StepStone Group LP, a leading global private markets firm, has announced that it has opened its first Latin American office in São Paulo, Brazil, and that the Firm has named Duncan Littlejohn and Bruna Riotto, both formerly of Paul Capital in Brazil, as Partner and Vice President, respectively. Their appointments are effective May 1, 2014.
Mr. Littlejohn and Ms. Riotto will be responsible for the Firm’s investment activities in Latin America, including reviewing primary, secondary and co-investment opportunities, and leading research efforts. They will also handle client development in Brazil and the wider Latin America region.
“These strong additions to our team and office expansion allow us to enhance our global coverage of the private markets,” said Monte Brem, CEO of StepStone. “Investors, including institutions and family offices, increasingly want access to private markets opportunities in Latin America, particularly in Brazil, which has the largest economy and population in the region. As our clients increase the capital they deploy there and Latin American clients look at global opportunities in alternative investments, we are pleased to be able to offer a full-service local presence.”
“We welcome Duncan and Bruna to the StepStone team,” added StepStone partner Jose Fernandez. “With talented and experienced Brazilians heading our new office, we will be well-positioned as we continue to invest in Latin America and serve our clients based in the region. We believe in building local teams with deep expertise in the markets in which we operate and we are sure that strategy will serve StepStone and its clients well in São Paulo.”
Mr. Littlejohn, 60, a 25 year veteran of the private equity industry in Latin America, joins StepStone from Paul Capital, where he had led the firm’s Latin American efforts since 2008. Previously, he was a Partner of BPE Investimentos and its predecessor, Brasilpar, a Brazilian primary private equity fund manager, which he joined in 1995. Prior to that, he worked in executive roles for companies such as AVM Auto-equipamentos Ltda, Pirelli Fintec Ltda, S&W Berisford (UK) Group, and Productos Ecuatorianos (Prodec). Mr. Littlejohn holds a BA in International Relations from the University of Pennsylvania. He has served on the boards of multiple portfolio companies, non-profit organizations, ABVCAP (the Brazilian private equity and venture capital association), and on various Latin American private equity fund advisory boards.
Ms. Riotto, 29, also joins StepStone from Paul Capital, where she had been since 2010. While at Paul Capital, Ms. Riotto was involved in all aspects of diligence, including company research, valuation, portfolio analysis, and transaction structuring. Previously, she worked as a financial analyst within the M&A team at Grupo Stratus. Ms. Riotto began her career with the Financial Controller team at Siemens. She earned her BBA with a concentration in Finance from Fundação Getúlio Vargas in São Paulo, where she was also a member of the University’s consulting team.
Artemis Investment Management announces the proposed launch of the Artemis Pan-European Absolute Return Fund – subject to regulatory approval.
The new Artemis Pan-European Absolute Return Fund will be managed jointly by Tim Steer and Paul Casson, and is based on the Artemis Pan-European Hedge Fund strategy (formerly Artemis UK Hedge Fund), a Cayman Islands-domiciled vehicle managed by Tim since 2009. When Paul Casson joined Artemis in April 2013 from Henderson, the Cayman fund broadened its opportunity set to include Pan-European equities.
“Tim and Paul have extensive experience of investing in UK and continental European stocks. They use a fundamental bottom-up approach to stock analysis, coupled with a proprietary screening tool, and have generated good annualised absolute returns for investors”.
While exact timings have yet to be decided, it is expected that the new fund will launch in Q3 2014, initially for Sterling investors. Multi-currency share classes should become available in Q4 2014, allowing international investors to access the fund. At first two GBP share classes will be made available: R class with 150bps AMC and I class with 75bps AMC. Subject to a high watermark, a performance fee will apply.
Commenting on the launch, Richard Pursglove, Artemis’ Head of Retail said: “We are delighted to bring this strategy to a wider audience. We are doing so in a UCITS fund for the first time, and in a sector that continues to be popular with our clients.”
