A giant in traditional asset management, Fidelity International is in turn giving in to the sirens of the unlisted. Still weakly present in alternative assets, apart from real estate and recently private debt, the asset manager with American roots (separate from Fidelity which covers the United States) hopes to have found the parade to place himself at the center of the game Fidelity International announces this Thursday a minority stake and an exclusive distribution partnership in Europe with the German fintech Moonfare.
This start-up offers unlisted fund units on its website to individual European and Asian investors. The goal of their alliance: to make the funds of Apollo, Carlyle and other big names in alternative investment accessible to as many people as possible. Their private equity, private debt or infrastructure products are traditionally reserved for institutional investors and wealthy individuals, with entry tickets of several million or tens of millions of euros.
Office in France
In parallel with the direct offer on the Moonfare site, which will continue, “We want to forge half a dozen partnerships [de distribution] important this year and ten next year. We are also targeting family offices, distributors and small institutions and pension funds ”, explains Christian Staub, Europe manager of Fidelity International, which manages half of its 700 billion dollars in assets for European clients. The need would be pressing, both on the side of savers and financial intermediaries. “Faced with low rates, we are seeing growing interest from individuals for unlisted assets (with potentially more attractive returns, Editor’s note) but access to these products remains difficult, points out the representative of Fidelity International. Beyond a handful of large banks, most players will seek to partner with an asset manager capable of carrying out the selection and administration of unlisted asset funds. “
For the moment, the market is still in its infancy. “Unlisted assets represent 25% of the allocation of institutional investors globally, against only 5% among individuals, according to Towers Watson”, says Steffen Pauls, founder of Moonfare and former head of the German market at KKR, one of the world leaders in leveraged buyout (LBO).
Moonfare and Fidelity International are mainly targeting Germany, Switzerland, Italy, the United Kingdom and France, countries where the start-up plans to open an office this year and where Fidelity International has just forged a partnership in the ’employee savingswith Société Générale Assurances. Moonfare also wants to settle in Singapore, in addition to its current branches in Luxembourg and Hong Kong. The start-up plans to double its workforce this year, to around 200 people. Before the arrival of Fidelity International, which takes a very minority stake at this stage, it had raised 40 million euros since its creation in 2016.
The iCapital example
The Berlin-based fintech wants to follow in iCapital’s footsteps. This American marketplace, supported in particular by Goldman Sachs, BlackRock and Blackstone, claims more than $ 70 billion in intermediated assets. At Moonfare, “Some 1,200 clients have allocated more than 600 million euros in around thirty funds on our platform since 2018. We should have more than one billion euros in assets at the end of the year, with 15 to 20 additional funds”, assures the boss of the German start-up.
Against an entry ticket of 50,000 or 100,000 euros, depending on local regulations, its clients do not invest directly in funds from CVC, Cinven or French Apax, but in shares of a special limited partnership based in Luxembourg, which itself invests in a vehicle governed by Luxembourg law managed by Pancura, a local intermediary specializing in the management of alternative funds.
If this type of offer is reserved for informed savers, “We provide a path to liquidity for investors who do not wish to remain invested over a ten-year lock-in period, by giving them access to the Moonfare secondary market. Our investors can exchange their holdings in private equity funds with each other or with Lexington Partners, a global manager of secondary funds, which acts as an institutional counterparty ”, says Steffen Pauls.
Schroders invests in life insurance combining listed and unlisted
To sell unlisted funds to a large public, an investment is required for asset managers: life insurance, the main envelope of French savings. “We are discussing with insurers to offer products invested in private assets that give a certain liquidity, either by mixing them with liquid assets to create mixed units of account (UC), or by backing them to the general assets of the contracts. life insurance, but this then has an impact on the insurer’s solvency, reveals Yes Desjardins, CEO of Schroders France. We are already working with one of them on a mixed UC dedicated to health. “ BNP Paribas Asset Management already launched last month in this niche with Harmony Prime, a hybrid fund combining illiquid and liquid assets: 25% private debt and real assets, 7.5% private equity and a majority of stocks and bonds. The Parisian branch of the British Schroders has other avenues for individuals: infrastructure debt “But only on the high yield part (less well rated, Editor’s note) which could offer a net return of 3 to 3.5% after remuneration of distributors, against less than 2% for senior debt”, and a “Hotel property classification fund for funds of funds and private banks”, announces Yves Desjardins.