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Hello everyone, and welcome to 
another episode of Top of the 

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OPS, a podcast brought to you by
The Drawdown. 

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In each episode, we take a 
glance at a hot topic in 

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operations and finance within 
private markets, delving a 

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little deeper into a recent 
article covered on the Drawdown.

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And today we will be discussing 
GPS attempts to tap private 

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wealth. 
Once again. 

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This episode is sponsored by the
good people at HSBC Innovation 

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Banking. 
From mid market private equity 

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00:00:34,920 --> 00:00:37,840
to venture capital, innovation 
needs different. 

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Our episode partner HSBC 
Innovation Banking offers 

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tailored financing, foreign 
exchange and banking solutions 

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to match evolving needs. 
Backed by deep sector expertise 

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and global reach, it's Strategic
Fund solutions team are here to 

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help UK clients achieve their 
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Discover more at 
hsbcinnovationbanking.com. 

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Now my podcast partner today is 
the fresh faced Rivers 

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Cartwright to my crusty and 
decrepit Jackson Lamb. 

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It is of course, the draw Downs 
Deputy editor Matthias Plotz. 

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Welcome, Matthias. 
Thank you for having me. 

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I kind of want to say good 
morning, but it's noon. 

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No, yeah, we've just skipped 
over SO. 

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I'm not sure where that comes 
from, but for some reason your 

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choice of words is making me 
hungry, which is probably 

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because it's lunchtime. 
Not sure why specifically, 

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because again, I have no idea 
who you're talking about. 

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Yeah. 
And as you name it is that is 

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exactly the intention. 
So OK, we're going to move on to

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today's topic, which is the 
standard industry marketing 

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jargon describes either as 
retailization or democratization

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of private markets, but really 
just means methods of allowing 

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high net worth individuals, 
ultra high net worth 

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individuals, mass affluent, 
these types of wealth, wealth 

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investors to access private 
funds. 

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The PR around this makes it seem
like a match made in heaven. 

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And certainly there has been an 
increasing number of Evergreen 

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vehicles being launched over the
last couple of years. 

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But what sort of operational 
challenges are being created by 

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the tapping of wealth channels? 
And are the predicted levels of 

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investor appetite, particularly 
over the long term, realistic? 

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I think the the investor 
appetite is definitely there. 

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We've seen enough of surveys and
reports which kind of confirm 

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that with the caveat that you 
you need to be aware that this 

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is a possibility. 
I think there is still a large 

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part of education that needs to 
be done on that. 

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Yes, this is now an asset class 
you can that that is open to you

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and there are specific products 
like the LTF or otherwise to 

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facilitate that access and how 
it can be done. 

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But the biggest challenge still 
and especially kind of for our 

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mid market readership is 
absolutely. 

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So the sheer volume of investors
and the kind of associated work 

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that you need to do around 
subscription and onboarding. 

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And I personally suspect that 
this is in part why the 

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Evergreen vehicle is of such a 
great interest at the moment, 

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because you will, the way I've 
seen them set up in most 

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instances is with a server 
cornerstone investment from your

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more traditional LP base that 
doesn't have the, you know, the 

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associated liquidity question 
attached to them. 

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And then alongside them, you 
have kind of a pool of of 

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private wealth investors where 
you you give them a bit more 

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that that's if you're flexible 
investor pool that will come in 

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and out in in theory. 
And I know that that the 

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liquidity question kind of taps 
onto that. 

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And I've seen most of those 
funds launched with this sort of

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a two year lock up period. 
And and then the, the 

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redemptions are open, but 
Evergreen that as much as it is 

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a possibility, the operational 
infrastructure that you need to 

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to run those vehicles. 
In particular, you spoke to a 

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lot of advisors and firms who 
run them earlier this year For 

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my cover feature on feeder funds
is that Evergreen vehicles take 

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a long time to actually take off
it. 

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They're sort of something that 
you set up and then it it takes 

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a whole lot of time to mature, 
which if you are a large 

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investor, obviously that is 
something you can accommodate 

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for with your own balance sheet.
But if you're a smaller investor

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who kind of, I guess also has 
more immediate needs in terms of

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management fees to keep your own
operations running, you don't 

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necessarily have the waiting 
time that others may have to to 

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until that fund sort of 
appreciates to a critical mass. 

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Yeah, I want to say. 
Yeah. 

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So you're, you're illustrating 
quite nicely there some of the 

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tensions right around 
operational burden and also 

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investor relations and investor 
expectations, which all those 

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complications are what we love 
to dig into. 

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We're at somewhat of a 
disadvantage today because the 

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author of our recent article on 
this topic, our intrepid 

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reporter Tanya Kuchel, is 
actually currently sightseeing 

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in Madrid. 
Lucky her. 

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But it just so happens we have 
an interviewee who is very well 

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placed to provide some insights.
So I just spoke to Tim Ball of 

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Schroeder's. 
So let's listen to that 

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interview. 
I'm delighted to be joined now 

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by Tim Bull, who's the head of 
product Management for Schroders

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Capital. 
As part of his role, he leads on

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helping private wealth managers 
gain better access to private 

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assets via Schroders platform. 
And Tim, you know, I've seen 

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some of the stuff that you've 
written that's out in the 

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market. 
You previously said about how 

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there is a growing appetite from
individual investors and wealth 

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managers for private assets, 
partly driven by that promise of

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higher returns, but also because
so much of the economy now can 

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only really be accessed via 
private markets. 

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And I guess on the other side of
the transaction, private market 

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managers are in this prolonged 
period of difficult fundraising.

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And so, you know, we're they're 
very keen to access this 

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previously untapped pool of 
liquidity. 

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But challenges still remain, 
right. 

