For investment managers with capital to grow their operations, it’s a difficult question to answer. What, exactly, is the best way to achieve greater scale: organically or through acquisitions?
At New York-based Rockefeller Group International (RGI), a subsidiary of Japanese developer Mitsubishi Estates, the answer is a hybrid model: organic growth in the US and growth through acquisition in Europe.
Over the past year, RGI has bolstered its investment management team in the US, hiring former Citi Property Investors’ executive John Bottomley as senior vice president to help lead capital raising and, more recently, appointing ex-PNC Realty Investors executive Paul McDermott as managing director responsible for acquisition and asset management.
In addition, the firm opened an office in Washington, DC, led by McDermott, at the start of this month, with plans to open an office in San Francisco in the near future.
According to sources, RGI also is believed to be raising its first institutional real estate fund, a $500 million core-plus vehicle, targeting office properties in gateway cities in the US, including New York, San Francisco, Chicago, Washington, DC, and Los Angeles, as it looks to expand from a primarily joint venture-focused investment strategy.
The tactic in Europe though is quite different. Last month, RGI closed on a 75 percent stake in London-based fund manager Europa Capital for an undisclosed sum.
Kevin Hackett, president and chief executive officer of RGI, said the firm had spent a long time deciding on the best way forward in starting a business in Europe and realised sending a New York executive to establish a presence in the region was less than ideal. “This is very much a people business and you need to keep the confidence of investors, not disturb it,” he added.
About 10 months ago, after more than a year searching the European market, RGI spied Europa Capital and its principals Charles Graham, Noel Manns and Peter Cluff. “We were very careful about making sure this was a cultural fit for both us and them,” Hackett said, adding that Graham, Manns and Cluff – who remain in day-to-day control of Europa and its three opportunity funds – agreed to make a long-term commitment to the platform.
Hackett said Europa would be the exclusive investment platform for RGI in Europe, although the firm would invest “substantial capital” over the next five years broadening the platform.
Back in the US, Hackett declined to comment on whether Rockefeller was raising a core-plus fund, but he added that, after more than 80 years in the country, organic growth made the most sense. “We are in this for the long term,” he said.
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