The ‘sunrise’ opportunity identified by GQG Partners
GQG Partners has identified how private credit is a “sunrise” part of the asset management industry as it sets up its own private credit solutions business.
It was announced in March that the firm would be acquiring minority interests in Avante Capital Partners, Proterra Investment Partners, and Cordillera Investment Partners for an aggregate cash consideration of US$71.2 million from Pacific Current Group.
These form the foundational investment in the firm’s new GQG Private Capital Solutions (PCS) division and operate separately from its global equities business.
The acquisition was completed in May and saw PAC chief executive Paul Greenwood move over to GQG to work alongside GQG managing director Mike Daley to co-lead the PCS business and investment team.
On a shareholder call for its FY24 results, chief executive Tim Carver shared details on why private markets are attractive for the business to invest in.
“We are always looking for what we call the ‘sunrise’ parts of the market. Where within the asset management industry are we seeing growth? Where are seeing talent flow to and where do we want to position our own business?
“Private markets clearly embody this and in doing the transaction with PAC, we were able to bring on board not only three great investment boutiques but also a team that we know quite well and has one of the longest tenures and deepest track record in the industry.
“We also know that our distribution infrastructure that we invest in can be leveraged to distribute high quality products to our current investors and future potential investors will find value added in their portfolios.”
Investment managers in closed-ended vehicles can provide relatively predictable, contractual management fees versus open-ended equivalents, and asset managers in the space typically have capital-light business models which result in high profit margins at scale, he said.
Those established asset managers also generate profits with minimal reinvestment requirements, offering an opportunity for high cash yield.
Carver added that GQG’s differentiation with the acquisition is that it is able to “catalyse growth” of its boutique interests with its existing institutional and retail distribution platform.
AUTHOR
Laura Dew
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