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So not least around the 
education and understanding of 

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the products being offered by 
managers such as Evergreen 

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structures. 
But Tim, you're very much at the

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frontline of this, so very keen 
to hear your view. 

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I guess to start off with on 
what the biggest challenges that

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kind of remain for GPS who are 
attempting to chat wealth 

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channels? 
Sure. 

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Well, thank you very much. 
Real pleasure to be to be 

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featured. 
I think that there are there is 

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still a number of obstacles 
which you know people are 

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addressing. 
And I think we also miss 

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recognize it's the market is 
very heterogeneous in the sense 

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of, you know, every market 
requires slightly different 

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approaches and in terms of 
accessing it. 

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And when we talk about the 
wealth space, we also kind of 

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tend to sort of mix up very 
different client types within 

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that. 
So maybe just by first by start 

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setting out what we would how we
would define the market. 

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I think you've got those 
investors which are kind of 

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single family office, you know, 
almost closer to institutional 

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type investors. 
And then you go down through the

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multi family office, the ultra 
high net worth, high net worth, 

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and then, you know, ultimately 
arriving at what we call kind of

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the mass affluent. 
Now, all of those different 

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types of clients have different 
requirements and different means

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of being able to access it 
according to regulation, 

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according to the, the, the 
wealth partners, the, the, the 

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intermediaries, the private 
banks and so on and the 

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financial institutions that 
they, that they work with. 

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So it's a very diverse market 
and in every country or every, 

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every jurisdiction tends to have
different considerations when 

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you want to, when you want to 
provide access to your products 

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in those, in those in those 
countries. 

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The way when I think about, you 
know, how the market has 

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developed over the past few 
years and what I, you know, when

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I think forward in terms of 
what's, what, what are kind of 

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the key things that we need to 
get right over the next few 

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years. 
I mean, regulation has come a 

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long way when I think back over 
the last 10 years and that's 

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certainly been a great 
facilitator for some of the 

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growth that we seen in the 
market. 

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And I think regulators also 
recognize the importance in 

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setting up right framework so 
that investors can access 

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private markets. 
It's in no one's interest to 

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completely block and prohibit 
investors that, you know, 

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eligible investors from being 
able to access these sorts of 

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financial products. 
And often, you know, if you, you

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know, the, the way that the 
economy is changing, as you, as 

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you mentioned, it's important 
that investors, you know, wealth

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investors are able to access 
similar sorts of opportunities, 

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which institutional investors 
have been able to do for many 

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years. 
So regulation is a key one, but 

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a lot of progress has been made.
I think the other aspect that 

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you also touched upon is the 
educational aspect. 

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And this is 1 where we see 
again, different types of 

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clients have different sort of 
experience and different levels 

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of understanding. 
For me, the most important thing

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is, is that the investors that 
we are speaking to and that 

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we're offering private markets 
products to have an 

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understanding in terms of, you 
know, the liquidity risks. 

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Because that's typically where 
problems have been had in the 

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past in terms of people 
misunderstanding in terms of how

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quickly they could get access 
to, to, to those products. 

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And there are certain things 
that are designed within the 

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products to make sure that 
investors can't, you know, 

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almost sort of react in an 
impulsive way to be able to sort

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of, you know, typically, you 
know, you know, exit the product

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immediately and therefore, in 
some cases sort of imperiling 

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some of the other investors in 
the fund. 

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So there's a, there's a whole 
education piece about how people

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think about how these products 
are used in part of the overall 

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portfolio. 
And then I think the other final

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piece would be the operational 
aspects. 

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And that's where the industry is
also making changes. 

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But again, depending upon the 
country, you see different, 

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different markets and depending 
upon the, the mutual fund 

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infrastructure that you're 
working with have been able to 

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accommodate some of the, the 
features or the characteristics 

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of these funds. 
Such as, for example, you know, 

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monthly, monthly subscriptions 
or quarterly subscriptions and 

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redemptions. 
The, the, the, the frequency of 

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information that is available 
and whether, for example, in the

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event of, you know, many 
investors looking to, to redeem 

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from a product, the, the concept
around this redemption gating, 

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which is a common feature across
many, many of the Evergreen 

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funds that we see in the market.
So I guess if I was to summarize

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it, a lot of progress has been 
made, but you know, still, you 

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know, and the opportunity is 
definitely very interesting for 

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both, I think for, for managers 
and also for investors. 

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But it's also, you know, there's
still a lot of progress that 

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still needs to be made for 
before we can say that, you 

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know, it's completely an open, 
you know, Open Access. 

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Sure. 
Yeah. 

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Let's dig into a few of those 
challenges that you mentioned 

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there. 
So looking from a European 

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perspective in terms of the 
products that are available to 

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and you may have a nuanced view 
in terms of different types of 

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investors as you've you've laid 
out previously. 

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But in terms of the products 
that are on offer, are they 

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sufficient to kind of reach the 
targets of fundraising around 

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wealth channels that you know 
are often kind of stated, you 

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know, the ambitions that are out
there? 

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Do we have the products yet? 
If we do, are the products well 

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understood enough yet to be able
to unlock that capital properly?

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What's, what's your perspective,
as I say, from a European 

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perspective? 
Sure. 

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But I think you've seen a, you 
know, huge explosion in terms of

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the number of funds launched in 
the last really the last 18 

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months. 
So, you know, some of your 

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listeners may be familiar with 
the the LTF rules, LTF 2.0, 

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which was sort of the second 
generation or, you know, 

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iteration of, of the rules 
around these European long term 

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investment funds. 
And that's certainly herald in, 

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you know, a big increase in the 
number of new funds that were 

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launched. 
And we've seen that across the 

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market. 
So I think there's certainly a 

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lot more variety in choice 
available to investors, which I 

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think is, you know, definitely a
positive. 

