Nick Cooper, The Townsend Group’s new London-based principal, became the most talked about man in European private equity real estate circles last month. Within 48 hours of news of his appointment at the Cleveland, Ohio consultancy firm breaking, the story had shot to the top of the most read ranking on PERENews.com.
There is little wonder why the story generated such interest. Cooper is a very well known figure in Europe, while Townsend in the region is perhaps more of a mystery. Cooper founded and was head of ING Real Estate Investment Management’s Global Select fund of funds business until last year and is also a former chairman of AREF, the British Association of Real Estate Funds. He resigned from ING when his employer chose to shift its multi-manager business from London to The Hague.
The day that ING announced Cooper’s departure, Townsend established contact with him, persuading him to join existing principal Adam Calman to help grow the consultant’s multi-manager activities.
“The ability to tap into this significant wealth of information that Townsend has was a big draw,” Cooper said. “I will be building investment strategies on a discretionary basis which is clearly what I have been doing for the last 20 years and it is what I will be doing here – deciding where to place our capital, and for whom and where it fits.”
The firm hopes to win separate mandates among UK and European local authorities, pension funds and redouble efforts in Asia with Cooper’s help. Adam Calman, who established the European office last year as Townsend’s first recruit outside of the US, added: “We see Asia as holding a very significant pool of potential clients, who will want to diversify their investments outside of their domestic markets. As the wide range of institutions in that region evolve, they are likely to follow the sophistication shown by their respective sovereign wealth funds, in that regard.”
Townsend has capital for UK and European open-ended core funds, core-plus and higher return strategies, as well as potentially for mezzanine debt funds in Europe. So far the firm has advised clients and subsequently placed a significant commitment in London-based Brockton Capital’s Fund II. Townsend’s capital represented investors from around the world, and included commitments ranging from £100 million (€117 million; $143 million) down to £2 million bite-sized chunks of capital.
Asked whether Townsend would ever recommend clients invest in a fund of funds operated by another European player, despite its plans to grow in the sector, Cooper said yes. “We have got no allegiance to any particular product,” he added.
The fear is that traditional consultants will start to view Townsend as competition. Cooper said: “The big message is: ‘I am not a consultant, I am an investment manager,’ and I rely on clients and providers of clients to come to us.”
Calman added clients had an increased appetite to “internationalise” their portfolios to emerging markets and uncover opportunities to deliver alpha performance in the current cycle. “The trend of capital as we are seeing it, is moving more towards the outsourced model of full investment management, with Townsend having full discretion,” said Calman.
Mandates already won include a UK corporate pension fund with £500 million to spend, and a number of private wealth banks, who can deliver a Townsend-advised “white label” product – where Townsend makes investment decisions for a fund but its name doesn’t appear on the product – through their distribution channels and sovereign wealth funds from Asia, that have started to commit to Townsend’s investment programmes.
In response to questions over whether Townsend would launch its own fund of funds, Calman said the firm planned to form customised multi-manager portfolios that could be applied to a single client, where Townsend would tailor the strategy and chose the individual third party fund managers.
“We don’t have in-house products branded as Townsend and we don’t have a pooled vehicle into which we place new or existing client capital, so we are completely agnostic as to who the manager is, what the geography is and what the strategy is. It just has to match the benchmark and investment appetite of the clients we take on.”