Wealth & Finance International | May 2016
Taking Their Opportunity
We spoke to Andres Szita, Chairman at Ethika Investments, a real estate investment firm that provides investors access to a unique platform by tactically investing in opportunistic real estate assets, primarily in the US. /12
Business Elite - COO of the Year
We got in touch with Aioi Nissay Dowa Europe COO, Michael Kainzbauer, to find out more about the company and how they continue to succeed in the highly competitive automotive market. /18
The Da Vinci Strategy /2
Real Estate Fund Manager of the Month - Luxembourg
CEO of the Year 2016 in Commodity Trading & Risk Management
We caught up with Seth M. Lieberman, CIO Real Estate Investments at Advanced Capital Group, a company ranked #2 on Preqin’s list of the world’s best-performing Private Equity FoF managers. /14
We find out about Aspect, the leading global provider of multi-commodity trade, risk and operations management solutions (E/CTRM) delivered Software-as-a-Service (SaaS) in the cloud. /20
Investing in Crowdfunding Projects
Business Elite Pharmaceutical MD of the Year
Business Elite CEO of the Year 2016
Business Elite MD of the Year
10 Years of Success
Business Elite 2016
Crowdfunding is ideal to open up the Sub-Saharan Africa Real Estate Market for professional investors. Erik van Eeten explains that Realty Africa is ready to offer these opportunities. /50 Birtenshaw CEO David Reid discusses the firm’s vast service offering and the current state of public funding for young people with Special Education Needs and Disability. /24 We spoke to CapAsia, a private equity fund manager to find out how they have succeeded over the past decade, and learn about their niche investment area. /40
Sathish Kumar K.J. talks to us about his company RelonChem, an independent generic company that manufacture and distribute therapeutic products to deal with a number of ailments. /38 In an interview, Richard Rowney, Managing Director of Life and Pensions at LV=, lifts the lid on how the company’s client-centric approach has underpinned their success. /28 We spoke to Greenfield Estate Agents to find out more about their firm, and got their unique insight into the ins and outs of the UK real estate industry. 36 www.wealthandfinance-intl.com
38.41 % p.a.
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Welcome to the May 2016 edition of Wealth & Finance magazine In this issue, we take a look at the recent developments in the world of wealth and finance across the globe, including the Temenos Study which argues that an increasingly complex set of customer demands will mean that firms must modernise their approach to technology without alienating older clients, still the bedrock of their business. And news from WisdomTree says that assets invested in short & leverage ETPs globally reached a record level to $71.2 billion up 4.9% YTD. In other news, researchers investigating the UK’s attitude towards money matters have discovered millions of people are not getting to grips with their finances, and many have little or no detailed understanding of their own financial position. We have a special feature on Business Elite COO of the Year 2016, profiling COO of Aioi Nissay Dowa Europe Michael Kainzbauer on how they continue to succeed in the highly competitive automotive market. And in Business Elite CEO of the Year 2016, David Reid discusses the firm’s vast service offering and the current state of public funding for young people with Special Education Needs. Other features covering in this informative edition include the challenges facing hedge fund start-ups, investing in crowdfunding projects as well as socially responsible and ethical investing made easy. I hope you enjoy reading this informed and absorbing edition. Finally, just before this edition went to press exciting news came in that AI Global Media Ltd., publisher of this magazine, announced their membership of the CPD Certification Service. Over the coming months, we will be publishing insightful articles from which we feel our subscribers will gain tremendous insight, and as such will be able to gain CPD hours from reading.
Contents 4. News 12. Real Estate Fund Manager of the Month - US - Ethika Investments 14. Real Estate Fund Manager of the Month - Luxembourg - Advanced Capital Group 18. Business Elite - COO of the Year 2016 - Aioi Nissay Dowa Europe - Michael Kainzbauer 20. CEO of the Year 2016 in Commodity Trading & Risk Management - Steve Hughes, Aspect 24. Business Elite CEO of the Year 2016 - David Reid, Birtenshaw 28. Business Elite MD of the Year 2016 - Richard Rowney, LV= 32. New Consultation Announced on the Proposed Corporate Offence of Failing to Prevent the Facilitation of Tax Evasion 36. Business Elite 2016 - Greenfield Estate Agents 38. Business Elite Pharmaceutical MD of the Year 2016 - Sathish Kumar K. J, Relonchem Limited 40. CapAsia 44. Ones to Watch in Hedge Funds 2016 - Valletta Fund Services Limited 46. Challenges Facing Hedge Fund Start-ups 48. Employment Tax Changes: Mistakes with Expenses Could Be Expensive! 50. Investing in Crowdfunding Projects 54. Socially Responsible and Ethical Investing Made Easy 56. Winners 3 Directory
Wealth & Finance International | May 2016 | News
MJI Announces the Launch of AI Robot Companion On Indiegogo MJI, a Japan-based robot developer, is pleased to announce the launch of an AI companion robot, “Tapia,” on the crowdfunding platform Indiegogo. Tokyo Japan - Tapia is a communication robot that learns your lifestyle and assists you in many ways in your daily life as your roommate, friend, and partner. She will warm your heart with jokes and laughter after a long day at the office and help you keep closer to your loved ones who are miles away by calling them.