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I think, you know, ultimately 
what we, we tend to see I guess 

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a slight sort of, you know, 
congregation of, of certain 

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types of strategies and certain 
types of, you know, product 

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features. 
So many of the funds that have 

230
00:12:43,480 --> 00:12:46,880
been launched, you know, in the 
recent recent months have been 

231
00:12:46,880 --> 00:12:49,480
Evergreen funds really sort of 
which taking advantage of some 

232
00:12:49,480 --> 00:12:52,200
of the flexibility that the LTF 
2 rules brought in. 

233
00:12:52,680 --> 00:12:55,080
I would say there's also been 
across the asset classes, 

234
00:12:55,080 --> 00:12:58,880
there's been probably I think 
when I last looked at the data 

235
00:12:58,880 --> 00:13:01,960
about 1/3 have been sort of 
private equity focus, 1/3 

236
00:13:01,960 --> 00:13:04,960
private credit and about 1/3 
infrastructure. 

237
00:13:04,960 --> 00:13:07,840
So I'd say those are the three 
dominant asset classes where we 

238
00:13:07,840 --> 00:13:10,760
tend to see the most activity. 
Real estate I'd say has tended 

239
00:13:10,760 --> 00:13:14,400
to be kind of less, less 
dominant, I think partly because

240
00:13:14,440 --> 00:13:17,640
real estate is often long been a
feature of, of investors 

241
00:13:17,640 --> 00:13:21,720
portfolios and real estate is 
often I guess has been sort of 

242
00:13:21,720 --> 00:13:24,720
provided for in more sort of 
typically local structures, so 

243
00:13:24,720 --> 00:13:26,160
country by country type 
structures. 

244
00:13:26,640 --> 00:13:29,760
So we have generally found that 
the demand for real estate has 

245
00:13:29,760 --> 00:13:32,000
been sort of more muted compared
to some of the other asset 

246
00:13:32,000 --> 00:13:34,440
classes. 
But I think that was also, I 

247
00:13:34,480 --> 00:13:37,440
think there was also a bit of a 
cyclical, cyclical aspect there.

248
00:13:37,480 --> 00:13:40,000
And I think, you know, we, we 
have begun to see more interest 

249
00:13:40,000 --> 00:13:42,560
in real estate strategies, you 
know, in the very recent months.

250
00:13:43,520 --> 00:13:47,800
So you would judge kind of the 
the amendments to the eltif 

251
00:13:48,080 --> 00:13:52,360
regime because of the the number
of vehicles launched those that 

252
00:13:52,360 --> 00:13:56,160
eltif 2 point OF it has in your 
view been you know largely a 

253
00:13:56,160 --> 00:14:01,520
success and is is kind of 
meeting the need in in the 

254
00:14:01,520 --> 00:14:04,160
pockets where there is demand at
this stage? 

255
00:14:05,400 --> 00:14:07,600
Yeah, I think it was definitely 
a big, you know, big step 

256
00:14:07,600 --> 00:14:10,000
improvement. 
I mean under the previous LTF 1 

257
00:14:10,000 --> 00:14:14,600
rules, you know, the restriction
to closed ended funds only, you 

258
00:14:14,600 --> 00:14:17,600
know, I think kind of probably 
made sense in 2015 when the LTF 

259
00:14:17,600 --> 00:14:20,480
rules were first published. 
But given how much the market 

260
00:14:20,480 --> 00:14:22,480
has has developed and the 
innovation we've seen on the 

261
00:14:22,480 --> 00:14:25,760
product side, I think, you know,
it was important that the LTF 

262
00:14:25,760 --> 00:14:27,920
rules were updated to to 
accommodate Evergreen 

263
00:14:27,920 --> 00:14:29,200
structures. 
Yeah. 

264
00:14:30,560 --> 00:14:33,360
Our focus here at the Drawdown 
is very much coming from a 

265
00:14:34,280 --> 00:14:37,480
operational as well as finance 
perspective. 

266
00:14:37,480 --> 00:14:40,720
So let's talk about managing 
that. 

267
00:14:41,000 --> 00:14:44,040
Some of the stuff that you you 
mentioned previously managing 

268
00:14:44,040 --> 00:14:47,520
the volume of investors within 
those strategies, you know which

269
00:14:47,520 --> 00:14:51,800
is not something that private 
credit, private capital managers

270
00:14:51,800 --> 00:14:54,680
have had to deal with 
previously. 

271
00:14:56,360 --> 00:14:59,880
How do you see that? 
Where are we in that evolution? 

272
00:14:59,880 --> 00:15:03,360
Have have you know, the the 
people who are kind of leaving 

273
00:15:03,360 --> 00:15:05,160
the market on this? 
Have they got that kind of 

274
00:15:05,160 --> 00:15:08,360
smooth on boarding process 
cracked? 

275
00:15:08,400 --> 00:15:11,120
Are there still, you know, 
aspects that need to be ironed 

276
00:15:11,120 --> 00:15:14,360
out in terms of communication 
and reporting? 

277
00:15:14,360 --> 00:15:18,720
You know, where, where are we? 
Are we, I imagine, you know, you

278
00:15:18,720 --> 00:15:21,000
kind of highlighted at the 
beginning, there's still a 

279
00:15:21,000 --> 00:15:22,680
learning process going on here, 
right? 

280
00:15:23,640 --> 00:15:24,560
Yeah, that's right. 
I think. 

281
00:15:25,120 --> 00:15:26,920
I mean, I think you know where 
it started. 

282
00:15:26,920 --> 00:15:29,400
I think, you know, where, you 
know, managers first started 

283
00:15:29,400 --> 00:15:34,760
sort of proposing funds to that 
sort of wealth type of client. 

