New fund distributor offers hands-on support
A new fund distribution firm in Sydney will assist offshore and domestic asset managers in reaching wholesale investors. The service provides local support in Australia’s tightly regulated market.
Selective approach to fund partnerships
Capital Partners Group, established by Phillip McLean and James Simpson, will focus on long-term distribution and marketing for a select group of funds. The first consideration when selecting a fund is whether there is an appetite for the strategy in the market and whether they believe it could immediately raise capital.
Simpson explained the firm’s selective approach. “One thing we agreed on was having less managers but higher quality ones because that’s where we believe we can make a meaningful difference,” he said. The due diligence process matches what institutional investors require, assessing tenure, performance, governance, and trustee arrangements.
Related: One fund manager beats private credit slump
The firm, which began operations in February, has already signed two funds. Torica Capital, a fixed income manager with $370 million in assets under management, and Seedspace, an Australian technology venture capital fund, are its first clients. Torica was founded by Raymond Lee, former head of credit at Kapstream.
Offshore managers face steep learning curve in Australia
Services vary depending on whether the client is domestic or foreign. For local managers, Capital Partners Group helps with distribution, investor outreach, and refining marketing strategies. For offshore firms, the advantage is clear: “We have boots on the ground here already, we have the connections and the infrastructure,” Simpson said.
The Australian fund market presents unique challenges for outsiders. It operates on strong relationships, with capital pools that differ significantly by state. “You can go to another state and it’s almost another market,” Simpson said. Regulations are also stricter than many foreign managers anticipate.
Related: State Street debuts first Australian active ETFs
Recent foreign entrants include Aegon Asset Management, Royal London Asset Management, and Pacific Asset Management. Some have partnered with local firms like Pinnacle Investment Management.
For managers who handle the process, the rewards can be significant. However, the regulatory, cultural, and logistical barriers lead many foreign firms to underestimate the effort involved. Some, he noted, leave after realizing how differently things work compared to their home markets.
The founders bring extensive experience to the venture. McLean spent over 25 years at Credit Suisse and Macquarie before joining forces with Simpson. The two met while working in business development at Shed Enterprises, where they represented multiple asset managers.
