Supplements » Luxembourg 2018

MANCO PROFILES: Micro managers

Speach_bubblesProviders of third-party management company services are small, but the business has taken off in the past year. Though the list is by no means exhaustive, we present profiles of some of the emerging players in Luxembourg.

Third-party management company (ManCo) services are a growth business. Of that there is little doubt.

Commonly referred to as ManCos, these are typically provided by specialist fund administration houses. In the past year, the sector has seen growth not only in Luxembourg, but in outsourcing centres Ireland and Guernsey.

ManCos provide an infrastructure for Ucits funds and EU-regulated alternative managers to distribute investment products across the continent. The attraction as far as managers are concerned is the prospect of lower administration and regulatory compliance costs than those they would incur by running their own management company.

ManCo providers offer gateways to the EU for funds and firms outside of it – and there’s little doubt that many have an eye on the UK market post-Brexit.

Developments in this field in the past year include Luxembourg-based Fuchs Asset Management, the asset management arm of a Swiss finance group, which extended its services in the UK through a partnership with Lawson Conner, a compliance and regulatory outsourcing firm.

Maitland, a fund administration firm (profiled here) expanded its Luxembourg ManCo team with the appointment of Greg Kok and said it planned to cover other fund domiciles in the near future.

Maitland has what it calls “strong aspirations” to grow its ManCo business in the European fund market, adding that it intends to expand beyond the fund centres of Guernsey, Luxembourg and the UK.

Alter Domus, a Luxembourg-based fund administration provider, has expanded into the ManCo market with the acquisition of Luxembourg Fund Partners.

FundRock, meanwhile, appointed Enda Fahy last year to head up its illiquid alternatives function in Luxembourg. The position was newly created as the firm set out to build its alternatives business to cover illiquid assets.

Bear in mind that, given the popularity of ManCos, the profiles below represent only a small portion of the industry.


Title: Alter Domus Management Company
Parent company: Alter Domus Participations S.à.r.l.
Number of staff in Luxembourg: 20+
Assets under management in Luxembourg: €4 billion
Services to Ucits funds: Yes
Services to AIFMD funds: Yes
Other jurisdictions: France

Executive comment
ANTONIS ANASTASIOU, DIRECTOR
As a specialist in alternatives in the areas of private equity, real estate, infrastructure and debt, we at the Alter Domus Management Company believe that the implementation of the AIFMD has enhanced transparency and the level of disclosure to both institutional clients and also private investors, who previously would not have looked at investing into the alternative investment market. In a difficult industry with low returns for traditional assets, this injection of fresh capital provides alternative solutions with prospective higher returns on investments.


Title: MS Management Services
Parent company: Maitland
Number of staff in Luxembourg: 7
Assets under management in Luxembourg: €2 billion
Services to Ucits funds: Yes
Services to AIFMD funds: Yes
Other jurisdictions: UK, Guernsey, Ireland

Executive comment
GREG KOK, GLOBAL HEAD, MANCO SERVICES 

Following the launch of the Alternative Investment Fund Managers Directive (AIFMD) in 2014, the ManCo market has seen steady growth in this area. A significant number of Aifs [alternative investment funds] were launched in Luxembourg in 2017 in particular and we expect this trend to continue and accelerate, with private equity, private debt and real estate being the primary asset class drivers.

The ManCo industry is evolving, with clients more focused on a solutions-driven approach than simply the provision of local substance. This demand, combined with increasing regulatory pressure, is changing the composition of ManCo teams, with a greater number of highly skilled resources, in particular in the areas of risk, portfolio management and valuation.

The next 18 months will be affected by Brexit, with some UK-based investment managers seeking EU solutions for their distribution needs. Expected impact to leading ManCo markets is to see a downsizing of the UK market with resultant increases to Luxembourg and Ireland.


Title: Crestbridge Management Company SA
Parent company: Crestbridge Luxembourg Intermediate HoldCo
Number of staff in Luxembourg: 12
Assets under management in Luxembourg: €8.5 billion
Services to Ucits funds: Yes
Services to AIFMD funds: Yes
Other jurisdictions: Jersey

Executive comment
DANIELA KLASÉN-MARTIN, COUNTRY HEAD, LUXEMBOURG

During the past seven years, I have seen a major shift regarding the type of funds marketed through Luxembourg. AIFMD has driven more demands to launch real estate, private equity and venture capital funds and Luxembourg has positioned itself as a strong player within these asset classes. 

Over the years, we have developed excellent expertise in managing such assets at all levels of the value chain, including strong knowledge in middle and front-office functions such as risk management and portfolio management.

Another trend I observe is the shift from regulated funds to unregulated ones, such as the Raif, appointing an AIFM to benefit from the EU passport. These factors clearly put Luxembourg in a nice position as regards marketing EU alternative funds.


Title: JTC Global AIFM Solutions S.A.
Name of parent company: JTC Group
Number of staff in Luxembourg: 6
Assets under management in Luxembourg: €350,000,000
Services to Ucits funds: No
Services to AIFMD funds: Yes
Services in other jurisdictions: No

Executive comment
FEMY MOUFTAOU, HEAD OF BUSINESS DEVELOPMENT, LUXEMBOURG

The real estate market and the private equity activity are flying high, offering more opportunities than ever to all market players. The regulatory storms are coming to an end in the next years, offering a new playground for all white-label ManCos. ManCos whose business involves setting up platforms for third parties and delegating investment management to such third parties will likely see a spike in business for several years. This increase of activity flowing into the ManCos is more than ever showing the need for expertise. All investment managers, GPs should then see ManCos like regulatory experts, to guide them when setting up their new project.


Title: Universal-Investment-Luxembourg
Name of parent company: Universal-Investment-Gesellschaft mbH
Number of staff in Luxembourg: 50
Assets under management in Luxembourg: €35 billion
Services to Ucits funds: Yes
Services to AIFMD funds: Yes
Other jurisdictions: Germany, Austria

Executive comment
MARC-OLIVER SCHARWATH, MANAGING DIRECTOR, LUXEMBOURG

Alternative investment structures are still on the rise. In recent years, we had the tendency to invest in equity, to realise today a growing demand for debt structures. The Luxembourg Reserved Alternative Investment Fund (Raif) became more and more requested as alternative product replacing the classical Specialised Investment Fund (Sif). For the first time in years, we saw at the end of 2017 that new business in the traditional world of Ucits has outperformed the alternatives.


Title: LRI Group
Parent company: LRI Group
Number of staff in Luxembourg: 100+
Assets under management in Luxembourg: €12 billion
Services to Ucits funds: Yes
Services to AIFMD funds: Yes
Other jurisdictions: No

Executive comment
MANUELA FROEHLICH, GLOBAL HEAD OF BUSINESS DEVELOPMENT

Due to its regulatory and infrastructural environment, Luxembourg remains the prime location for fund domiciliation in Europe: 35.9% of European Ucits are launched in Luxembourg, 18.5% in Ireland and 12.4% in Great Britain. We see an ongoing demand from institutional investors for Ucits structures in various hedge fund strategies, such as global macro, market neutral or arbitrage.

Matching asset managers proposals with investors’ appetite is one of the USPs we offer.

In the real asset sector, we see particularly growing interest from managers for launching their strategy in a Raif structure, which has the benefits of a very short time to market. Strong demand is shown for real estate (especially Germany), infrastructure, private equity and debt strategies.

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