284
00:15:35,280 --> 00:15:37,960
You know, typically, you know, 
it was almost trying to address 

285
00:15:37,960 --> 00:15:40,360
the immediate problems, which is
a whole sort of subscription and

286
00:15:40,360 --> 00:15:42,640
onboarding process. 
And typically they tried to do 

287
00:15:42,640 --> 00:15:45,440
that by setting up a feeder. 
It kind of meant that they 

288
00:15:45,440 --> 00:15:47,480
didn't have to do it if someone 
else was doing it. 

289
00:15:47,480 --> 00:15:50,000
And typically, you know, some of
the digital platforms that we've

290
00:15:50,000 --> 00:15:52,600
heard about now that we see in 
the market quite regularly were 

291
00:15:52,600 --> 00:15:55,040
kind of key in terms of 
facilitating that access. 

292
00:15:55,040 --> 00:15:58,560
So you know, that that was, I'd 
say the first step. 

293
00:15:59,720 --> 00:16:02,880
You know, inevitably, you know, 
that kind of helped a little bit

294
00:16:02,880 --> 00:16:05,480
in terms of managing things such
as the capital pools, the sort 

295
00:16:05,480 --> 00:16:10,400
of, you know, fairly, you know, 
you know, complex sort of 

296
00:16:10,400 --> 00:16:12,600
subscription process where you 
have to really sort of, you 

297
00:16:12,600 --> 00:16:14,520
know, take invested through 
complicated subscription 

298
00:16:14,520 --> 00:16:16,960
documents. 
But it didn't really give, it 

299
00:16:16,960 --> 00:16:19,120
didn't really address the full 
needs of the sort of clients 

300
00:16:19,120 --> 00:16:21,480
that we're thinking about here 
with what the wealth clients. 

301
00:16:21,480 --> 00:16:23,880
And that's really where I think 
the Evergreen structures have 

302
00:16:23,880 --> 00:16:28,480
really probably taken that that 
next significant step by 

303
00:16:29,000 --> 00:16:31,480
building upon really the mutual 
fund infrastructure. 

304
00:16:31,640 --> 00:16:34,640
So, you know, this was rather 
rather than approaching it from 

305
00:16:34,640 --> 00:16:37,840
the perspective of, you know, a 
private markets manager, you 

306
00:16:37,840 --> 00:16:39,880
know, typically, you know, would
set up limited partnership 

307
00:16:39,880 --> 00:16:43,200
funds, you know, taking kind of,
you know, an incremental step 

308
00:16:43,280 --> 00:16:46,440
kind of to sort of open up that 
process to wealth clients. 

309
00:16:47,000 --> 00:16:48,960
I think, you know, where you 
take it from the mutual fund 

310
00:16:48,960 --> 00:16:50,560
infrastructure, you'll miss work
from the other way. 

311
00:16:50,560 --> 00:16:53,720
So you say, OK, so how do wealth
clients tend to access 

312
00:16:54,000 --> 00:16:56,600
investment securities or 
investment funds at the moment 

313
00:16:57,160 --> 00:16:59,560
using, you know, many of the 
platforms that are available, 

314
00:16:59,560 --> 00:17:01,720
the, you know, the ones that are
typical with the, with the 

315
00:17:01,720 --> 00:17:04,800
standard usage funds or other 
social mutual funds and thinking

316
00:17:04,800 --> 00:17:08,640
about how we can build a private
markets strategy using that 

317
00:17:08,640 --> 00:17:10,240
existing architecture. 
And I think that's where we've 

318
00:17:10,240 --> 00:17:13,800
seen the most success because 
for the, for the, for the wealth

319
00:17:13,800 --> 00:17:16,960
managers, for the private banks,
it has allowed them to really 

320
00:17:16,960 --> 00:17:19,160
sort of, you know, be able to 
offer these funds without 

321
00:17:19,160 --> 00:17:22,040
necessarily having to sort of, 
you know, create new, new 

322
00:17:22,040 --> 00:17:24,800
complex operational steps and 
processes around it. 

323
00:17:25,359 --> 00:17:28,079
So for a, you know, for a 
private bank that is already 

324
00:17:28,079 --> 00:17:31,120
offering, for example, global 
equity funds or regional, 

325
00:17:31,200 --> 00:17:33,880
regional fixed income funds, you
know, to be able to offer 

326
00:17:33,880 --> 00:17:37,240
private markets fund using their
existing service partners on 

327
00:17:37,240 --> 00:17:41,640
the, you know, on the, kind of 
the, the trading side or the, 

328
00:17:41,760 --> 00:17:44,120
you know, the, the, where they 
get the, the market data from. 

329
00:17:44,320 --> 00:17:46,560
It's, it's all there. 
It's a case of just being able 

330
00:17:46,560 --> 00:17:49,800
to sort of really extend their 
shelf to include private markets

331
00:17:49,800 --> 00:17:51,960
funds. 
Yeah. 

332
00:17:51,960 --> 00:17:56,320
I guess we're always concerned 
or interested in the 

333
00:17:56,520 --> 00:18:02,000
capabilities of, I guess 
managers less progressive along 

334
00:18:02,000 --> 00:18:04,320
the maturity scale. 
You know, obviously it's the 

335
00:18:04,320 --> 00:18:07,280
largest managers who are doing 
this at the moment and have kind

336
00:18:07,280 --> 00:18:11,680
of pioneering this. 
How attractive that additional 

337
00:18:11,680 --> 00:18:15,800
kind of operational lift is 
going to be to to kind of mid 

338
00:18:15,800 --> 00:18:19,000
market managers potentially in 
the future And what do you have 

339
00:18:19,080 --> 00:18:22,760
a a perspective on that? 
Yeah. 

