FlexFunds, a provider of asset securitization services offering both turnkey or custom-built solutions that facilitate the setup and launching of exchange traded products, has issued its 500th Exchange Traded Product (ETP) for Driftwood Capital.
Driftwood Capital specializes in real estate strategies spanning acquisition, development, and lending and has a portfolio of assets under management of over US$ 3 billion and 1,200 active investors.
The ETP issued by FlexFunds under the denomination “Great North Partners II” facilitates Driftwood’s distribution of high-return mezzanine debt and loan investments in hotel assets throughout the United States.
Carlos J. Rodriguez, Chief Executive Officer and Chairman of Driftwood Capital said: “FlexFunds gave us the opportunity to distribute our investment products to a wider audience of foreign investors in a cost-efficient and effective manner. We plan to use FlexFunds for distributing not only our Hotel Lending Platform products but also for our Hotel Development and Acquisition Investment strategies. We see FlexFunds as a way to continue to increase our channels of distribution worldwide and continue to exponentially grow our US$ 3 billion + hotel portfolio.”
Emilio Veiga Gil, Executive Vice President, and Chief Marketing Officer of FlexFunds, said: “Through FlexFunds’ securitization program, we can convert any asset into a listed and Euroclerable security, allowing international investors to participate in any project easily. Driftwood Capital’s ETPs are a clear example of the advantages that asset securitization can offer, ranging from real estate to portfolios of listed securities or any other private equity project. Asset repackaging plays a key role in allowing investors to participate in a wide range of opportunities with lower levels of investment, thus democratizing access to capital markets.”
Photo courtesyAdam Malamed, new Sanctuary Wealth's CEO.
Sanctuary Wealth Group named wealth management industry leader Adam Malamed Chief Executive Officer, effective immediately.
Mr. Malamed, an existing member of Sanctuary’s Board of Directors, will leverage his proven expertise in growing and leading privately held and publicly traded wealth management and financial services enterprises across multiple business models to spearhead the next stage of the firm’s growth, according the firm information.
“I’m thrilled to lead Sanctuary Wealth as the firm embarks upon the next stage of its growth, which will be built on very strong foundations. Having served on Sanctuary’s Board of Directors, I’ve had the opportunity to dive deep into understanding its business, unique culture and value proposition for financial advisors. I have the utmost respect for the firm’s executive leadership, employees and the financial advisors we support. I look forward to applying my experience in leading and expanding some of the nation’s largest and most successful financial services companies to this new role,” Mr. Malamed said.
Previously, Mr. Malamed served as Executive Vice President, Chief Operating Officer and Board Director of Ladenburg Thalmann, a leading NYSE-listed network of wealth management and other financial services firms. He served a pivotal role in building the enterprise to encompass 4,500 financial advisors, approximately $200 billion in client assets and an enterprise value of $1.3 billion, the statement added.
Building on Sanctuary’s Strong Foundations
Launched in 2018, Sanctuary delivers a well-resourced, partnered independence experience through a platform of comprehensive solutions and services to financial advisors with entrepreneurial drive and the desire to serve clients with distinction.
“With robust institutional financial backing from leading global asset managers Kennedy Lewis and Azimut Group, Sanctuary empowers successful and experienced financial advisors to elevate their professional success and the service experience provided to their clients”, the firm said.
“Never before has there been a greater need for independent financial advice, and independent firms with sophisticated growth strategies are well-positioned to drive rising success for their organizations and advisors. Toward this end, I am a big believer in taking the best elements of a firm’s culture and aligning it with an institutionalized strategy and scalable solutions that consistently elevate the financial advisor and client service experience,” continued Mr. Malamed. “This is precisely what we will achieve together at Sanctuary going forward. In a fast-evolving wealth management landscape, Sanctuary has an opportunity to become the destination of choice throughout the independent financial advice industry.”
More than two-thirds (68%) of privatebank and banktrust executives are actively considering merger and acquisition (M&A) opportunities to grow and adapt their businesses, according to the latest Cerulli Edge—U.S. Asset and Wealth Management Edition.