3. PERSONAL ASSISTANT Tapia is also the perfect personal assistant able to place phone calls, provide weather updates, manage your schedule, read you the news, etc., giving you all the perks of having a personal assistant at your disposal 24 hours a day, 7 days a week. The built-in SIM slot makes connecting to the Internet a breeze.
She gives you helpful updates on weather conditions when you are headed out, and can play music when asked to set the mood or help you relax. She will stay faithfully by your side and evolve right along with you on life’s journey with the following features.
4. PERSONAL SECURITY Tapia helps those living alone enjoy greater personal security and freedom by monitoring when they come and go and contacting family members if they’ve not returned home for a certain period of time.
1. USER RECOGNITION Tapia memorizes your facial features, name, and birthdate. Want to guess what she might say on your birthday morning?
5. MEDIA Tapia can help you celebrate by taking photos of important memories and playing music when you want to relax, set the mood, or feel like dancing! Tapia is your companion. It’s completely up to you just how to make the most of her!
2. COMMUNICATION Conversations with Tapia will naturally change and evolve depending on how you speak to her. If you talk with her a lot every day, you will begin to hear new humorous and surprising words.
6. DESIGN AESTHETIC APPEARANCES The rounded design represents “Wa (harmony)” that characterizes the Japanese spirit. “Wa” stands for compassion for others, kindness, and peaceful relationships. We want Tapia to be your best companion, the one who will always be there with you. 7. EMOTIONAL FACIAL EXPRESSIONS Tapia’s big round eyes express all emotions—joy, anger, sorrow, happiness, etc., and she will be there, watching over you any time you need her.
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DayNine Completes Acquisition of Decisif Consulting, Strengthening its Global Workday Financial Management Practice DayNine Consulting, Inc., a global Workday Services Partner, on 17th May announced the completion of its acquisition of Decisif Consulting, an international Workday Advisory Services Partner that specializes in the localization of Workday Financial Management for global enterprises. With the acquisition, DayNine will now be able to leverage pre-packaged global accelerators from Decisif, which are a collection of localised configurations for Workday Financial Management deployments in key countries. The accelerators will extend Workday’s own deployment tools and methodology, and are designed to enable rapid global deployments and ensure compliance with local statutory requirements for Workday Financial Management customers. Financial terms of the acquisition were not disclosed.
forces with Decisif, we have increased our ability to help companies transform their business and their investments in Workday Financial Management across the globe in each country they do business.” “The combination of DayNine’s extensive Workday experience and success, combined with our localization expertise and accelerators, provides customers with a complete and optimized global deployment solution for Workday Financial Management,” said Sylvain Nguyen, founder and CEO of Decisif Consulting.
Founded in 2003 by Sylvain Nguyen, Decisif Consulting offers a robust portfolio of consulting and outsourcing solutions for global Workday customers. With European headquarters in Bordeaux, France, and offices in North America and Asia-Pacific, Decisif Consulting tripled its client base and grew its global team by 250 percent in 2015. Nguyen will join DayNine Consulting to co-lead the company’s global Workday Financial Management practice.
“Since 2009, DayNine and Workday have built a partnership dedicated to ensuring the success of our mutual customers,” said Jim Bozzini, executive vice president of customer operations for Workday. “DayNine’s investment in Decisif underscores the continued momentum we are seeing for Workday Financial Management across our partner ecosystem. Together, DayNine and Decisif will provide our growing community of global customers with a robust services offering to meet their multinational financial requirements.”
“We are excited to announce this news as it further demonstrates our commitment to being a leader in Workday Financial Management deployments, and a premier global Workday Services Partner,” said Tim Ramos, co-founder and CEO of DayNine Consulting. “By combining
DayNine plans to maintain Decisif’s current management team, as well as its more than 20 certified Workday consultants.
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Wealth & Finance International | May 2016 | News
Wealth Managers Face ‘Fight for Survival’, Says Temenos Study • Report says a generational transfer of wealth is ‘reshaping the wealth management industry’ • Two thirds of HNW clients favour an increasingly digital approach from their wealth managers • But half of HNW clients rate cybercrime as their top concern related to technology At the 17th Temenos Community Forum in Barcelona on 19 May 2016 – Temenos, the software specialist for banking and finance, announced a great transfer in wealth from aging baby boomers to younger generations is reshaping the wealth management industry in ways that demand greater efficiency and adaptation by incumbent firms, according to a new report from Temenos and Forbes Insights.
alert to the challenges presented by a more complex set of customer needs – as well as growing cyber risks. Yet, this is a fantastic opportunity. These findings highlight that increasingly intelligent technology will help wealth managers redefine processes, find new efficiencies and build better relationships with their clients.” Temenos, in partnership with Forbes Insights, surveyed more than 60 wealth managers and 35 High-Net-Worth (HNW) clients about the evolving banking experience—how they communicate, their needs and the importance of technology. The report includes commentary from executives at leading investment and private banks. Key findings include:
The report, The Rise of Bionic Wealth: A Hybrid Model of Cutting-Edge Technology and Advisor Expertise Heralds the Future for Wealth Managers, explores how Generations X and Y now move ‘effortlessly across both the analogue world of face-to-face meetings and the virtual world of digital platforms that enable the fast and accurate service they expect’.
