney office to chase flows amidst booming demand for private credit and international diversification from big superannuation funds.
Founded in 2004 by Robin Doumar with the backing of a number of Canadian pension funds, Park Square – which manages circa US$16.5 billion – was an early mover in European credit and has since expanded its offerings into junior debt, large size senior debt and middle-market direct lending across Europe and the US. In Australia it already manages circa $500 million on behalf of super fund clients, and Doumar thinks the time is right to pick up some more.
“What we’re seeing is continued growth of the asset class as institutions around the world become more sophisticated in how they deal with what they used to call their fixed income allocation, as well as components of what used to be their alternatives buckets,” Doumar tells ISN. “There’s more interest in credit of all shapes and sizes, because it’s so additive to the overall asset allocation.”
“We’re delighted to be opening up in Australia to support the growth of our investor base. We have some super high quality, super sophisticated clients in Australia; we want to continue that momentum and we think local presence is very valuable.”
Park Square maintains 10 offices globally, and already has a presence in Tokyo and Seoul. The local office will be headed up by Hugh Walters. While the biggest alternatives managers usually maintain antipodean outposts, pretty much everybody else opts to fly in a platoon of managers and BDMs a couple of times a year.
It’s a testament to the growing global importance of super funds and Australia’s private wealth scene – as well as the local opportunity set – that more and more managers are setting up down under. A number of new alternatives shops have descended on our shores in recent years, with Advent International opening up in Sydney, secondaries outfit Coller Capital landing in Melbourne, and Ares building out its local private equity capability.
Meanwhile, super funds have been grabbing as much private credit as they can, with AustralianSuper awarding a super-sized US$1.5 billion mandate to Nuveen-affiliate Churchill Asset Management, Hostplus handing $500 million to Apollo for its Asia-Pacific credit strategy and UniSuper investing in senior secured loans through Revolution Asset Management, a manager it picked up in its merger with Australian Catholic Super.
“Australia has a lot of very sophisticated (pension) plans that have been cutting edge in doing a good job of investing and are very performance oriented,” Doumar said. “That’s very attractive – we tend to have success with more sophisticated plans. The more sophisticated plans appreciate what we can provide, which is very differentiated performance in the private credit.”
Big managers are also increasingly targeting the so-called “small ‘i’ institution” – private wealth groups or family offices that are starting to build their own alternative asset exposures but can’t or won’t bring that capability in-house. While Park Square is also eyeing the private wealth segment, it primarily wants to deal with “big investors and their key gatekeepers”.
“If you think about the really big alternative managers, they’re getting tapped out in the institutional investor channel because their AUM is so large that it’s hard to grow,” Doumar said. “And if the performance isn’t great it’s especially hard to grow in that channel.”
“The wealth channel is rapidly growing, and many of the really big asset managers that are facing challenges in the institutional channel see that growth. And also, candidly, it’s a market that can be less sophisticated about performance. They might focus on other things, like brand. At our phase of growth there’s plenty of opportunity within the traditional institutional channel and then retail is upside. So there’s plenty to do.”