Ken Taubes, director de Inversiones de Pioneer Investments para Estados Unidos. Fed’s Inflation Target Misguided? Good vs. Bad Disinflation
For more than a year the Federal Reserve Board has cited inflation below its targeted 2% level as one justification for maintaining its extraordinarily accommodative monetary stance. As of February, the core inflation rate was 1.1%, based on the Personal Consumption Expenditure (PCE) inflation series, the Fed’s preferred measure of inflation. But there is good reason to question whether the 2% target justifies current policy.
What’s Driving Inflation Lower?
Today’s low inflation is taking place in an economic environment that is far different from the conditions that triggered falling prices during the Great Recession in 2007-2009. Those declines occurred as a result of severe debt contraction, a downward spiral in asset values across nearly the entire economy and a global banking crisis. The Fed’s actions to offset these damaging conditions were exceptionally timely and successful, and conditions are now the exact opposite. Values across a broad array of asset classes have seen significant appreciation, and many key economic sectors are exhibiting healthy competition and growth.
Good vs. Bad Disinflation
There is a difference between “good disinflation” and “bad disinflation.” Looking deeper at the inflation data over the past several years reveals that disinflation is the result of a variety of factors, including technological progress, new efficiencies in business models and strengthening competition. Let’s look at the commodity sector, one of the weakest areas within the inflation reports. Technology has had a tremendous impact on energy costs over the past few years. With horizontal drilling techniques and fracking, vast amounts of newly recovered U.S. oil and gas have been brought into production. We now produce so much oil & gas that we are considering changing laws so it can be exported once again. Energy CPI grew 0.4% year-over-year, and was an even lower -1.6% a year ago.
Time for the Fed to Correct Course
I don’t understand the Fed’s stance on these lower prices. Aren’t technological progress, new efficiencies in business models and processes drivers of economic progress? The truly worrisome deflation we should be concerned about is driven by asset price declines. When home values fell during the recent recession due to a confluence of unaffordable prices, poor underwriting, increased jobless rates and high leverage, they had a systematically disruptive impact on consumers, the financial system and the overall economy. When asset value and resulting debt value declines broadened beyond the residential housing market to most other sectors of the economy, the result was one of the worst recessions since the Great Depression.
We are clearly not in the debt contraction/asset price downward spiral that we faced during the recent recession. The reality is quite the opposite. I, for one, hope the Fed begins to distinguish the “good” disinflation from the “bad”, as I sense the markets have begun to enjoy the easy money party for a bit too long.
Analysis by Ken Taubes, director de Inversiones de Pioneer Investments, US.
NEPC, one of the industry’s largest independent, full-service investment consulting firms to endowments and foundations, has made public the results of its Q1 2014 NEPC Poll, a measure of endowment and foundation confidence and sentiment related to the economy, investing and market performance.
“Our survey found respondents feeling much more confident in the economic outlook, with fully 75% noting the economy is in a better place now than it was this time last year,” said Cathy Konicki, Partner and Head of NEPC’s Endowment & Foundation Practice Group. “Overall confidence is reflected in more than half of endowments and foundations polled saying the markets will show high single-digit returns and their strong conviction that equities, both US and emerging markets, will be the top performers in the year ahead.”
Despite overall confidence in the markets, 50% of respondents noted that a slowdown in global growth poses the greatest single risk to investment performance, a moderate decrease from the 60% who gave the same answer in Q4, 2013. “Rising interest rates” (19%) replaced last quarter’s “US budget deficit / government shutdown” as the second greatest concern, and “Fed tapering” (13%) followed in third place, displacing concern about rising interest rates seen last quarter.
On the investment front, U.S. and emerging equities, followed by international equities, are believed to be among this year’s top performers by 60% of endowments and foundations.