340
00:18:22,800 --> 00:18:24,520
I mean, I think it's look, I 
mean you, you know, you're 

341
00:18:24,520 --> 00:18:26,640
definitely right in that, you 
know, you tend to see some of 

342
00:18:26,640 --> 00:18:29,400
the largest managers that are 
most active in this space. 

343
00:18:29,960 --> 00:18:33,600
I think partly that's partly a 
consequence of brand being quite

344
00:18:33,600 --> 00:18:36,720
important. 
You know, so I think we tended 

345
00:18:36,720 --> 00:18:40,280
to see sort of, you know, and 
especially, you know, I'd say in

346
00:18:40,280 --> 00:18:42,680
certain markets, like in Asia 
for example, branding is is 

347
00:18:42,680 --> 00:18:45,280
especially important. 
I think the private bankers, the

348
00:18:45,280 --> 00:18:48,440
wealth managers that, that 
operate in Asia take a lot of 

349
00:18:48,440 --> 00:18:51,440
comfort from being able to kind 
of, you know, to to offer their,

350
00:18:51,440 --> 00:18:53,760
the, you know, the well known, 
well established private market 

351
00:18:54,440 --> 00:18:56,240
managers to to their client 
base. 

352
00:18:57,120 --> 00:19:01,640
We have certainly seen some 
smaller managers beginning to 

353
00:19:01,640 --> 00:19:04,480
launch funds. 
I think the greatest challenge 

354
00:19:04,480 --> 00:19:07,600
though is scale really. 
And I think you know, maybe sort

355
00:19:07,600 --> 00:19:10,920
of, you know, six years ago when
we when, when we launched, you 

356
00:19:12,400 --> 00:19:14,960
know, one of our first Evergreen
funds and in the private equity 

357
00:19:14,960 --> 00:19:17,720
space, you know, I think there 
were very few funds to choose 

358
00:19:17,720 --> 00:19:19,280
from. 
And, and really we saw kind of 

359
00:19:19,280 --> 00:19:23,640
incremental growth, you know, 
over time as more investors kind

360
00:19:23,640 --> 00:19:25,680
of came in. 
I think now for a Evergreen 

361
00:19:25,680 --> 00:19:28,040
strategy, you really have to 
sort of almost start it with, 

362
00:19:28,200 --> 00:19:32,080
with, you know, at least 100 
million of, of AUM, ideally 

363
00:19:32,080 --> 00:19:33,800
larger. 
So I think there's almost this 

364
00:19:33,800 --> 00:19:36,800
sort of this, this shift of 
people kind of really focusing 

365
00:19:36,800 --> 00:19:39,240
upon, you know, going for, for 
funds which are well established

366
00:19:39,240 --> 00:19:42,120
in terms of size. 
And that will make it harder for

367
00:19:42,120 --> 00:19:44,200
for for the smaller managers 
that either don't have the 

368
00:19:44,200 --> 00:19:46,440
balance sheet or they don't 
necessarily have the sort of the

369
00:19:46,440 --> 00:19:49,440
partnerships with private banks 
or wealth managers in order to 

370
00:19:49,440 --> 00:19:51,560
be able to kind of get that sort
of anchor investor or 

371
00:19:51,560 --> 00:19:53,000
cornerstone investor at the 
beginning. 

372
00:19:53,000 --> 00:19:57,200
So, you know, there are some 
considerations which I guess 

373
00:19:57,200 --> 00:19:59,800
have kind of increased the 
hurdle or increased the sort of 

374
00:19:59,800 --> 00:20:02,720
the the entry barriers for some 
of the the smaller managers. 

375
00:20:03,160 --> 00:20:06,480
But you know, I think we do see 
especially, you know, coming 

376
00:20:06,480 --> 00:20:09,920
back to the L TIF regime, you 
know, we do see in certain 

377
00:20:09,920 --> 00:20:13,640
markets where you know, it's 
either the sort of the there's a

378
00:20:13,640 --> 00:20:17,400
fiscal situation, for example, 
the tax benefit for being able 

379
00:20:17,400 --> 00:20:19,240
to offer very sort of niche type
strategy. 

380
00:20:19,240 --> 00:20:22,720
So so for example in Italy. 
There are certain tax benefits 

381
00:20:22,720 --> 00:20:25,160
for investors that invest in 
Italian focused strategies and 

382
00:20:25,160 --> 00:20:27,600
that certainly helps some of the
local managers in that market. 

383
00:20:28,200 --> 00:20:30,600
And again, we also see in France
with the unit linked insurance 

384
00:20:30,600 --> 00:20:33,440
market, there are certain sort 
of structures in order to be 

385
00:20:33,440 --> 00:20:35,640
able to has to be a French 
structure in order to be able to

386
00:20:35,640 --> 00:20:38,360
tap into that client base. 
And that's also I guess has been

387
00:20:38,360 --> 00:20:40,760
to the benefit of some of the 
French managers. 

388
00:20:41,200 --> 00:20:44,680
So, you know, on a, on a, on a 
global basis, I would say 

389
00:20:44,680 --> 00:20:47,520
definitely sort of the larger 
managers have the benefit in, in

390
00:20:47,520 --> 00:20:49,280
the bigger scale and the balance
sheet. 

391
00:20:49,640 --> 00:20:52,520
But we do also see some some 
success with more sort of, you 

392
00:20:52,520 --> 00:20:55,200
know, specific or specialized 
type managers that have been 

393
00:20:55,200 --> 00:20:56,720
able to tap into the wealth 
market as well. 

