The Capital-Raising Challenge
The UK institutional investment marketplace is very large and sophisticated. The UK Investment Management Association’s annual survey for 2019-2020 estimates that £4 trillion of assets are managed by its members for UK institutional clients out of total AUM of £8.5 trillion at the end of 2019.
Given this scale it is no surprise that it is also highly competitive. In a marketplace with hundreds of competitors and thousands of products and strategies, raising capital from institutional investors presents a major challenge for asset managers. How can you gain access to decision-makers? Where do the best prospects for success lie? How can you differentiate your proposition? How can you establish your credibility? How can you maximise your chances of success?
At Black Isle we cover the UK institutional market in its broadest sense. The relevance of each segment in the list below will vary according to each client’s proposition but all offer realistic capital raising prospects for the right proposition.
- DB pension funds, both private and public sector
- Mastertrusts and DC pension funds
- Insurance companies
- Fiduciary managers
- Governmental bodies
- Endowments and charities
- Wealth managers and private banks
- Family offices
- Multi-managers and Fund of Funds managers
- International pension funds and SWFs with a UK presence
Given the high degree of consultant intermediation in the UK institutional market, particularly amongst DB pension funds, we also focus on investment consultants, from the large global players to the smaller domestic firms.
We approach the capital-raising challenge from both a top down and a bottom up perspective.
The investment needs of each segment vary and continuously evolve. To raise capital successfully, it is important to understand those needs and target the appropriate segments, and these “top-down” considerations will inform our client-specific approach. An opportunistic strategy that appeals to certain family offices is unlikely to appeal to a life assurance company subject to the constraints of Solvency II.
Ultimately though, it is the “bottom up” execution – access to and dialogue with individual decision-makers – that will determine our success. Given the competition for capital, access to asset owners has never been harder. Achieving that access requires detailed knowledge of personnel, decision-making structures and investment preferences, and it requires personal relationships.
When raising capital, there is simply no substitute for market knowledge and personal relationships developed over many years. Each member of the Black Isle team has the experience and relationships that provide an invaluable shortcut to the institutional marketplace. Without the sort of access we can provide, asset managers lacking experience of the UK institutional market will find the capital raising challenge very tough.