STRATEGY FOR SEEDING THE NEW GENERATION OF … · Financial Forum July 4th, 2012 PRESENTATION OF THE ROUND TABLE “STRATEGY FOR SEEDING THE NEW GENERATION OF INNOVATIVE EMERGING

Paris EuroplaceFinancial ForumJuly 4th, 2012

STRATEGY FOR SEEDING THENEW GENERATION OF INNOVATIVEEMERGING ASSET MANAGERS

Alain LECLAIR, Chairman, Emergence

Paris Europlace International Financial Forum

July 4th, 2012

1


PRESENTATION OF THE ROUND TABLE

“STRATEGY FOR SEEDING THE NEW GENERATION OFINNOVATIVE EMERGING ASSET MANAGERS”

INTRODUCTION:• Alain LECLAIR, Chairman, Emergence

SPEAKERS :• Jean-Philippe BOUCHAUD, Chairman, Capital Fund

Management

• Fabrice DUMONTEIL, CEO, Eiffel Investment Group

• Lionel MELKA, Chief Investment Officer & Co-Founder, Bernheim,Dreyfus &Co

• Philippe PAQUET, Deputy CEO, NewAlpha Asset Management

2


PARIS FUND INDUSTRY:LEADER IN EUROPE AND WORLDWIDE

600 PARIS-BASED ASSET MANAGEMENT COMPANIES• A permanent growing number : an average of +40 per year

4 ASSET MANAGERS IN THE TOP 20 GLOBAL RANKING

2.600+ BILLION EUROS UNDER MANAGEMENT

NUMBER ONE CENTER FOR FUND MANAGEMENT IN EUROPE(20%)and number two globally (behind the USA)

Source: EFAMA,AFG, CSSF, IFIA

Funds Financial Management* Industry in EuropeEUR 7.920 bn at end – December 2011

* Assets domiciliated in Luxemburg and Irland reallocatedto promoter’s country of origin – AFG estimates


A COMPLEX ENVIRONMENT CREATINGOPPORTUNITIES

FOR THE ASSET MANAGERSCREATING NEW ACTORS: A LEADING BENCHMARK FOR DYNAMIC

AND INNOVATIVE MARKET PLACES• Paris is in Europe the leading place for independent Asset

Management Companies• International recognition of the French managers’ very high level of

professional expertise• Top education and research of the French University and Business

Schools, especially in the quantitative area

FOR THE FINANCIAL MARKETSAN INCREASING ROLE OF THE MARKETS TO FINANCE THE EUROPEAN

ECONOMY• Reinforced regulations which restrict classical banking… schemes

(Basel III, Solvency II, Dodd-Frank)• Large pool of individual and institutional savings• New asset classes : environment, energy, health

FOR THE INVESTORSEMERGING CONCEPT MEETS AN INCREASING INTEREST OF GLOBAL

INVESTORS• New source of performance for investors• Historical development in the U.S.A. via pension funds, endowment…• Recent developments in Europe and emerging financial places

4


334 353 375413 432 427

474 486 502538

571 567592 60061

42

62 59

36

29

35

26

42

52 50

25

4439

0

10

20

30

40

50

60

70

0

100

200

300

400

500

600

700

Evolution de la population de SGP en France

Nombre de SGP Nombre de création brutesNumber ofcompanies

Gross Number ofcompanies created Source: AMF

A permanent growing number of management companies inFrance

STRONG FRENCH ENTREPRENEURIALDYNAMICS

400 INDEPENDENT ASSETMANAGEMENT COMPANIES

• 150 created over the past 5 years

SOME HAVING REACHED AEUROPEAN & INTERNATIONAL SIZE

HURDLES TO REACH THE 100MILLIONS EURO UNDERMANAGEMENT THRESHOLD

• Too little seed-money in Paris• Institutional constraints: level of

participation, track-record…• “critical mass” phenomena : global

investors are avert to funds with lowassets under management

• Marketing and sales often need to bescaled up

5

Growth of emerging asset managers is a keyobjective for the Paris Fund Industry

Growth of emerging asset managers is a keyobjective for the Paris Fund Industry

Source: AMF

120

80

1220

<100M€ 100M€-500M€ 500M€-1Mds€ >1Mds€

Nombre de SGP françaises entrepreneuraialespar encours sous gestion

(source AFG, 2010)

Breakdown of independent management companies inFrance by assets under management

Source: AFG 2010


A SHIFT IN FINANCING THE EUROPEANECONOMY

6

An increasing roleof third party asset

management

New constraints ininvestment banking

activities

Consequences of Basel III and Solvency IIRebalancing of banking versus market

financing

Consequences of Basel III and Solvency IIRebalancing of banking versus market

financing

TOWARDS A NEW EQUILIBRIUM OFTHE FINANCING SCHEME

Many experienced and talented professionals have already movedout of their Groups to launch their own asset management company

Many experienced and talented professionals have already movedout of their Groups to launch their own asset management company

EUROPEAN FINANCINGSTRUCTURE

USA FINANCINGSTRUCTUREBanks

Markets

?? ?

