Given Pantheon Ventures' near-20-year presence in Asia, it's perhaps surprising to learn that just one-tenth of its $22 billion in assets is allocated to the region. Yet the London-based private-equity fund of funds envisages that weighting rising to 15% in the next three years due to the region's growth potential.
Of course, the firm's clients have different views on Asia, so such adjustments will be made depending on their risk-return appetite, says London-based chief investment officer Colin Wimsett. Pantheon expects to build its headcount and AUM over time, depending on how markets and its fundraising progress, he says, adding that the firm has regional investment caps agreed with clients, beyond which it must gain approval for fundraising.
Certainly, rising regional interest among private-wealth and institutional investors in alternative assets such as private equity would help the firm if it sought more capital.
"We believe very strongly in the Asia story," says Wimsett. "We're very excited about how China and India are developing and about the increasing robustness of the private-equity manager universe." Pantheon started investing in Asia during the 1980s, set up in Hong Kong in 1992 and launched its first Asia fund in 1994.
Meanwhile, market conditions in more mature markets are likely be tough for the next few years, says Wimsett, but he adds that tough markets have historically been good for private-equity returns in the long term. In terms of target returns, he says Pantheon's clients are looking for consistent private-equity returns that outperform listed markets in the long term.
Last week's purchase of the firm by US asset manager Affiliated Managers Group (AMG) suggests Pantheon will be given free rein to develop in the direction it wishes. The UK manager will obtain a 15% equity stake and retain management autonomy, following the same model as for AMG's other investment boutiques.
The US firm will pay around $775 million in cash, with the potential for additional payments over the next five years, contingent on the growth of Pantheon's business. The deal is expected to close in the second quarter.
US firm Russell Investments, the previous owner of Pantheon, says the sale does not signal any shift away from alternative investments or manager-of-manager strategies.
AMG holds equity investments in 30 boutique investment management firms, with a total of $253 billion in AUM across a range of investment styles. As with its other managers, AMG will provide assistance in strategic matters, marketing, distribution, product development and operations.
Pantheon manages assets for over 300 global clients, including pension funds, endowments, government bodies and insurance companies. It has a team of 63 investment professionals in offices in London, San Francisco, New York and Hong Kong. It manages regional funds of funds, as well as global secondary funds of funds, global infrastructure fund of funds and customised separate-account programmes.