As Blackstone‘s first chief financial officer in Asia-Pacific, Tim Janke has first-hand experience in building a presence in the region. Last month, he was appointed CFO at Xen, a fundraising platform start-up aiming to do just that.
Individual investors are a relatively untapped source of capital for alternative investment managers but Singapore-headquartered Xen will provide accredited investors in Asia access to Western funds, including hedge funds, private equity, real estate and infrastructure.
Based in New York, Janke will head the start-up’s finance processes and help to develop relationships with US general partners, whose funds will be offered in Asia. He told Private Equity International about Xen’s inner workings, the firm’s biggest challenges and what he learned at Blackstone.
How does Xen work?
We’ll put funds on our platform and see how interested our investors are, which will translate into our commitment ticket size. We’re expecting our commitments to be in the $10 million ballpark.
In the initial years it’ll be very important to draw down money up front so that we can be sure not to miss capital calls, but it will probably change as we develop longer term relationships with the investors.
The fee structure would be no different than for an LP coming into the fund directly and we’ll charge an access fee. All carried interest goes back to the investors because we’re not asset managers; if they make good decisions and the fund managers perform well then they should get the returns.
Who will be your investors?
We’ll go strongly towards offshore Chinese wealth. The initial market is wealthy families who are passing their wealth down to the second or third generation and looking for long-term ways to reap sizeable rewards in less traditional spaces. We’re also reaching out to wealth management platforms that operate in Indonesia and the Philippines.
What funds will you target?
Right now we have one fund managed by a well-known private equity brand in the US. Our targets aren’t the giant managers’ “flagship funds”: we hope to work with the big fund houses on their non-traditional funds, such as natural resources, infrastructure or real estate that they wouldn’t tend to distribute in Asia through the big wealth management channels.
What keeps you up at night as a CFO?
What will really start to get me nervous is when we’re doing the nuts and bolts of closing capital and putting it into one of the products we’re offering. Also: the first time we’re reporting to the investors and making sure we get that right in a repeatable process.
What learnings have you taken from Blackstone?
One of the things I was always amazed by at Blackstone is they take such great lengths to make sure their LP communications are as transparent as they can be without giving away too much, which is an underappreciated science.
Steve Schwarzman [Blackstone co-founder and chief executive officer] is legendary for not wanting to lose investors’ money and that ethos is so strong throughout the organisation. We want to provide our investors with fund managers that have the same kind of ethos, where they fundamentally believe in the decisions they’re making and are intervening in companies or real estate to make the organisations better for the long run.
What will your finance team look like?
The finance team will be incredibly small. We have one other gentleman who helps out, so we might expand on that but it won’t be significant because we want to run with a very lean shop. The investments we’re making in the technology platform should help with the stuff that historically would have fallen to the finance function.
It’s always better when you’ve got the fund structures like ours to be using outside accounting firms to be the arms and legs, so there’s no question of what the cost is to the platform, as opposed to the cost to LPs.