Confidence in equities aside, there appears to be continued migration of capital from traditional equity and fixed income strategies to non-traditional assets. Only 4% of respondents indicated they are planning to increase exposure to domestic equities, while 81% indicated they are planning to allocate the same or more to hedge funds, specifically focusing on the multi-strategy, credit-linked and event-driven spaces.
Private equity continues to be among the top alternative investment picks of endowments and foundations: 38% of respondents (vs. 32% last quarter) plan to increase their allocation, and 34% are keeping their private equity investments level with last year. Specific sub-categories of private equity investments favored by respondents were split at 25% each between buyouts / growth equity, direct lending, and secondaries.
NEPC’s Q4 2013 survey noted that 41% of respondents planned to allocate more to real assets in 2014. In the current survey, when asked which real assets were their top choices, 34% said real estate, 24% selected energy, and 8% picked precious metals (specifically gold, gold mining and silver).
On April 29, 2014 the Association of the Luxembourg Fund Industry (“ALFI”) and the Luxembourg Association of Risk Management (“ALRiM”) hosted its fifth edition of the ALFI & ALRiM Risk Management Conference. Practitioners demonstrated the industry’s continuing support to Asset Managers looking to key risk requirements of both UCITS and AIFMD proving Luxembourg’s long track record of being a business friendly, highly expert and competitive jurisdiction for both UCITS and Alternative Investment Funds.
Luxembourg was amongst the first jurisdictions to both accept applications and grant authorisation to Alternative Investment Fund Managers under the Directive. In Luxembourg there have been 26 AIFM authorisations on the CSSF’s list with a further 16 approved that have yet to be added to the list. 191 have so far applied for authorisation in Luxembourg (figures as per April 9th 2014).
With Luxembourg’s position as the European leader in cross-border fund distribution, ALFI and ALRiM expect that the implementation of the AIFMD will further enhance Luxembourg’s leading position as a domicile for fund and management companies in the alternative sector.
This year over 250 European Risk Managers, Conducting Officers and Experts turned up to hear more about the Alternative Investment Fund Managers Directive (AIFMD) from local and international experts who discussed the implications and opportunities associated with AIFMD. The ALFI & ALRiM Risk Management Conference has established itself as an important forum where Risk Managers, Conducting Officers and Experts from all over Europe and beyond gather and exchange information and ideas about risk governance, measurement, management and reporting in the areas of both UCITS and Alternative Investment Funds.
This year’s morning session focused on operational risks within UCITS and AIF Management and on the rules set by a series of related CSSF Circulars and elaborated what impact the new reporting obligations for alternative investment fund managers may have on risk management and how these reporting principles can be applied to the wide range of strategies in the context of AIFMD.
In the afternoon, participants could choose between a selection of interactive workshops focusing on leverage, the implementation of risk management systems for real asset funds and on counterparty and credit risk, where they have the opportunity to discuss practical aspects in smaller groups. Each workshop session was held twice in order to allow participants to attend two of the three workshops on offer.
After the workshop sessions, a panel of European industry experts compared recent trends in risk management in the UK, Ireland, France and Germany. The conference day was concluded by the panel discussion “first experience gained” since the entry into force of the AIFMD.
At the occasion of this conference, ALFI has published, in association with ALRiM, new risk management guidelines on:
* Operational Risk Management within UCITS. The aim of these Guidelines are to present best practice proposals for the management of Operational Risk and to assist Board members and senior management in the development of their risk management process;
* Guidelines on Risk Management under the Alternative Investment Fund Managers Directive (“AIFMD”).
The ALFI guidelines on Risk Management under AIFMD are complemented by the ALFI Q&A “Risk Management for AIF under AIFMD”. The Q&A shall be regularly updated with additional questions to cover key aspects of Risk Management activities under AIFMD including, e.g., aspects in relation to key risk categories as well as governance/delegation topics.
