Spanish investment firm Altamar Capital Partners plans to double its total assets under management to up to €15 billion over the next five years.
The Madrid-headquartered fund of funds manager invests in private equity through buyouts, growth, venture, mezzanine and special situations. It has invested in funds managed by EQT, Equistone Partners Europe and FSN Capital, according to PEI data.
Its most recent vintages include the Altamar X Global Private Equity Program FCR, which raised €750 million last October to back growth and buyout GPs in Europe, the US, Asia and Latin America. It is also in the market with ACP Secondaries 4, which has a target of €750 million.
Private Equity International caught up with José Luis Molina, the firm’s co-chief executive and co-CIO, to find out how he plans to scale the business amid a tougher market environment.
What’s top of mind for you?
We should be doubling our AUM to up to €15 billion in the next five years. One of the things we did as a firm is to grow little by little. We started with three partners and now have more than 30 partners. From private equity – buyouts, venture capital and growth – we have expanded into infrastructure, real estate and private credit over the years.
When we started expanding into new verticals, we were a little worried that we could be killing our bread and butter – which is the PE business – but it was quite the opposite. Because if you are an investor and you’re happy with how our investment platform operates, we can now come to you with a suite of product offerings that could cater to the different risk-return profiles that you are seeking for your portfolio.
Moreover, we preferred to grow our business lines than become too big in our core funds, so that we can continue to deliver outstanding returns. For example, in the secondaries market, a lot of capital has gone into very large funds, which has created a very interesting dynamic for people like us that have decent-sized funds. We are large enough to be serious players for intermediaries, but not too much, which allows us to find alpha in the market.
It’s true that in the larger end of the market, not everyone can do a $1 billion transaction. But there is a vacant space, in the sub-$100 million transactions – that for us remains a very interesting market.
How has the pandemic affected your growth plans?
So far, the pandemic has not changed our targets for the two funds in the market – ACP Secondaries IV and Altamar Infrastructure Income II FCR – as investors have been very supportive. But it is fair to say that it has impacted the timing a bit as certain processes have inevitably been altered.
Therefore, we expect to reach or exceed our targets but this may take a few months more than initially planned. Moreover, we have had significant successes in the separately managed accounts side of the business as well as in the private banking business, which means that 2020 is bound to be another record year.
How do you plan to get to €15 billion?
We find that internationalisation is the best way to achieve scale and find the US is a growth opportunity. We want to do it with a focused effort and develop a key number of relationships. The lion’s share of our AUM still comes from LPs in Spain and Latin America, and increasingly in Europe. However, we believe that our track record should enable us to raise money in new territories.
We’ve done quite a bit on the private wealth side over the years and we did that mainly in Spain. We think there is a big opportunity to offer this type of product to the high-net-worth side of the business, allowing us to cater to some sophisticated private banks globally, internationalise our experience and have a handful of relationships.
Are you considering ways to tap the defined contribution market in the US in the future?
The DC is a huge market with a lot of potential and many large players are positioning themselves to try to capture their share. In our case our plan is not focused on huge volume but instead developing partnerships with clients that are seeking to achieve superior risk-adjusted returns together with an excellent client service.
How will you continue to remain relevant given the scale you want to achieve?
Even if we double our size to €15 billion, the market will continue to grow and should still be able to deliver alpha. I think that being too big goes against generating large returns but achieving more scale goes in favour of consistency and allows us to have a stronger platform and invest in technology for us to grow in a very efficient manner.
Scale is becoming important but you could still be a good boutique manager that caters to small-size institutions and deliver alpha to them in differentiated manner. However, you need to be large enough to be able to cater to a wide range of investors, to have great technology, great access to information and reduced cost of service. Scale is important, like it or not.
José Luis Molina is the founder, co-chief executive and co-chief investment officer of Altamar Capital Partners.