Australian Funds Contemplate a Global Presence
Brighton House Associates recently ventured down under to gain a better understanding of the Australian alternative marketplace—how fund managers raise capital and the areas of interest to investors. Being so far away from major financial hubs, Australia is rarely discussed in the alternatives industry.
Australia’s main investor in alternatives has been the Superannuation fund, which manages retirement and pension plans for public and private employees. In the past, these plans invested heavily in local funds. Presently, the Superannuation plans have begun to take a different approach and invest in global and offshore fund managers. This has not only tightened capital inflows for many midsized hedge funds but also made it difficult for emerging funds to source capital. Many managers are realizing that growing their funds will require them to market to offshore investors.
The obvious barrier to this effort is their location. The majority of alternative investors conduct on-site due diligence when researching new managers, and there are plenty of funds located in and around major financial hubs. There is little incentive for U.S., European, and Asian investors to spend time and money flying to Australia a few times a year when there are many managers in more convenient locations.
Another barrier is the time difference. Many managers want to proactively market their funds, however, they have only a small window of opportunity during the business day to make phone calls or hold conference calls with investors.
Australian investors expressed a similar frustration: they find it difficult to source managers because many funds do not travel to Australia to conduct business. In fact, one of the major factors that affect their investment decisions is if a manager is willing to come to Australia once or twice a year.
Overall, many fund managers are realizing that to grow their business, they need to dedicate more time to marketing offshore or open offices in strategic locations. In the next few years, BHA expects to see more Australian funds attempt to increase their global presence.