394
00:20:57,120 --> 00:21:01,040
OK, great. 
Finally, Tim, I just wanted to 

395
00:21:01,040 --> 00:21:04,600
touch on that, that sticky 
question around liquidity and I 

396
00:21:04,600 --> 00:21:08,360
guess you know connected to that
education around products as 

397
00:21:08,360 --> 00:21:13,480
well. 
Do you think that expectations 

398
00:21:13,480 --> 00:21:18,080
around liquidity and what 
managers ideally would like to 

399
00:21:18,120 --> 00:21:21,000
offer, do you think there's 
alignment there at the moment? 

400
00:21:21,000 --> 00:21:25,560
Do you think there's still work 
to be done in terms of either 

401
00:21:25,560 --> 00:21:30,520
side kind of sealing ground in 
terms of how realistically how 

402
00:21:30,520 --> 00:21:34,240
often you know redemptions are 
going to work or or other 

403
00:21:34,240 --> 00:21:39,280
liquidity mechanisms? 
Yeah, it's, it's definitely a 

404
00:21:39,280 --> 00:21:40,760
key question. 
I mean, I can give you 2 

405
00:21:40,760 --> 00:21:43,840
reference points. 1 is, I guess 
from, you know, our own, our own

406
00:21:43,840 --> 00:21:47,560
experience with our own funds 
and the investor behavior. 

407
00:21:48,480 --> 00:21:50,560
And then I think, you know, the 
broader perspective as we think 

408
00:21:50,560 --> 00:21:53,760
kind of going forward. 
I mean, I'd say in terms of our 

409
00:21:53,760 --> 00:21:56,880
experience, we, you know, when 
we launched our private equity 

410
00:21:56,880 --> 00:22:00,080
Evergreen fund about six years 
ago, we, we within six months, 

411
00:22:00,080 --> 00:22:03,000
we had COVID. 
We were pretty nervous about how

412
00:22:03,000 --> 00:22:06,640
investors would behave. 
You know, I think on the whole 

413
00:22:06,640 --> 00:22:08,880
we had, we said we saw very 
little change in redemption 

414
00:22:08,880 --> 00:22:11,160
levels. 
We then had the Ukraine crisis 

415
00:22:11,280 --> 00:22:13,120
and then a few months later we 
had the Guild crisis. 

416
00:22:13,120 --> 00:22:16,320
In both instances, we were a bit
nervous whether investors would 

417
00:22:16,320 --> 00:22:18,680
start to panic. 
I'm pleased to say that in, you 

418
00:22:18,680 --> 00:22:21,200
know, in none of those 
situations did we see sort of 

419
00:22:21,200 --> 00:22:24,720
investor redemption activity, 
you know, have a noticeable 

420
00:22:24,720 --> 00:22:29,120
change, I think partly because 
of the liquidity mechanisms that

421
00:22:29,120 --> 00:22:30,720
people have generally built into
these funds. 

422
00:22:30,720 --> 00:22:34,040
So for example, you know, having
to provide, in our case, it was 

423
00:22:34,040 --> 00:22:36,360
three months notice for an at 
least three months notice for an

424
00:22:36,360 --> 00:22:39,400
investor to leave meant that 
investors tended not to see it 

425
00:22:39,400 --> 00:22:42,160
as a sort of ATM as as people 
sometimes describe it. 

426
00:22:42,160 --> 00:22:44,720
So it's not, it didn't provide 
an immediate sort of exit route.

427
00:22:44,760 --> 00:22:47,560
So investors were having, if 
they wanted to redeem, we're 

428
00:22:47,560 --> 00:22:51,000
going to have to make the 
decision about a price that 

429
00:22:51,000 --> 00:22:52,840
well, they'll be trading on a 
price in three months time. 

430
00:22:53,080 --> 00:22:56,480
So I think there's one factor. 
I think as we go forward, the 

431
00:22:56,480 --> 00:23:01,480
concern around, you know, are we
are investors making the 

432
00:23:01,480 --> 00:23:04,600
decision with, you know, having 
the right expectations around 

433
00:23:04,600 --> 00:23:06,680
liquidity is a key 1. 
And that's really when it comes 

434
00:23:06,680 --> 00:23:09,480
down to, you know, making sure 
investors are provided with the 

435
00:23:09,480 --> 00:23:12,200
right information, making sure 
the selling process is, is 

436
00:23:12,200 --> 00:23:15,280
appropriate. 
Because the last thing I think 

437
00:23:15,280 --> 00:23:17,960
anyone wants in this industry is
a is another mis selling 

438
00:23:17,960 --> 00:23:19,040
concern. 
I mean, I think, you know, 

439
00:23:19,080 --> 00:23:22,720
financial services, you know, 
over, over the past has had sort

440
00:23:22,720 --> 00:23:24,760
of, you know, they've been very 
instances of, you know, mis 

441
00:23:24,760 --> 00:23:27,160
selling issues and you know, 
it's in no one's interest to 

442
00:23:27,160 --> 00:23:28,880
have that. 
So it's really important that 

443
00:23:28,960 --> 00:23:32,360
you know, both the end investor,
but also the wealth managers are

444
00:23:32,520 --> 00:23:34,960
kind of provided with all of the
information about when it comes 

445
00:23:34,960 --> 00:23:38,240
to, you know, needing liquidity,
what the various points are. 

446
00:23:38,240 --> 00:23:41,480
And and at the end of the day, I
think these products are best 

447
00:23:41,480 --> 00:23:43,200
suited for long term savings 
plans. 