M&A has been a mainstay of bank growth strategies for the better part of the past decade. As clients demand more intuitive technology and broader services from their private banking and trust providers, these organizations require greater economies of scale to invest in enhancing their offerings.
Greater efficiency through economies of scale (75%), a desire for geographic expansion (69%), and the many benefits of greater fee-based revenues (63%) are the primary motivators behind most M&A in the bank space.
According to Chayce Horton, research analyst, “Larger and more scaled firms that can provide seamless and comprehensive financial services experiences for their clients have regained momentum after finding themselves flatfooted for the better part of the previous decade.” Private banks now are the fastest-growing segment of the bank wealth management industry, with annualized growth of 17% since year-end 2019.
Cerulli finds 62% of executives actively considering M&A options are looking into acquiring smaller firms in their channel and integrating them into their offering.
“This option is considered one of the least cumbersome M&A strategies, with the benefits of complementary business growth and cost-cutting measures,” states Horton. “However, the acquiring firm must possess the systems and operational nimbleness to handle the injections of scale that come with acquisitions,” cautions Horton. Merging with a similarly-sized bank/trust company (38%), acquiring an RIA or family office (38%), or acquiring a digital advice or fintech provider (23%) are other strong considerations for M&A among bank executives.
As M&A in the bank space continues to churn, third parties providing products and services to these firms must prepare to adapt their strategies as well. “Often during M&A events and the resulting integrations, traditional gatekeepers and decision-makers can change in unpredictable ways. The best way to continue addressing opportunities through these events is to have conversations early and often with counterparts across the organizational chart to gauge when and what problems may arise, so that they can be appropriately resolved ahead of time,” concludes Horton.
Investment funds managed by Morgan Stanley Capital Partners (“MSCP”), the middle-market focused private equity team at Morgan Stanley Investment Management, have acquired Apex Companies (“Apex” or the “Company”), a provider of end-to-end environmental consulting and engineering solutions, from Sentinel Capital Partners (“Sentinel”).
MSCP is partnering with the current management team led by CEO Dave Fabianski, who will continue to lead the business. Sentinel Capital Partners will maintain a minority position in the Company post-closing.
Apex, headquartered in Rockville, Maryland, “is a leader in consulting and engineering services across a broad range of environmental and infrastructure needs”, according the firm information. The Company serves public sector clients at the federal, state, and municipal levels, as well as thousands of private sector clients across retail, industrial, real estate, technology, financial services and energy end markets.
An established leader in stormwater compliance and environmental services, Apex also offers a strong portfolio of services in infrastructure and water resources, compliance and assurance (including ESG consulting), health and safety, transportation and civil engineering, the press release adds.
“Apex’s solutions serve clients and communities across a broad range of environmental and infrastructure needs, and seek to ensure that corporations, government agencies and municipalities achieve and maintain regulatory compliance. In addition to being a highly respected provider of environmental services, Apex is also a leader in the attractive and high-growth stormwater compliance industry,” said Eric Kanter, Managing Director and Head of Industrials at MSCP. “We believe the company’s record of expansion, both organically and through accretive M&A, has generated substantial momentum for continued growth. We are excited to partner with Dave and the Apex leadership team to drive continued success in Apex’s core service offerings and to pursue strategic M&A that adds additional geographic presence, service capabilities and customer diversity.”
Dave Fabianski, President and CEO of Apex, stated, “Partnering with MSCP provides us with a tremendous opportunity to access additional capabilities and resources that we believe will help us further enhance our value proposition and service offering. Together with MSCP we will accelerate our strategic growth pursuits in water, environmental, infrastructure, and ESG, while expanding our investment in Apex’s people, culture, and digital strategies. The outlook in our industry has never been better, and we are excited to partner with the MSCP team for our next chapter of growth.”
MSCP’s acquisition of Apex represents its second investment in environmental services, following the acquisition of Alliance Technical Group in 2021, and is an area where the team has deep institutional knowledge and domain expertise. It also is in line with MSCP’s and Morgan Stanley’s broader commitment to ESG.
