Alvarium Investments’ co-chairman on going global for growth

Wealth manager Alvarium is expanding overseas to help fuel its ambition of $40bn assets under management over the next three years. Co-chairman Andrew Williams spoke to EG and explained the firm’s strategy. [caption id="attachment_978157" align="alignright" width="200"] Andrew Williams[/caption] Alvarium Investments, formerly known as LJ Partnership, is powering ahead with its rapid expansion through acquisitions. Under its new banner – named after the Latin for “beehive”, a metaphor for its approach to co-operation and intricate decision-making processes – the London-based investment boutique aims to grow its total assets under management to $40bn (£31bn) over the next three years. Co-chairman Andrew Williams is now overseeing a strategy to build a hub in Asia with the aim of amassing a notional $10bn-$15bn of AUM, to match that of its European business. A separate team is overseeing a similar strategy in the US. A spree on wealth manager purchases, relating to family offices and high-net-worth individuals, has also added around $1bn of AUM within the space of eight months. The latest of these was Paris-based asset manager Iskander, in March. Other acquisitions include London-based asset manager Casteel Capital in February, Swiss multi-family office Albacore in November, and two investment managers in New Zealand, NZAM and Pathfinder Asset Management. Sealing a £1bn deal The family office, where former Lazard boss Ken Costa became co-chairman last year, has lately been partial to hotels as an asset class. It was part of the Queensgate Investments consortium that clinched the four trophy Grange Hotels in central London for around £1bn, as first revealed by EG. While Queensgate has a background in acquiring hotels, including the Holiday Inn London Kensington Forum, SW7, the deal marked a significant leap forward in its long-held ambition to bolster its UK hotels presence. “It was complex, and the macro environment did not really help,” says Williams on the deal. “It was not an insignificant trade, and it was good that the debt providers [on it] held against some significant headwinds.” The £1bn deal is a far cry from its early trades of around £3m-£5m in 2009, when the firm operated as LJ Partnership. Back then its deals were primarily residential focused, when the asset class was an easy call and equity was powerful. Even though the German market in the past few years has arguably had better metrics, it is a lot easier for a Singaporean investor to get their head around investing in the UK “We still regard ourselves as a bit of a start-up, even though we are bigger and faster than we used to be,” Williams says, rather modestly. Currently, asset-rich operational companies are among the categories piquing the private wealth house’s interest – in particular, real estate with significant occupational capability, such as serviced apartments and student accommodation. In South East Asian countries such as Vietnam, data centre markets are also a draw. Planning also plays an important part in the wealth manager’s acquisition strategy. Last month Alvarium financed developer Montreaux to buy a £44.5m B&Q site at Cricklewood’s Broadway Retail Park, NW2, for a resi-led scheme, in a deal also revealed by EG. Hong Kong real estate firm Peterson Group and New York family office Dilmun – which is said to be linked to the Qatari royal family – are among Alvarium’s largest backers. A major selling point for the firm is that families can co-invest alongside these, as well as other families, on real estate assets, in addition to other illiquid classes such as private equity, merchant banking and corporate finance. [caption id="attachment_978185" align="aligncenter" width="847"] Project Station was the acquisition of a 26,000 sq m listed building complex in prime central Berlin, which Alvarium bought earlier this year with Cresco Capital[/caption] Themed approach To determine its strategy, Williams’ team looks thematically at asset classes and specific locations in real estate that it reckons will outperform the market on a forward-looking basis for a period of three to six years, before forming a joint venture to execute its sector-specific plan of action. “Real estate is broken into a thousand different asset classes, right down to a ‘wrong side of the street’ asset class in sectors and geographies, and these all have different cycles at different times,” he says. “To that extent, we spend a lot of time looking at whether it is event driven, legislatively driven, operationally or country driven. Certain sectors within countries run and grow at different times.” Perhaps unsurprisingly, much focus will remain in the UK as a market that contains plenty of arbitrage opportunities in current trading conditions, alongside Australia. Williams says: “We are lending a lot of money at the moment in markets where we see a significant arbitrage and where the banking community has withdrawn or is, to our mind, overly withdrawing from the market. “So we are doing a lot in Australia at the moment and some in the UK, where we are seeing almost equity-like returns for debt structures.” “A great deal of comfort” At a time of heightening uncertainty, the industry is striving to figure out what investors really make of the commercial property market in the UK. “Everyone agrees there’s a volatility to sterling, and there is a reticence among international investors [regarding] the UK at the moment, which sounds a bit strange having just concluded a £1bn deal,” says Williams. “It is not a fundamental reticence, but a wait-and-see reticence, which is perfectly understandable.” Despite the palpable sense of hesitancy this quarter, Williams observes that there is still “a great deal of comfort around the UK market” among families and investment partners. The response from international investors, particularly from those based in the Asia-Pacific region, seems to have remained “generally favourable, and active”. Although he predicts that the general reluctance to invest could stretch into the next one or two years “quite easily”, he highlights that the UK market’s historical and structural advantages, such as the full repairing and insuring leasing system, will propel it through a quiet period. “Even though the German market in the last few years has arguably had better metrics, it is a lot easier for a Singaporean [investor] to get their head around investing in the UK,” says Williams. “There is a natural empathy towards money here. They enjoy the security of the legal system and the ability to invest safely, and return profiles have been good.” To send feedback, e-mail pui-guan.man@egi.co.uk or tweet @PuiGuanM or @estatesgazette