448
00:23:43,680 --> 00:23:45,800
You know we still say that even 
though this fund has sort of 

449
00:23:45,800 --> 00:23:48,480
quarterly redemptions, you 
should still think about it in 

450
00:23:48,480 --> 00:23:53,440
terms of five year type hold. 
And so that suggests, you know, 

451
00:23:53,440 --> 00:23:57,160
there's been increased 
regulatory interest around this 

452
00:23:57,160 --> 00:23:59,840
question of potential MIS 
selling you would you would 

453
00:23:59,840 --> 00:24:04,520
welcome that right for adding 
additional transparency and 

454
00:24:04,520 --> 00:24:07,920
understanding across the market.
Yeah, I think it's, I think it's

455
00:24:07,920 --> 00:24:09,240
really important. 
I mean, we've had, when we 

456
00:24:09,240 --> 00:24:11,280
launched some of our Suns, you 
know, especially at the 

457
00:24:11,280 --> 00:24:13,520
beginning, the regulator was, 
you know, very interested to 

458
00:24:13,520 --> 00:24:16,120
understand the, the, how the 
liquidity mechanisms worked. 

459
00:24:16,600 --> 00:24:18,720
I think, you know, regulators 
have got a bit more comfortable 

460
00:24:18,720 --> 00:24:20,720
with the number of funds that 
they're seeing in the market and

461
00:24:20,720 --> 00:24:24,440
also how many of those funds 
have been able to, how to, how 

462
00:24:24,440 --> 00:24:26,720
they've been able to operate 
through various times of, of 

463
00:24:26,720 --> 00:24:29,880
market tension. 
You know, investors should be 

464
00:24:29,880 --> 00:24:31,960
able to, well they should 
understand that when they invest

465
00:24:31,960 --> 00:24:34,960
in, in these sorts of asset 
classes, they are ultimately a 

466
00:24:34,960 --> 00:24:37,800
liquid and and therefore they 
should be doing it with the 

467
00:24:37,800 --> 00:24:39,800
basis of a long term, long term 
horizon. 

468
00:24:40,560 --> 00:24:43,440
Absolutely, Tim, I think we need
to wrap it up there. 

469
00:24:43,440 --> 00:24:46,120
But thank you so much for taking
your time to to chat today. 

470
00:24:46,960 --> 00:24:55,880
Thank you very much. 
Mathias, you were sitting 

471
00:24:55,880 --> 00:24:58,680
listening to that interview as 
it was being recorded. 

472
00:24:58,680 --> 00:25:04,280
What are your initial thoughts? 
I think the thing that stood out

473
00:25:04,280 --> 00:25:09,320
to me immediately was kind of 
the as a geographic differences 

474
00:25:09,320 --> 00:25:14,000
in terms of attitude towards 
private market investments. 

475
00:25:14,000 --> 00:25:17,800
I'm going to call it as someone 
who was born and raised in 

476
00:25:17,800 --> 00:25:20,800
Germany and spent the 1st 19 
years of his life there. 

477
00:25:21,920 --> 00:25:30,720
There is AI want to say cultural
aversion to more complex 

478
00:25:31,000 --> 00:25:35,040
investments. 
I think partially that might be 

479
00:25:35,040 --> 00:25:39,880
because the part of Germany that
I come from is a bit more 

480
00:25:39,880 --> 00:25:46,960
traditional, but also because of
the so the consequences of 2008 

481
00:25:46,960 --> 00:25:52,640
and the GFC and, and what they 
did or how to play it out in the

482
00:25:52,640 --> 00:25:55,360
country. 
On the other hand, you have 

483
00:25:55,360 --> 00:26:00,640
countries like France where I 
think the whole retailization, 

484
00:26:00,640 --> 00:26:04,280
democracy and democratization 
conversation is almost not 

485
00:26:05,280 --> 00:26:07,960
happening as much as it is, 
especially here in the UK. 

486
00:26:07,960 --> 00:26:11,920
But that is because private 
wealth and private banks have 

487
00:26:11,920 --> 00:26:16,840
been part of P invest investor 
portfolios for a long time. 

488
00:26:16,840 --> 00:26:19,480
It's not really a novelty there.
Yeah, there might have been 

489
00:26:19,480 --> 00:26:24,440
through the Eltive or other 
products that might have been 

490
00:26:24,440 --> 00:26:27,120
some sort of tweaks and changes 
that make it easier. 

491
00:26:27,400 --> 00:26:31,520
But it is not a a new 
conversation that firms in in 

492
00:26:31,520 --> 00:26:33,920
the market are having. 
And I think if you look at 

493
00:26:33,920 --> 00:26:39,920
someone like Altia, I believe 
that for their last four funds 

494
00:26:39,920 --> 00:26:45,440
always had so I think 20% 
private wealth investor base. 

495
00:26:45,440 --> 00:26:46,960
Don't quote me on any of those 
numbers. 

496
00:26:46,960 --> 00:26:48,440
That conversation happened a 
while ago. 

497
00:26:50,240 --> 00:26:51,960
I think that that is quite 
interesting. 

498
00:26:51,960 --> 00:26:55,680
And at the same time you where 
you have geographic differences 

499
00:26:55,680 --> 00:27:00,360
in the investor base, you also 
have geographic differences in 

500
00:27:00,360 --> 00:27:04,480
in terms of the products. 
So when the LTF 2 point O came 

501
00:27:04,480 --> 00:27:10,240
around, I looked at the ESMA 
register which lists every 

502
00:27:10,240 --> 00:27:13,080
single LTF that has been 
launched. 

503
00:27:13,520 --> 00:27:15,520
And. 
Quite helpfully indeed. 

504
00:27:15,560 --> 00:27:17,240
Great resource. 
Please keep that up. 

505
00:27:19,520 --> 00:27:23,320
But they also tell you where 
it's been incorporated, shall we

506
00:27:23,320 --> 00:27:26,280
say. 
And obviously Luxembourg is the 

507
00:27:26,360 --> 00:27:28,840
forerunner and I don't think 
that will change anytime soon. 

