French alternative asset manager Tikehau Capital wants to tap the UK retail market as it seeks to reach as much as €35 billion in AUM within two years.
The firm is in market with at least seven funds, four of which are in private equity. These include the T2 Energy Transition fund, which has raised at least €350 million; a €1 billion specialist vehicle focused on the aerospace sector; as well as a growth equity vehicle and a medtech fund, both with undisclosed targets.
Tikehau is also set to launch strategies in the private debt segment including an impact lending strategy as well as its first private debt secondaries fund, according to the firm’s first half 2020 results. Capital-raising targets for the vehicles have not been disclosed and the firm declined to comment.
The Paris-headquartered firm plans to replicate the offerings it implemented in Spain and Italy with UK private banks, according to Carmen Alonso, head of Iberia who was concurrently appointed head of UK on Monday.
“On the fundraising side, we have made some inroads with a number of UK based investors in our vehicles and strategies. The UK market represents a great opportunity for us both on the institutional side but also with retail investors,” Alonso told Private Equity International.
The firm also said on Monday it had promoted Peter Cirenza to chairman of the UK and chairman of its tactical strategies unit.
Tikehau partnered with Fideuram-Intesa Sanpaolo Private Banking, Italy’s largest private banking network, and raised over €400 million from 3,000 high-net-worth individuals last December. The fund invests across private equity, private debt, real estate and special opportunities. In April it teamed up with Spanish bank Banca March for a long-term vehicle focused on energy transition.
The UK ranks fifth in terms of ultra-high-net-worth distribution, or individuals with a net worth of over $30 million, according to Knight Frank Research’s 2020 Wealth Report.
HNW interest in private equity and other alternative assets has been growing in recent times. A survey in June by the UK’s Connection Capital found that 87 percent of UK-based HNW investors are planning to maintain or increase their allocations to alternative assets over the next 12 months. Nearly 60 percent said they are interested in private equity as an investment strategy over the next year.
Private equity firms Blackstone, StepStone Group, Pantheon and Partners Group have all tapped the private wealth market to raise capital for their offerings. StepStone launched its private wealth group Conversus in September last year while Pantheon expanded outside of the UK and the DACH region when it teamed up with Paris-based Kermony Capital this year.
Tikehau’s assets under management grew nearly 10 percent to €25.7 billion as of end-June. Capital from foreign investors has been growing and accounted for nearly a third of the group’s total AUM in H1, according to its earnings results. Investments in private equity made up €2.3 billion, or about 10 percent of the firm’s total AUM.
Tikehau set up its London office in 2013 and employs more than 50 professionals across private equity, private debt, real estate and capital markets strategies there. The firm also runs its tactical strategies unit, which is responsible for managing its special situations funds, from the city. The second generation of its special situations fund raised more than $210 million as of end-December.
Despite the economic fallout from covid-19 and further disruption as the end of the Brexit transition period draws near, the UK remains a priority market for the firm, with investors still requiring access to alternative, non-correlated investment strategies, Alonso said.
She added that the firm also expects a number of opportunities to deploy capital in the UK market to help support the country’s economic regeneration, including offering long-term patient capital to businesses hit by the pandemic as well as helping to support companies that had to put their growth plans on hold to confront the health crisis.
“The biggest challenge will be selection – choosing the winners of the crisis – and the discipline to identify those opportunities carefully,” Alonso said.