All around financial advisors for retail customers

caldi9

Aegis, most brokers do not allow to invest in PE funds. Some wealth advisors do have access to them as they bundle end clients' assets.

caldi9

masonic, I need the wealth manager to get access to PE funds. Just because I invest professionally, does not mean I get access to good PE funds as retail customer. Do you have anything to add that actually helps the topic?

masonic

caldi9 wrote: »

masonic, I need the wealth manager to get access to PE funds. Just because I invest professionally, does not mean I get access to good PE funds as retail customer. Do you have anything to add that actually helps the topic?

I think this lack of "access" to PE opportunities is a red herring. Most likely you don't meet the requirements, in particular the minimum investment. In that case a wealth manager is unlikely to help much. Have you considered joining a syndicate?

That said there are a lot of accessible opportunities out there, from what I've seen. No wealth manager required.

bowlhead99

masonic wrote: »

I think this lack of "access" to PE opportunities is a red herring. Most likely you don't meet the requirements, in particular the minimum investment. In that case a wealth manager is unlikely to help much. Have you considered joining a syndicate?

That said there are a lot of accessible opportunities out there, from what I've seen. No wealth manager required.

This is not really the case at all. Caldi9 is not talking about buying shares in a listed vehicle that puts its money into the private equity sector, he is no doubt talking about private equity partnership vehicles offered to institutions by fund managers.

Unfortunately when PE managers are fundraising hundreds of millions or billions they do not seek out single individuals who can offer them £50-100k towards their £500m target. They may take individuals as a 'job lot' from a wealth manager, or if you have a pre-existing relationship with them, e.g. you are part of their close network / inner circle of friends and family.

Sure, there are listed products into which you can put your money as the 'man on the street' who wants to buy access on the stock exchange, but this is a very small piece of the private equity market. Most money in the sector is raised via blind pool partnership commitments from institutional investors such as pension funds, endowments, insurance companies, family offices, sovereign wealth etc. If a wealth firm has clients who can commit a few million between them, they may get a look in on a small venture fund or if more money, a bigger fund.

However, this doesn't work very well on an 'execution only basis' as you might buy a share on the stockmarket via a broker. You can't just show up to a typical IFA and say "I heard CVC [or other random example of a manager closing a fund this month] are fundraising, can you get me in on it, I only have £50k to commit to them over the next 5 years and I don't want you to manage the rest of my wealth". They are not going to go and make an introduction for you or broker a deal where they sit in the middle somehow so they can make money out of it as you pay your capital calls.

You do see some private banks or wealth managers putting their clients into PE funds, either on a fund of funds basis through their own fund product, or selective one off commitments if you have enough to do a broad portfolio yourself. Here's a press release on HSBC private banking's latest offering. https://www.privateequitywire.co.uk/2019/06/25/276818/hsbc-private-banking-successfully-closes-first-vision-private-equity-fund-over .

There are a number of wealth managers at all parts of the size spectrum who make PE allocations (from the big investment / private banks like UBS down to the family office boutiques like Bedrock) but I can't speak from experience of using them. The problem is, if you are a professional investor who feels you can do your own investing, you probably don't want to buy the services of a wealth manager to charge you half a percent a to get your foot in the door when PE management fees and carry are high enough already.

I have heard some buzz about Moonfare (Berlin-based outfit using a Luxembourg feeder) with a relatively new product acting as a gatekeeper to PE firms, but only from press releases or media coverage really - don't know anyone who has used it. They say they have 3000 users on their platform now which seems like a surprising number of customers in a short space of time - perhaps they have got some bulk signups from WMs or advisors. This may be the sort of thing Caldi09 is looking for.

masonic wrote:

A professional investor? Looking for an adviser? In a consumer discussion forum? *sniff* *sniff*

Nope.

Private Equity is a niche and so it is not particularly surprising that someone who can call themselves a professional investor or meet the sophisticated investor criteria for FCA purposes does not actually have a network of relationships with PE firms.

As you imply, there are not going to be many people looking for an 'in' via a consumer discussion forum such as this, because it's likely very few people could help out through having experience of the sector - because the proportion of people working in or investing in private equity (other than the odd VCT or using stockmarket listed vehicles for access), within a cross section of consumers, is tiny. Maybe there is more on other more dedicated investment forums such as lemonfool. But there is all sorts of garbage on most internet forums so word of mouth recommendations is the way to go, if you can.

masonic

bowlhead99 wrote: »

This is not really the case at all. Caldi9 is not talking about buying shares in a listed vehicle that puts its money into the private equity sector, he is no doubt talking about private equity partnership vehicles offered to institutions by fund managers.

Unfortunately when PE managers are fundraising hundreds of millions or billions they do not seek out single individuals who can offer them £50-100k towards their £500m target. They may take individuals as a 'job lot' from a wealth manager, or if you have a pre-existing relationship with them, e.g. you are part of their close network / inner circle of friends and family.

Sure, there are listed products into which you can put your money as the 'man on the street' who wants to buy access on the stock exchange, but this is a very small piece of the private equity market. Most money in the sector is raised via blind pool partnership commitments from institutional investors such as pension funds, endowments, insurance companies, family offices, sovereign wealth etc. If a wealth firm has clients who can commit a few million between them, they may get a look in on a small venture fund or if more money, a bigger fund.

Perhaps I am misunderstanding what the OP is wanting to invest in. There seem to be several organisations out there that offer a slice of syndicated VC funds or a diversified portfolio of EIS investments. Perhaps it is just the institutional offerings the OP is interested in.

bowlhead99

masonic wrote: »

Perhaps I am misunderstanding what the OP is wanting to invest in. There seem to be several organisations out there that offer a slice of syndicated VC funds or a diversified portfolio of EIS investments. Perhaps it is just the institutional offerings the OP is interested in.