508
00:27:29,160 --> 00:27:33,040
But a sizeable amount of them 
often sit in either France, 

509
00:27:33,040 --> 00:27:38,200
Spain or Italy. 
And that's partially to I think 

510
00:27:38,200 --> 00:27:42,560
what Tim was alluding to is that
within those countries there 

511
00:27:42,560 --> 00:27:47,520
then very specific national 
investment strategies which 

512
00:27:47,640 --> 00:27:52,120
either help you kind of from a 
tax structuring perspective or 

513
00:27:52,120 --> 00:27:57,680
from an educational perspective 
just of incentivize investment 

514
00:27:57,680 --> 00:28:00,600
there, which can then benefit I 
guess also that the broader 

515
00:28:00,600 --> 00:28:04,760
economy in those countries. 
Yeah, I guess it's, it's 

516
00:28:04,760 --> 00:28:09,120
important to clarify why we're 
kind of interested in digging 

517
00:28:09,120 --> 00:28:12,360
into this topic because as you 
say, actually the the the 

518
00:28:12,360 --> 00:28:16,440
fundamentals of it aren't 
necessarily that new, but what's

519
00:28:16,440 --> 00:28:20,920
new is kind of the, the volume 
of activity and kind of the 

520
00:28:20,920 --> 00:28:22,920
spread of it. 
And I guess we're quite 

521
00:28:22,920 --> 00:28:26,640
interested in how deep that goes
to the moment and how deep it's 

522
00:28:26,640 --> 00:28:29,680
likely to go. 
And you know, it's, it's largely

523
00:28:29,680 --> 00:28:31,720
the preserve of large cap 
managers, right. 

524
00:28:32,200 --> 00:28:36,920
I've seen some data recently 
which suggested that, you know, 

525
00:28:36,960 --> 00:28:43,600
over half of Evergreen private 
credit AUM, which this report 

526
00:28:43,600 --> 00:28:49,800
put up just over $500 billion, 
half of that is controlled by 

527
00:28:49,840 --> 00:28:54,720
the five largest GPS and the top
20 managers control more than 

528
00:28:54,720 --> 00:28:58,960
80% of that market, right. 
So it really is the biggest guys

529
00:28:58,960 --> 00:29:02,160
who are, you know, really 
aggressively going after this. 

530
00:29:03,240 --> 00:29:04,880
And there's very good reasons 
for that. 

531
00:29:04,880 --> 00:29:07,120
As kind of Tim alluded to a 
little bit. 

532
00:29:07,120 --> 00:29:10,040
You know, you know, there's that
brand recognition, they've got 

533
00:29:10,040 --> 00:29:13,560
the extension distribution 
networks, the product 

534
00:29:13,560 --> 00:29:17,520
development capabilities also 
needed to launch and scale these

535
00:29:17,520 --> 00:29:19,280
products. 
And that they've got the 

536
00:29:19,280 --> 00:29:22,360
resources, they've got the 
talent, they've got the capital,

537
00:29:22,600 --> 00:29:25,280
they're able to build the 
systems that are required to 

538
00:29:25,320 --> 00:29:27,720
kind of address some of these 
operational needs that we're 

539
00:29:28,840 --> 00:29:30,880
talking about. 
Yeah, there is. 

540
00:29:30,880 --> 00:29:34,960
If I can jump in there because I
kind of I looked at this, I 

541
00:29:34,960 --> 00:29:37,880
think I mentioned it in the 
intro as well, but I looked into

542
00:29:37,880 --> 00:29:42,360
feeder funds earlier this year 
precisely because that was a 

543
00:29:42,360 --> 00:29:45,080
point that Tim made is that 
feeder funds were sort of the 

544
00:29:45,080 --> 00:29:50,560
first prototype or step in the 
evolution and then the first 

545
00:29:50,560 --> 00:29:53,200
iteration and Evergreen sort of 
are the next step. 

546
00:29:53,640 --> 00:29:57,960
And I think for a lot of the mid
market, they are, I don't want 

547
00:29:57,960 --> 00:30:00,560
to say stuck because that 
implies that it's sort of their 

548
00:30:00,560 --> 00:30:03,760
fault, which it isn't. 
But they're kind of still stuck 

549
00:30:03,760 --> 00:30:09,160
on the feeder fund level because
they don't have the scale to 

550
00:30:09,160 --> 00:30:11,680
operate the feeder fund due to 
all of the reasons that you just

551
00:30:11,680 --> 00:30:15,360
said, no, sorry, not the feeder 
fund, the the Evergreen fund. 

552
00:30:17,160 --> 00:30:21,400
But for them Axis I think is 
still very much restricted to 

553
00:30:21,560 --> 00:30:24,320
making use of a feeder fund 
through a partnership with a 

554
00:30:24,320 --> 00:30:28,120
private bank or a larger asset 
manager that does all of the, 

555
00:30:28,400 --> 00:30:32,640
the grunt work, shall we say, 
that has the resources to do it.

556
00:30:33,680 --> 00:30:38,120
And then the the mid market GP 
can just invest that capital 

557
00:30:38,120 --> 00:30:41,760
through their own fund. 
We've probably waffled on for 

558
00:30:41,760 --> 00:30:43,680
too long. 
I think we've that's probably 

559
00:30:43,680 --> 00:30:46,720
about as enough time as we have 
for this episode. 

560
00:30:47,240 --> 00:30:49,280
Thank you, Matthias. 
Well, thank you, John. 

561
00:30:49,640 --> 00:30:52,840
It's been an absolute pleasure. 
As always, thank you to our 

562
00:30:52,840 --> 00:30:57,640
sponsor HSBCIB, and thank you to
everyone for listening. 

563
00:30:57,840 --> 00:31:00,400
Until next time, see you soon. 
Bye.