Latham & Watkins served as legal counsel to MSCP, and Harris Williams and Raymond James served as MSCP’s financial advisors. Carlyle and Churchill Asset Management acted as the administrative agents, bookrunners and arrangers on the financing.
Lazard Asset Management (LAM) announced that Jennifer Ryan has joined the firm as Managing Director and Head of North American Distribution, effective immediately.
Based in New York, Ms. Ryan joins from BlackRock where she held leadership roles in both its U.S. and U.K. Institutional Client Businesses. As a member of the senior leadership team for Lazard’s Asset Management business, she will be responsible for LAM’s business development in North America and will oversee its Institutional Client Group, Financial Institutions Group, Alternative Investments Sales, and Consultant Relations Group.
“Jen brings to Lazard over 25 years of experience in the asset management industry. She has a deep understanding of the North American market, the trends that are driving its evolution, and the strategies needed to grow and develop both our intermediary and institutional client businesses,” said Evan Russo, Chief Executive Officer of Lazard Asset Management.
“Her appointment underscores our commitment to providing outstanding service and differentiated investment solutions to meet the continually evolving needs of our clients.” “This is a fantastic opportunity to further optimize LAM’s distribution capabilities in North America,” said Ms. Ryan.
“Lazard is a well-established global brand, and I am looking forward to working with its outstanding distribution teams to increase our presence in the region and continue to provide world-class investment solutions to new and existing clients.” Ms. Ryan joins Lazard from BlackRock where she spent six years in senior leadership roles in both its U.S. and U.K. Institutional ClientBusinesses.
Previously, she spent 19 years at Goldman Sachs Asset Management in several key client-facing roles, including Head of U.S. Consultant Relations, Co-Head of Endowments and Foundations and Head of New York Bank Intermediary Sales. Ms. Ryan started her career as a product strategist in the Global Liquidity business at Goldman Sachs. She earned a B.A. in English and International Studies from Boston College, and an MBA from Columbia Business School.
Photo courtesyHomar Mauras, Market Head for the Andean Region, Central America and the Caribbean
Insigneo announced the appointment of Homar Mauras as Market Head for the Andean Region, Central America and the Caribbean. He will be based at the firm’s Puerto Rico office.
Prior to joining Insigneo, Mauras was President, CEO and COO of Citi International Financial Services LLC in Puerto Rico, which Insigneo acquired in August 2022. Throughout his successful 25 plus year career at CIFS in Puerto Rico, he worked in a variety of leadership positions including Regional Sales Principal, Regional Sales Manager, and Head Trader.
“Insigneo’s recent acquisition of Citi International Financial Services has further strengthened Insigneo’s platform to serve clients in the Andean Region, Central America and the Caribbean, and positioning a senior leader like Homar in this leadership role at Insigneo further evidences our commitment to develop our wealth-management business across these key markets,” said Rodolfo Castilla, Sales Head of Insigneo Financial Group. “Having known Homar for over 20 years, I am sure he is perfectly suited to lead our growth efforts – organic and inorganic – in this important region, with a much bigger presence in Puerto Rico as a regional hub of Insigneo.”
Added Mauras: “I am excited to bring to Insigneo a strong expertise and skill set which I have honed over the past 30 years, working successfully in top leadership positions within the uniquely complex Andean, Central American and Caribbean markets. I have a close pulse on local market dynamics and emerging trends, and look forward to working with the Insigneo team to find new ways to meet the changing needs of our different wealth managers and their clients.”
Additionally, as Insigneo continues to integrate the two firms and optimize its operating model, Javier Rivero, the current President and Chief Operating Officer, has been appointed President of Insigneo International Financial Services LLC. Rivero, who joined Insigneo in 2017 as Head of Client Relations, is noted as a seasoned executive with extensive experience in senior management roles within the wealth management industry.
