A new asset-management firm operating in London but backed by continental European family wealth is taking majority stakes in boutique investment shops. It has recently acquired ownership of a young Singapore-based equity long/short boutique called Ellis Munro Asset Management.
Jonathan Little, partner at Northill Capital in London, says the post-2008 environment has changed for smaller asset managers. No longer can they build assets quickly with a good story and modest amounts of capital. They need to have the infrastructure to meet institutional investor requirements.
Northill is aiming to provide that, thanks to a roughly $1 billion mandate in working capital, provided it finds a particular kind of business opportunity.
Building a multi-boutique model is familiar territory for Little, who was previously international chairman at BNY Mellon Asset Management, a role he exited in 2010 to join Northill. The family behind the new venture had decided to establish a long-term, serious asset management business, “to throw off cash”.
Like BNY Mellon, Northill acquires specialist managers, gives them autonomy to get on with investing, and provides support in other parts of the business. Unlike BNY Mellon, it is private, not regulated by US banking authorities, can reward partners with equity and doesn’t have to report earnings on a quarterly basis.
It is also aiming to remain much smaller than, say, an Affiliated General Managers, by setting a limit of 10 investee managers. So far it has invested in five, the latest being Ellis Munro.
Little says Northill wants to find older, experienced investment professionals looking to continue running portfolios but no longer interested in being CEOs and dealing with burgeoning compliance needs. The target manager is in his/her 50s or even 60s, with an eye on exiting the business in five to seven years, but in a way that preserves the firm. For that, Northill requires majority, but not absolute, control.
Ellis Munro is a little different in that its founder, Andrew Lloyd, is young. He is an investment obsessive with a family history in Asia that stretches back several generations. (The firm is named after ancestral family names.) Although the family is now back in London, Lloyd has been running a concentrated portfolio of Asian equities with a long bias. Three years ago he decided to return to his roots in Singapore.
Northill’s seeding gives the flagship strategy over $50 million of assets, allowing it to hire more people and establish an office in Singapore’s central business district. It also has enabled Ellis Munro to build a track record without feeling the pressure of needing to acquire more assets.
“We didn't speak with investors last year,” Lloyd says. The firm is now armed with a three-year track record and is now beginning to market itself to clients such as Asian sovereign funds and US endowments.
“We will look to build a concentrated client base over the next 18 months,” Lloyd says, noting that clients need to be committed for the long haul, and not require liquidity.