European fund of funds managers Altamar Capital Partners and CAM Alternatives agreed earlier this month to merge their businesses and form a €14 billion enterprise.
By partnering up, the combined entity called Altamar CAM Partners will have more than 220 employees – one third of which are investment professionals – across five offices in Europe, the US and South America. The union will have 14 funds across private equity, real assets, venture, private debt and specialist sectors, and will cover strategies including primaries, secondaries and co-investments and separately managed accounts.
“There is a huge cultural fit and friendship between Altamar and CAM,” Claudio Aguirre, co-chief executive and founding partner of Altamar, told Private Equity International.
He added that the firms’ LP base is “extremely complementary” with not one LP in both firms. Madrid-headquartered Altamar, a two-time winner of PEI Awards’ Fund of funds Manager of the Year in EMEA, is mainly backed by a range of LPs in Spain and Latin America. Investors of Cologne-based CAM are predominantly insurance companies, financial institutions, pension funds and family offices from the DACH region.
The move to consolidate is about scale and reach, according to Aguirre.
“The big firms are getting bigger and bigger. This is a business that needs some critical mass and having €14 billion is a critical mass that’s expected to be invested in technology, sustainability, and all the digitisation that is coming,” Aguirre said. “Joining forces is important. That will be beneficial as we expand our global reach and access.”
The deal had been years in the making – the pair launched a private debt initiative as a joint venture three years ago and that was the start of merger discussions, said Rolf Wickenkamp, co-chief executive and founding partner of CAM Alternatives.
A focus on private wealth and SMAs
Building out Altamar CAM’s technology platform to tap more private wealth investors is a priority in the near-term.
Altamar has since 2006 been developing a private wealth management business that requires significant technology, Aguirre noted. That platform today consists of 15,000 private wealth clients that have contributed more than €2 billion to Altamar’s funds.
The firm plans to launch the platform in Germany and other countries in Europe, Aguirre said. “We will keep investing in technology and are in discussions to make the business truly global. This includes discussions with smaller firms to bring more private capital technology into the business.”
Aguirre noted that the plan is to reach €25 billion of AUM of the two firms together in five years’ time. “It’s ambitious, but we think it’s a realistic and achievable goal.” He noted that a significant part of their capital raising efforts will come from growing the private wealth management side, which the firm expects to double to €5 billion.
For Wickenkamp, Germany’s high-net-worth investors are an untapped opportunity. “The private wealth business was dead in Germany for so many years since the financial crisis, because the cost of investing in PE funds was seen very negatively because of the impacts from other areas like real estate or ship financing. But that’s opening up again,” he said.
“For the next funds, we won’t just go to the institutional investor landscape, but also the private wealth channel.”
Along with expanding its investor base, Altamar CAM wants to grow the advisory side of the business – something that CAM has had more experience in, having managed separate accounts since 2001 for some German insurers.
“Over the years, more and more investors have moved into the managed accounts area because they feel that it’s a more flexible way to invest money. And it’s a way to benefit much more from the learning curve that a manager can provide,” Wickenkamp said.
He noted that the percentage of investor capital managed through customised solutions will be much bigger in the next couple of years. “It’s increasing in a more relevant way than in the past, and we are perfectly prepared for that growth.”
Added Aguirre: “Similar to what has happened with other big firms, the advisory business will be taking over to some extent the commingled funds business, and that’s where are going to put a lot of focus on.”
Future fundraising
The firm will merge its investment activities and combine big pools of capital in private equity and infrastructure, Wickenkamp noted. Although there are slight differences in investment strategy – CAM is more focused on mid-market investing than larger deals – the details will be ironed out and the expectation is to roll out a combined fund of funds offering as well as a joint infrastructure fund.
Aguirre noted that the firm wants to take its efforts in social responsibility and sustainability “to the next level” with the launch of a dedicated impact fund focused on Europe, next year. He declined to provide additional details on the fundraise.
The pair added that Altamar and CAM’s current offerings are ideal in attracting a broader set of investors.
“It is true that CAM has focused on the lower mid-market, and that’s something that would be very attractive for our LP base. Similarly, our venture capital offerings would be very attractive to their LPs,” said Aguirre. Altamar has a joint venture with Barcelona-based fund of funds Galdana Ventures, which is in market with its third vehicle seeking €800 million, according to Altamar’s website.
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