Alternative Financing *

* Non bank financial intermediation


SEEDING PERFECTLY MATCH INVESTORSAND MANAGERS INTERESTS (1/2)

7

TO PROVIDE SEED MONEY TO THE MOST PROMISING ANDINNOVATIVE INVESTMENT FUNDS, managed by newly created

French or International Asset Managers, incorporated in France

EMERGENCE : 30 MILLION EUROS AVERAGE INVESTMENTPER SEEDED FUND

BENEFITS FOR THE “HAPPY FEW” :


SEEDING PERFECTLY MATCH INVESTORSAND MANAGERS INTERESTS (2/2)

AN EFFICIENT SCREENING TOOL• 100+ applications• Stringent selection by the Fund advisor, NewAlpah AM

A SECURED FRAMEWORK TO SEED AND MONITOREMERGING ASSET MANAGERS

• Follow-up of seeded funds and managers• Strong risk management of seeded funds

A KEY ROLE OF THE INVESTORS IN THE GOVERNANCE ANDMONITORING OF THE FUND

• Veto power of the Investment Comity• Conflict of interests are strictly managed

OPTIMIZED REGULATORY SOLVENCY II ‘S CONSTRAINTS• Transparization of the portfolio (look-through)

A DOUBLE SOURCE OF REVENUES• The performance of the incubated funds (3 year seeding period)• Fee-sharing from seeded managers (overall 7 year period)

8

BENEFITS FOR INVESTORS :


“THE EMERGENCE FUND”

AN UMBRELLA CONTRACTUAL FUND• A regulated tailor-made structure

LARGE FRENCH AND INTERNATIONAL INVESTORS• Board : Aviva, BNP Paribas Cardif, CAVP, CDC, CNP, Macif Gestion, UMR in the

process of being enlarged, headed by Alain LELCLAIR

INNOVATIVE INVESTORS GOVERNANCE TO PARTICIPATE toseeded managers selection

• Investment Committee headed by Jean-Tristan PARODI, CDC

INNOVATIVE FEE-SHARING SCHEMES between EMERGENCE Fund and theseeded asset managers

• 30 M€ seed-money per investment for 3 years – fee sharing for 7 years

TARGETED ASSETS: 150-200 MILLION EUROS for the first sub-fund (finalclosing 3Q12)

THE FIRST SUBFUND : “ABSOLUTE RETURN”• managed by NewAlpha AM

OTHER SUBFUNDS UNDER STUDY

LEGAL FRAMEWORK DESIGNED WITH GIDE LOYRETTE NOUEL ANDPWC SELLAM

9


NEWALPHA AM : THE MANAGER OF THEFIRST SUB-FUND

10

→ Overview

• Investment management company regulatedby France’s Autorité des Marchés Financiers(AMF)

• More than 1,500 seeding projects analyzed - 19seeding partnerships with early stage managers

• $720 million in cumulative seeding investments

• $3 billion managed by currently partneringmanagers

• 10 professionals averaging 16 years’ experience

→ NewAlpha has been awarded several times fordetecting and seeding talented emerging managers

• Voted ‘Best Seeding Platform’ in 2010 and 2011by Hedge Funds Review

• ‘Best Performing Specialist FoHF Over 3 years’Award in 2011 (HFR European FoHF Awards)

• Best Long / Short Europe fund in 2010(HedgeWeek) and 2011 (EuroHedge) forMelchior European

• NewAlpha Genesis 3 has been nominated intwo categories for the World Finance 2012Awards : Most innovative FoHF Europe and BestSeeding FoHF Europe


TYPOLOGY OF APPLICATIONS RECEIVEDFOR THE SUBFUND “ABSOLUTE RETURN”

BY INVESTMENT

STRATEGY TYPE

BY ASSETS UNDER

MANAGEMENT

11Source: NewAlpha AM

Source:NewAlpha AM


CONTACTS

CONTACTS EMERGENCE• Alain LECLAIR, Président d’Emergence

06 07 44 31 01 / [email protected]

• Anaële COJAN-BAUDANT, Secrétaire générale d’Emergence


CONTACTS NEWALPHA AM• Antoine ROLLAND, Président de NewAlpha AM

[email protected]

• Philippe PAQUET, Directeur Général en charge du Développement deNewAlpha AM


• Clarisse ANGER, Directeur de la clientèle institutionnelle, NewAlpha AM

01 4068 67 77 / [email protected]

CONTACTS FINANCE INNOVATION• Arnaud de BRESSON, Délégué général, Paris EUROPLACE, Directeur

général FINANCE INNNOVATION

01 49 27 11 14 – [email protected]

12

Documents

STRATEGY FOR SEEDING THE NEW GENERATION OF … · Financial Forum July 4th, 2012 PRESENTATION OF THE ROUND TABLE “STRATEGY FOR SEEDING THE NEW GENERATION OF INNOVATIVE EMERGING