As to Mauras, following is some additional background: The distinguished executive has over 30 years of highly valued experience in the Latin America Wealth Management sector. He has worked in roles throughout multiple geographies, across all operational areas of the investment wealth-management business including operations management, sales management, offshore banking products, business development and business process improvements.
He received a master’s degree in business administration (MBA) in finance and a bachelor’s degree in accounting from Inter American University. His licenses include: SIE – Securities Industry Essentials Examination; Series 7 – General Securities Representative Examination; and Series 24 – General Securities Principal Examination
Australian boutique investment manager Maple-Brown Abbott has entered into an agreement with Hyde Park Investment (HPI) to distribute its UCITS funds in the UK and several countries across Europe including Sweden, Spain, Italy, Switzerland, Germany and France.
Maple-Brown Abbott CEO and Managing Director Sophia Rahmani said the partnership with HPI would allow the firm’s UCITS funds to be distributed to a broader range of UCITS fund buyers including wealth managers, family offices and private banks. This distribution agreement would complement Maple-Brown Abbott’s existing relationship with Douse Associates, which has been a quality partner for 17 years with a focus on institutional investors and their consultants, and some UCITS buyers in the UK and Switzerland.
“We are aiming to build on our existing presence across the UK and Europe for our existing UCITS funds – global listed infrastructure and Asian equity income – as well as funds we are looking to launch in the future such as global emerging markets,” Ms Rahmani said. “We believe we have compelling and differentiated investment capabilities, which are managed by globally recognised and award-winning teams. This includes the long-standing integration of environmental, social and governance (ESG) factors into the investment process for all our strategies, with our existing UCITS funds all registered Article 8.
They are confident that the HPI team is aligned with their culture and values at Maple-Brown Abbott, and believe that HPI’s distribution model, with experienced teams on the ground in the UK, Sweden, France, Italy and Spain and its strong track record in attracting assets, will broaden its investor base in these markets, according to Rahmani’s statement.
Commenting on the new agreement, Hako Finckenstein, Director, Hyde Park Investment, added, “We are delighted to be representing Maple-Brown Abbott’s UCITS funds in the UK and Europe. This partnership is a natural alignment of our businesses and values, particularly our mutual commitment to ESG. Maple-Brown Abbott has nearly 40 years of excellent investment pedigree and a unique product offering which resonates strongly with the market.
“We are encouraged by the interest our clients have shown already, especially in relation to Maple-Brown Abbott’s integrated ESG capability.”
Ms Rahmani concluded: “As a world class boutique investment manager with a range of differentiated investment strategies, we are excited to be working with two established and well-respected partners to continue to build deeper relationships with existing and future clients in the UK and Europe.”
The key trends to look out for in science, technology and sustainability over the next 12 months – and beyond:
1. Protecting biodiversity
The world is waking up to the fact that protecting biodiversity is just as important for our survival on Earth as halting global warming. At the UN COP 15 summit in Montreal in December 2022, governments signed a ground-breaking deal to halt biodiversity loss by 2030. To achieve this, we will need to harness new and existing technologies to embed more sustainable practices across industries such as agriculture, forestry, IT, fishery, materials, real estate, consumer discretionary and staples, utilities and pharmaceuticals. Following COP 15, the financial sector is expected to increasingly contribute to this transition. The OECD estimates that investments aimed at protecting biodiversity stand at less than USD100 billion a year – a paltry sum, particularly when compared with what climate change attracts (USD632 billion). Expect that gap to slowly start closing in 2023.