Wikimedia CommonsFoto: Alvez, Flickr, Creative Commons.. Santander anuncia una oferta de adquisición por el 25% de su filial en Brasil
Banco Santander’s Board of Directors has resolved to make an offer to acquire all shares of Banco Santander Brasil not already held by Grupo Santander, representing approximately 25% of Santander Brasil’s share capital. Banco Santander will offer a 20% premium over the last closing market price. The consideration offered under the transaction, which is expected to be completed by October, would be paid by means of Banco Santander shares.
The offer is voluntary and, therefore, minority holders of Santander Brasil may choose whether or not to participate in the transaction, which is not subject to a minimum acceptance level. Santander will acquire all shares held by shareholders accepting the offer and has no intention of causing the delisting of Santander Brasil from either the Sao Paulo stock exchangeii or the New York Stock Exchange. Banco Santander shares will be traded on the Sao Paulo stock exchange through Brazilian Depositary Receipts (BDRs).
Shareholders who accept the offer will receive, through BDRs or through American Depositary Receipts (ADRs), 0.70 newly-issued shares of Banco Santander for every unit or ADR of Santander Brasiliii.
If all shares held by minority shareholders were tendered in the offer, Banco Santander would have to issue approximately 665 million shares, which represent 5.8% of the current share capital (EUR 4,686 millioniv).
The offer reflects Banco Santander’s confidence in Brazil and its Brazilian subsidiary as well as the latter’s long-term growth potential. Santander offers Santander Brasil’s shareholders the opportunity to exchange their shares for a 20% premium or to remain as shareholders in Santander Brasil.
The transaction is beneficial for Banco Santander Brasil’s shareholders as well as for the shareholders of the parent company, Banco Santander. Minority shareholders of Banco Santander Brasil will profit from the transaction since they will be awarded a 20% premium, which entails a higher Price Earnings Ratio (PER) than that of its competitors, according to market consensus. Moreover, given that consideration takes the form of shares of Banco Santander, minority shareholders will continue to benefit from exposure to Brazil as well as from a security with high diversification and growth prospects.
The transaction is also beneficial for the shareholders of Banco Santander, given that it will increase their Earnings Per Share (EPS) from the outset. The market consensus anticipates that Santander Brasil will obtain a profit close to 6,400 million of reais brasileiros in 2015 (equal to, approximately, EUR 2,000 million) from which, with its current share capital participation, approximately EUR 1,500 million would be attributable to Grupo Santander. Therefore, if all shares held by minority shareholders are tendered in the offer, Santander Brasil would contribute to Grupo Santander with an additional amount of approximately EUR 500 million in 2015, entailing a 1.3% increase in the EPS in 2015 and a 1.1% increase in the EPS in 2016. The impact of the transaction on the core capital would be almost neutral, since, in the event that all the minority shareholders accepted the offer, this would contribute three basis points to the core capital.
The offer will be subject to customary conditions for this type of transaction, including the granting of the relevant regulatory authorizations and approval at Banco Santander’s general shareholders’ meeting.
Foto: Insider Monkey, Flickr, Creative Commons.. J. Safra Sarasin adquiere el negocio de banca privada de Morgan Stanley en Suiza
Morgan Stanley has announced that it has reached agreement to sell its private banking business in Switzerland to Bank J. Safra Sarasin, which is part of the international banking group J. Safra Sarasin Group. Terms of the transaction were not disclosed.
The sale is the result of a strategic review of the Firm’s Swiss private banking business, which includes offices in Zurich and Geneva. The business that will be included in the transaction is focused on Ultra High Net Worth (UHNW) clients in Europe, Middle East & Africa (EMEA) and Latin America.
Morgan Stanley’s Asian wealth management business, conducted through the Swiss bank’s branches in Hong Kong and Singapore, is not included in the transaction and will be extracted out within the Morgan Stanley Asia group before the execution of the Swiss transaction commences.
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, investment management and wealth management services. The Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals from more than 1,200 offices in 43 countries.