I presume he is looking at institutional private funds, as he mentioned Blackstone in his OP, and access to PE houses - you don't need anything special to arrange 'access' if you are just going for stockmarket listed vehicles, or for the discretionary EIS portfolios offered to consumers by EIS specialists.

The VCT and EIS stuff that retail customers can typically access by themselves (if they sign off on the risks) is a niche within a niche - venture capital investments at a small enough size and early enough stage to qualify for tax breaks for individual participating investors. But most PE investing is not really the sort of stuff you see on Dragon's Den, where an angel investor having a punt for a bit of seed capital or early stage growth investment, needing substantial tax relief to make it investible.

Three quarters of private equity money goes into buyouts, and over half of the money raised in Europe in the last couple of years has gone into funds with a billion-plus of investor commitments. Venture capital has not been a particularly high performing segment within UK/European private equity in the last couple of decades. So if you were a professional investor you wouldn't limit yourself solely to that area just to grab a tax break or just because it was easy to get added to the mailing list.

The OP mentions wanting the suite of services offered to HNW customers 'without being one' so he can get into private equity. The FCA have a pretty relaxed definition of HNW which anyone with a six figure salary, or £250k of investments outside their home or pension, can meet. But the man on the street would assume it means you are worth a few million plus, perhaps 'independently wealthy'.

The reality is, if you are not one - and the wealth to be managed is perhaps only £50-100k instead of a couple of million - the HNW wealth manager will not be able to manage your wealth cost-effectively; the service fees they want to charge will be a higher percentage of your portfolio than if you had a bigger portfolio to negotiate, and you will be paying wealth management fees for a service you might not even be properly using, if the only reason you're signing up is access to an asset class.

masonic

bowlhead99 wrote: »

The OP mentions wanting the suite of services offered to HNW customers 'without being one' so he can get into private equity. The FCA have a pretty relaxed definition of HNW which anyone with a six figure salary, or £250k of investments outside their home or pension, can meet. But the man on the street would assume it means you are worth a few million plus, perhaps 'independently wealthy'.

The reality is, if you are not one - and the wealth to be managed is perhaps only £50-100k instead of a couple of million - the HNW wealth manager will not be able to manage your wealth cost-effectively; the service fees they want to charge will be a higher percentage of your portfolio than if you had a bigger portfolio to negotiate, and you will be paying wealth management fees for a service you might not even be properly using, if the only reason you're signing up is access to an asset class.

So this is not really a sensible move for someone of this type then. Unless he can become part of a syndicate whose investment is pooled to reach the couple of million level or above, and then go in search of a suitable 'introducer' (which is what the first part of my previous post #14 was driving at).

or perhaps find some sort of proxy:

https://blogs.cfainstitute.org/investor/2018/12/03/private-equity-the-emperor-has-no-clothes/

bowlhead99

masonic wrote: »

So this is not really a sensible move for someone of this type then. Unless he can become part of a syndicate whose investment is pooled to reach the couple of million level or above, and then go in search of a suitable 'introducer' (which is what the first part of my previous post #14 was driving at).

If he doesn't have demonstrable high net worth, nobody is going to want him to join such a 'syndicate' - as when there is a recession and he flakes out on paying his fair share of capital calls, their whole combined investment which relies on cashflow from him, could be in default. Outside HNW family offices - which he doesn't have - practically no-one in mainstream private equity pools their commitment with their buddies to try to meet a minimum investing threshold and then goes looking for a gatekeeper to let them in.

In previous threads, OP has said he won't pay wealth managers big percentages, and balked at the cost (a few hundred pounds a year) of getting a SIPP provider to work directly with the broker of his choice because it's not 'competitive' with the price of simple SIPP offerings - even though it was the going rate for the more advanced service he considered to use to cut his FX costs by using a cheap European brokerage to handle the front end transactions. So he is perhaps the kind of person that wants to have his cake and eat it too, and after making a bit of money thinks he ought to be able to have his pick of the deals from Blackstone and KKR etc.

In his last thread earlier this year, he didn't want to use a listed vehicle that invested as a fund-of-funds or did secondary transactions rather than direct, because he thinks that some fund houses might perform poorly, so he only wants to invest in the best ones that he picks himself from a wide range. The enthusiasm is commendable, but private funds in the alternative investment space are not the sort of thing you commit into via a 'buy it now' button on eBay. There are 1000+ PE houses out there worldwide, but most of them are not currently fundraising, and of the ones that are, a retail investor with no knowledge of the sector is going to get a seat at the table with 0 of them.

That's why I suggested something like Moonfare where if you want to access some limited range of private funds on a pick-from-the-list basis, using someone else's feeder vehicle, you might be able to get something approaching that, if it really does what it says on the tin. As they are pretty new and cater to investors who traditionally struggle to access the sector and might be inexperienced, I have no idea how they expect to handle investor defaults in a credit crunch scenario -other than perhaps a huge cash/liquidity pool which hurts IRR.

Alexland

While this thread is interesting, and Bowlhead is demonstrating top knowledge (again), it leaves me wondering what is wrong with the return from traditional mainstream long-term investments. It feels like trying to fix an already solved problem.

Reaper

I agree. Unless you have millions to invest I'd stick to the obvious. A fund like BMO Private Equity (used to be called F&C) is simplicity itself. Or VCTs at a stretch.