2. High-tech cars
New technology brings disruption and opportunities to almost every industry. The auto sector is no exception. Electric vehicles are becoming ever more popular – not least thanks to the recent surge in petrol prices. 2023 will see new launches from many manufacturers, including Tesla’s iconic-looking pick-up truck. Five years from now, one in four new cars sold is expected to be fully electric.1 That, in turn, will fuel demand for batteries and semi-conductors. Automation is the other key tech shift in the car industry. While fully automous vehicles are still largely the stuff of science fiction, the latest models are offering ever more advanced automation features, backed by ever more complex software. China’s Baidu is even planning to launch a car with a detachable steering wheel. According to Goldman Sachs, the average length of software code per vehicle has doubled to 200 million lines in 2020, and is forecast to reach as high as 650 million lines by 2025, presenting a big growth opportunity for the tech sector.2
3. Computing at the edge
The rise of 5G and advances in AI have opened up a new era of data storage. Edge computing uses augmented reality and machine learning to analyse data at or near the place where it is gathered, or “on the edge”. It then takes advantage of super-fast transfers made possible by 5G to send that data to the cloud. When 6G comes, the process will be even faster. One of the key benefits of such an approach is low latency, which in turn opens the door to the development of new devices and applications which rely on minimal delays. Farms, for example, are starting to embrace edge-enabled ground and air sensors to monitor water and chemicals for optimal crop yields. Edge technology can benefit the environment, as it has lower carbon footprint compared to processing data on the cloud. It also creates new cybersecurity challenges and demand for solutions to address them.
4. Power of the circle
From metals and fossil fuels, to animals and crops, we are consuming a year’s worth of the Earth’s resources in just eight months, which is clearly not sustainable in the long run. The answer is to make the most of what we’ve got and make it last for as long as possible. The circular economy concept ideally envisages a world without waste – a loop whereby resources are used and reused for as long as possible. The emphasis is on creating products that are long-lasting and easy to take apart, repair, refurbish and re-assemble to make other products. The approach also involves making greater use of organic materials (such as wood in construction) that are part of a natural loop. Circular design can be applied both to consumer goods and to industry, and it’s a huge opportunity – the circular economy could unlock up to USD4.5 trillion of additional economic output, according to Accenture.3 Governments are increasingly on board. Circular economy is a key part of Europe’s Green Deal initiative, with targets for 2023 including legislation for substantiating green claims made by companies and measures to reduce the impact of microplastic pollution on the environment.4
5. Drug engineering
Drug development is notoriously slow and costly, with low chances of success. But that may be all about to change thanks to advanced computing. In one of the most exciting recent developments in the healthcare industry, DeepMind, Alphabet’s AI unit, succeeded in developing technology that can be used to predict the shape of any protein in the human body. The breakthrough potentially paves the way for much faster, cheaper and more efficient drug discovery – something Alphabet and others are now working on. Over the next decade, the market could be worth some USD50 billion, according to Morgan Stanley. 5
6. Battle against obesity
The prevalence of obesity in the world has tripled since 1975,6 and it is now responsible for some 3 million deaths a year. Covid increased awareness of how excess weight can make people susceptible to other diseases. There is growing momentum – from governments and individuals – to tackle the problem, which coincides with the development of new treatments. One potentially promising new weight loss drug has recently been approved for use in the US; another one is expected to get the green light in 2023. The global obesity treatment market could top USD54 billion by 2030 from just USD2.4 billion in 2022, according to Morgan Stanley. Insurers are slowly becoming more willing to cover obesity treatment, and there is also a growing appetite from the public to pay out of pocket where such coverage is not available.
7. Learning for life
Demographic and technological change have deeply impacted society. As a result, learning is no longer the mainstay of school. A growing number of countries are embracing lifelong learning as a means to cope with the challenges associated with longer-living populations. The pandemic prompted many people to reconsider their lives and their jobs. Labour shortages in some industries have created opportunities for new workers to step in. At the same time, improved work/life balances – with working from home saving commuting hours – have opened the door for people to take up new hobbies. Growing acceptance of online learning has made studying more accessible. It shouldn’t be a surprise that 2023 has been pronounced the “European Year of Skills”, with extra investment in training and a drive to get more women into science and technology.
Opinion written by Stephen Freedman, Head of Research and Sustainability for Pictet Asset Management’s Thematic Equities as well as Chair of the Thematic Advisory Boards
Inflation uncertainty has risen sharply worldwide since the onset of the COVID-19 pandemic, a situation that worsened in 2021 with increased demand and a tightening supply of goods and services. In 2022, the war in Ukraine further boosted inflation, making it difficult for investors to make decisions.