Foto: Phillip Maiwald (Nikopol). Obligaciones convertibles: mantener un enfoque defensivo sin renunciar al potencial de subida
Convertible bonds combine the defensive qualities of straight bonds with the upside potential of equities, which gives them an asymmetric risk/return profile. This characteristic is a considerable advantage in the long term, as it enables this asset class to deliver equity-like performances with significantly lower volatility. The convexity of the asset class thus represents its main advantage and the reason clients add convertible bonds to their portfolios, as they provide an excellent way of diversifying a portfolio.
Union Bancaire Privée, having been an early believer in the many opportunities offered by the asset class, has been a forerunner in managing convertible bonds in Europe. The team has worked with a consistent approach to convertible bonds since 1999, basing its strategies on three key differentiating features that lie at the heart of its investment approach: an investment-grade bias, which strengthens the bond floor and reduces the overall credit risk; a focus on cheap options to maximise convexity; and discretionary delta management to quickly adapt the equity sensitivity, when needed.
The investment team is known for its long-term views, one of which is that they believe there is still strong value in Europe. The re-pricing movement that has been operating in the European convertible bond space, following the market dislocation in early 2012, is currently producing its positive effects in pushing European convertible bonds’ value upwards.
Through a set of distinctive convertible bond strategies primarily defined by clear equity sensitivity ranges, UBP provides an alternative to bonds and equities. The defensive strategy for example offers convertible bonds with low equity sensitivity as an alternative to bonds. The appealing long-term risk/return profile of the strategy, which places it in top-position in terms of size in Europe, is based on its positioning: by deliberately limiting the expected upside to equities it enables its holders to benefit from positive yields in a traditionally negative yield environment, strong asymmetry, as well as low volatility.
At the higher delta side of the convertible bond range, UBP’s dynamic European strategy has demonstrated its capacity to stand as a strong alternative to an investment in European equities. Its dynamic positioning – an equity sensitivity varying from 20% to 80% – combined with a pure bottom-up investment process focused on convexity have provided investors with an enhanced risk/return ratio over the long run, characterised by equity-like returns and contained volatility.
Fifteen years after the first strategy was launched by Jean-Edouard Reymond, the team of six manages about EUR 3.5 billion, making UBP one of the major players in the field. At the end of 2013, the dynamic European strategy had delivered a 15.3% gross performance, ranking in the 1st quartile of its peer group in terms of performance (on a 1- and 3-year basis).
Nearly 150 women gathered last month in Charleston, South Carolina for the 13th annual Women’s Retreat hosted by GenSpring Family Offices, a leading wealth management firm for ultra-high net worth families. The weekend symposium brought together multi-generations of female clients ranging in age from 17 to 87. The group convened around topics dedicated to preparing them for decisions about the management of their wealth and the impact it will have on their lives and those of family members. Five themes emerged as participants from 23 different states representing over $2 billion of collective wealth discussed both the emotional and financial aspects of a woman’s life.
Five areas of interest emerged as key themes for discussion:
1. The importance of effective family communication 2. Enabling versus providing opportunity to next generation family members 3. The implications of equal versus unequal inheritance 4. Best practices for communicating wealth transfer intentions 5. The impact money has on relationships
As a family office, GenSpring recognizes the importance for all family members to live an informed and fulfilled life with wealth. Since the firm’s founding 25 years ago, learning programs designed just for women have been an integral part of the overall service offering. In more recent years, GenSpring’s focus on women has been organized into a dedicated effort known as the Women & Wealth Initiative which is co-chaired by GenSpring executives Patricia Soldano and Carolann Grieve.
“I am thrilled with the level of engagement and enthusiasm participants demonstrated throughout this year’s Women’s Retreat,” said Ms. Soldano. “Given the statistics that women will control 2/3 of the consumer wealth in the U.S. within the next 10 years, financial education tailored specifically to women is a critical component of our role as a family office to prepare family members for the responsibilities and challenges that come with a life of wealth.”
