A new European boutique asset management platform is looking at add an Asian shareholder to help identify local fund management ‘affiliates’.
It is already in active discussion with a potential shareholder in mainland China.
IM Square, whose founding shareholders comprise the French firms Amundi, Eurazeo and La Maison, aims to acquire minority stakes in “entrepreneurial” asset management companies in the US, Europe and Asia.
The shareholders have collectively agreed to commit €40 million ($43 million) to finance IM Square’s initial investments. The platform aims to invest a minimum of €250 million within the next two to four years.
Launched in June, IM Square is the brainchild of Philippe Couvrecelle, a former chairman of Edmond de Rothschild Asset Management, and Jean Maunoury, a former Edmond De Rothschild fund manager. Michel Cicurel, chairman of the board of La Maison, is also a former chairman of Edmond de Rothschild.
In addition to providing financial backing, IM Square will assist these asset management companies with their international business development.
Couvrecelle told AsianInvestor: “The objective is to create a virtuous ecosystem bringing together entrepreneurial asset managers, international distributors, and investors.
“A shareholder in this region will help us to analyse the quality of our targets and together with our other shareholders, we have the capability to help affiliates in Asia to develop abroad.”
IM Square is initially targeting US boutique fund houses who need a partner to develop their business in Europe. “These firms don’t need capital," Couvrecelle said. "The majority of managers are aged 40 to 55, and they just want to see their businesses grow. We bring an industrial approach that will allow them to expand their business utilising our connections in key overseas markets. We have very powerful shareholders.”
The concept of an investment collective buying stakes in entrepreneurial asset management firms is well understood in the US; the best-known example being Affiliated Managers Group (AMG) which currently has around $500 billion under management.
The genesis for IM Square came from Couvrecelle’s days running the Natixis fund of funds business 15 years ago where, he said, “an ability to choose the best fund management partners was crucial.”
“For the asset management company, it’s a choice between working with partners or going it alone and setting up an office in an overseas location. But that’s often a hard thing to do.”
For IM’s part, it recognises it needs to have a shareholder in Asia with sufficient power and influence to allow it to operate successfully in the region. He said the firm is already in active discussion with a potential shareholder in mainland China, though he declined to name the firm.
Amundi already has a Chinese joint venture in ABC-CA Asset Management, with Agricultural Bank of China (ABC), in which it has a 33% stake. Couvrecelle would neither confirm nor deny that ABC is the firm he is talking to, but he did say that IM Square is not specifically looking for an asset manager as shareholder. “What is important is for us to have a powerful Asian shareholder with distribution across Asia.” That whittles it down to only a few firms on the mainland who would have that breadth of coverage across the region.
IM Square currently has 30 asset managers as potential affiliates. The first one is expected to be signed up sometime in the fourth quarter of this year.
He stresses this is not a private equity venture. “We will not be looking to exit in a few years. We want to create a permanent business. And we are not looking for additional fees like a third-party marketer would.
IM is targeting long–only fund firms with $1 billion to $15 billion under management, and will only consider groups that have a consistently good track record and an investment team that has been together for, ideally, 10 years.
They will look to take between 20% and 40% of each company. By the end of 2016, Couvrecelle predicts IM Square will have four partner asset managers, 2-3 in the US and one “hopefully” in Asia. The four partners will have between $25 billion and $40 billion under management.
If the Asian project takes off as planned, Couvrecelle says IM Square will open an office in Asia.