In such a period, alternative assets could be a tool to obtain greater diversification, decrease volatility and obtain better portfolio returns. All this without the need to go to the stock market.
According to Blackrock, there are two main types of alternative investments. The first consists of vehicles that invest in non-traditional assets, such as real estate and private equity. The second involves strategies that invest in traditional assets through non-traditional methods, such as short selling and leverage.
The alternative asset industry is on a growing trend. Hence, portfolio managers see it as a pillar of the modern investment landscape, supported by assets under management (or AUM) being at record levels, accompanied by investor interest.
According to Prequin, from 2015 to the end of 2021, assets under management (AUM) across all alternative asset classes increased at a CAGR of 10.7%. At the end of 2015, AUM stood at US$7.23 tn, rising to US$13.32 tn by the end of 2021, and we expect AUM growth to accelerate to 11.7% and reach US$23 tn in 2026.
For Forbes, 2023 promises that alternative investments will finally gain a daily place within investors seeking broader diversification portfolios.
In 2023, portfolio managers are targeting a more significant allocation in alternative assets due to their low correlation to the secondary market, which could mitigate inflation-induced volatility and potential recession and boost returns more than stocks and dividends alone.
How to distribute alternative assets effectively?
Initially, alternative investments were exclusive to experienced accredited investors. However, tools provided through asset securitization programs allow the distribution of alternative investment strategies quickly, efficiently, and simply.
By securitizing these alternative assets, an ETP (Exchange Traded Product) type investment vehicle is structured and issued, converting any underlying asset into a listed and “Euroclearable” security, which facilitates reaching a more extensive investor base, simplifying subscriptions and broadening distribution.
Repackaging an alternative asset into an ETP currently represents one of the most successful solutions for launching and growing private investment funds, real estate funds, and hedge funds of various sizes. Leading real estate fund managers such as Participant Capital, Black Salmon, and Driftwood Capital use these investment vehicles, or ETPs, to raise international capital for alternative investments.
Main advantages of ETPs for distributing alternative assets
Any alternative asset fund manager can benefit from this option to increase the distribution of their investment strategies. In addition, this type of investment vehicle allows you to customize your strategy thanks to its flexibility: it can be applied to a wide variety of financial assets. A “Eurocleable” financial security is put into circulation, providing the investment vehicle with the appropriate infrastructure to obtain standardization, market transparency, and international reach.
In summary, the advantages offered by an ETP include the following:
Set up an Irish special-purpose vehicle (SPV) for exclusive use by real estate projects, hedge funds, or any private fund.
Offer equity and debt-based investment instruments through a Euroclear listed security.
Increase distribution to a broader investor base.
Price dissemination through Bloomberg and other world-leading brands such as Reuters and Six Financial.
Facilitate access to global private banking, financial advisors, and broker-dealers through their investment platforms and custodians.
Companies such as FlexFunds, based in Miami and with an international presence in Latin America and Europe, offer specialized solutions in structuring and launching ETPs through its asset securitization program.
Historically, Japan has been a difficult market for many overseas investors to fully comprehend, with several misconceptions about the Japanese corporate sectors. This offers compelling opportunities for active managers such as Nomura Asset Management to add value through their proprietary research, market insights and company engagement.
Nomura Asset Management will host the “Rediscovering Japan” virtual conference on January the 26th , where you will learn more about the current opportunities from our experts, and hear market insights from the guest speaker Seiji Kihara, Member of the House of Representatives.
Yuichi Murao, CFA, Senior Managing Director and Chief Investment Officer, Equities, will open the event with the Bank of Japan’s monetary policy outlook and the impact on exchange rates.
Andrew McCagg, Senior Client Portfolio Manager, will present the “Japanese Equity Market Outlook for 2023”.
Seiji Kihara, member of the House of Representatives and deputy Chief Cabinet Secretary, will speak on “Towards Realizing a New Form of Capitalism”. Kihara also serves as special advisor to the Prime Minister for National Security Affairs.