“The work we conduct with women centers around helping them to discover their voice – empowering them to find a comfort level within their personal situation and then teaching them how they can thrive within those circumstances,” added Ms. Grieve. “The Women’s Retreat provides an opportunity for us to focus on those challenges that resonate with them. If you are going to connect with women, you have to speak their language. They relate to the world differently than men and have different perspectives, concerns and priorities.”
Today, the Women & Wealth Initiative uses GenSpring’s collective expertise and experience serving women clients to create meaningful and relevant learning programs, which are offered to women on both a small and large scale to encourage the sharing of information, networking and problem solving. The purpose is to create a welcoming environment emphasizing a holistic approach to financial stability, which in turn enables women to live an informed and responsible life with wealth, to feel fulfilled and empowered to achieve their goals.
CFA Institute, the global association of investment professionals that sets the standard for professional excellence, will recognize May as Putting Investors First Month. The global initiative aims to build awareness and unite financial professionals in a commitment to place investor interests above all others. Putting Investors First Month will feature a series of events and outreach throughout the month of May, hosted by hundreds of CFA Institute members and many of the organization’s 143 member societies worldwide.
“Putting Investors First Month is an ideal time to call attention to the needs and rights of investors and spotlight those in the investment profession who are committed to serving the interests of investors,” said John Rogers, CFA, president and CEO of CFA Institute. “The financial industry is dealing with a crisis of public trust, and despite signs of recovery in markets around the world, many investors still do not believe that their interests are the primary concern of those responsible for managing and growing their savings and investments.”
The CFA Institute 2014 Global Market Sentiment Survey of investment professionals worldwide indicated that the most needed action to boost investor trust and confidence is improved ethical culture that is established and encouraged by top management and executives. The survey also explores issues critical to investor trust, including fair treatment and the information investors need to properly evaluate products and services to make informed decisions.
“The global financial industry can be an extraordinary force for good, but there is still work to be done to shape the industry for future generations,” continued Rogers. “Through Putting Investors First Month, CFA Institute aims to inspire the industry to ensure that investors’ rights to information, fair and honest advice and accurate assessment of risk and reward is at the core of client service. A commitment to uphold the highest standards of investment practice and to serve investors and the global economy can affect positive change in finance, but change starts with all of us.”
Putting Investors First Month Slate of Global Events Kicks Off May 1
Putting Investors First Month activities will be held in more than 50 cities around the world by CFA societies representing more than 35,000 investment professionals. It kicks off on May 1 in New York with a free live-streamed event covering best practices for individuals, firms, and policymakers to improve the future of finance, and in Chicago, where the local society will hold its annual conference to help financial professionals adapt investment strategies to a changing world.
Other events include: a series of events in Florida featuring CFA Institute president and CEO John Rogers; a declaration by the Governor of Georgia of May 19 as Putting Investors First Day throughout the state; a future of finance symposium in Amsterdam; a conference in Istanbul featuring the Minister of Economics; the Philippine Retail Investment Conference in Manila; a conference for financial professionals and students in Mexico, and a presentation in Toronto to explore industry reforms.
For information on all member society events, visit this list on the CFA Institute website.
Putting Investors First Month is part of the CFA Institute Future of Finance initiative, a global effort to shape a trustworthy, forward-thinking financial industry that better serves society. The initiative sets the stage for the 67th CFA Institute Annual Conference, to be held May 4-7 in Seattle, which will bring together up to 1,800 of the world’s leading financial professionals to focus on shaping the future of finance. More than 30 scheduled sessions, including presentations from Shelia Bair, Nate Silver, and Bill Sharpe, will examine market trends and deliver practical advice to shape the future of finance for generations to come.
For more information about the Future of Finance initiative, Putting Investors First Month, and the Statement of Investor Rights, a declaration of the conduct investors are entitled to expect from financial service providers, visit this link.
