Banco Santander’s fund manager has a project to segregate the business from illiquid assets, one of the areas that has grown the most in recent years, and where it already manages 1,900 million euros. The group wants to value this division and try to market these venture capital funds among external institutional investors.
The calls alternative assets or illiquid assets they are investments apart from the classic stocks and bonds. They are channeled through venture capital funds that invest in unlisted companies, in private debt, in infrastructure… In these funds, the minimum investment amounts are high and the money cannot be recovered until at least seven years have passed . Hence, we speak of illiquid assets. These characteristics make them products aimed at institutional or very sophisticated clients.
Santander Asset Management, the asset management unit of the Santander group, entered the alternative asset segment less than three years ago, with the signing of Borja Díaz-Llano. The manager, from Barclays, led a team of 13 people (in Europe and Latin America) in charge of detecting business opportunities in this area.
In just over two years, Santander has attracted more than 1,000 million euros to invest in venture capital and has firm commitments for another 900 million euros for the next few years. One of the funds he launched is Alternative Leasing, which invests in financial leasing contracts in the form of purchase and subsequent rental of machinery and industrial equipment for Spanish SMEs. He also put on the market another fund that invests in international trade financing instruments (trade finance, in jargon). And he marketed another fund dedicated to buying hotels.
This is the investment in unlisted assets
- illiquidity. Venture capital funds invest in companies that are not listed on the Stock Exchange, in private loans, in international trade instruments or in infrastructure. The money committed by investors is disbursed gradually, according to an established schedule. And it is returned after seven years, when the investments made are recovered.
- Amount. Until now, the minimum amount to invest in these funds used to be at least €100,000 (in some cases it was as high as €500,000). Now, with new legislation that the Government has just approved, it reduces the minimum investment to just 10,000 euros.
- Qualification. The illiquidity of these investments, combined with the sophistication of some products, means that the marketing of these funds is highly restricted. Normally, only institutional investors (insurers, mutual societies, pension funds, private banks…) can put money into these funds. A private investor who wanted to invest would have to prove some minimum knowledge.
address changes
The driving force behind the creation of this area was Mariano Belinky, CEO of Santander Asset Management until November 2021. His replacement is Samantha Ricciardo (from BlackRock) who has already begun to make some strategic changes in the manager, such as the decision to spin off the illiquid assets unit. Santander sources have declined to comment on these moves.
Ricciardi has decided to place Luis García-Izquierdo at the head of the illiquid assets divisionwho until now was the head of business at Santander AM in Latin America.
Banco Santander is one of the largest originators of private debt in the world. It supports hundreds of companies to finance themselves outside the market. “The asset management division can become a bridge between the part of investment banking that originates these loans and the clients who are looking for something more profitable than in traditional fixed income,” sources from the manager explained when it began to launch the project.
Now that this division of unlisted assets has gained traction, Santander wants it to take on a greater role. According to market sources, The ultimate objective of the segregation is to increase visibility and attract investors from outside the bank to its venture capital funds.thus increasing third-party sales.
Investment in illiquid assets has skyrocketed in recent years, coinciding with the long period of low interest rates. Institutional managers (insurers, pension funds, investment offices of wealthy clients…) have been allocating an increasing part of their portfolios to this type of investment.
Until now, most of the venture capital funds that Santander has launched have done so under the umbrella of its subsidiary in Luxembourg. Once registered, this type of vehicle is distributed in all the countries where the bank is present.
The investment arm of the Santander group manages assets for more than 200,000 million euros and has a presence in 12 countries (Spain, Portugal, Germany, Luxembourg, the United Kingdom, Poland, Mexico, Brazil, Argentina, Chile and Puerto Rico).
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