• Over 40% of wealth managers believe that a mix of digital and offline ways of communicating is ideal. • Over a third (34%) of HNW clients now demand some form of digital communication from their wealth manager. • Almost two thirds (62%) of HNW clients are now in favour of ‘the digitisation of wealth management services’ – but still want to meet often with an advisor. • Just under a fifth (17%) of HNW clients say technology is now essential. • Around half (48%) of HNW clients rate cyber risk and hacking as a top concern related to the use of technology.
The research suggests that success, even survival, for wealth managers will depend on giving rising client segments what they need in terms of service and financial performance. An increasingly complex set of customer demands will mean that firms must modernise their technology approach without alienating older clients, still the bedrock of their business. Pierre Bouquieaux, Product Director, Wealth Management at Temenos, said: “With this generational transfer of wealth underway, firms must be
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Assets Invested in Short & Leverage ETPs Globally Reached a Record Level to $71.2 Billion up 4.9% YTD According to WisdomTree This year’s sharp correction in commodity and equity markets underpins fears of a China-led global slowdown. Triggering significant bearish repositioning by short and leverage (S&L) investors, global AUM of S&L ETPs rose to record highs of $71.2 billion • Sentiment in global equities soured as S&L investors repositioned with conviction: they redeemed $4.3 billion from long ETPs and poured $3.1 billion into short ETPs tracking major equity benchmarks • Zero and sub-zero rates environment has added to investors’ downbeat growth outlook. Bank of Japan’s (BoJ) negative deposit rate introduction accelerated bearish positioning in S&L Japanese equity ETPs: $590 million into short ETPs and $720 million outflows from long ETPs • Buoyed by the ECB’s March stimulus package, S&L investors increased their short exposure to German debt by $152 million • The rebound in oil prices encouraged opportunistic repositioning by S&L investors with $400 million outflows from long ETPs and $155 million inflows into short ETPs tracking crude oil
from long ETPs and $590 million into short ETPs. By contrast, S&L fixed income investors were buoyed by the ECB’s expanded March stimulus package, with falling Bund yields also compelling S&L investors to increase their short exposure to German debt. In commodities, the rebound in oil prices from January lows encouraged opportunistic repositioning by S&L investors with $400m outflows from long ETPs and $155m inflows into short ETPs tracking crude oil.” Investors in S&L ETPs can express bullish as well as bearish sentiment by investing in either a leverage or a short ETP. Thus the AUM of S&L ETPs can reveal a broader range of investor sentiment than flows or AUM data for mutual funds and other ETPs. Since S&L ETPs tend to be held for shorter periods and used more for tactical positioning, AUM and flows data for S&L ETPs can provide valuable insight into the market sentiment of a relatively sophisticated set of investors. The BOOST Short & Leverage ETFs/ETPs Global Flows Report highlights the key flows and trends in S&L ETPs across asset classes and geographies.
BOOST ETP, Europe’s award winning, specialist Short and Leverage (S&L) Exchange Traded Product (ETP) provider iwasproud to announce the release of the Boost Short & Leverage ETFs/ETPs Global Flows Report for March 2016. The report reveals the AUM of S&L ETPs at the end of March reached new record highs at $71 billion, up 4.9% YTD. The report demonstrates that investors globally continue to increase their usage of S&L ETPs.
S&L ETPs cover all major assets classes and geographies. In terms of asset allocation at the end of March, equity ETPs are the most popular with 72% of total AUM ($52.6 billion), followed by debt (12%, $7.0 billion) and commodities (9%, $6.8 billion). In equities, most of the AUM is focused on US large cap and US small cap equities ($19.0 billion), Asia-Pacific equities ($15.9 billion) and European equities ($5.7 billion). In Europe, broad European indices are the most popular ($2.5 billion in AUM), followed by Germany ($1.4 billion), Italy ($552 million) and France ($566 million). In debt, most of the AUM is in US government debt ($3.6 billion), German government debt ($1.5 billion), and Italian ($254 million) and European-region focused ($216 million) government debt. In commodities, oil is the most popular ($4.4 billion in AUM), followed by gold ($705 million), natural gas ($637 million) and silver ($623 million).
Nick Leung, Research Analyst at WisdomTree Europe, commented: “Global meltdown fears triggered significant bearish repositioning by S&L investors as heightened volatility pushed S&L AUM to new record highs of $71bn. “Sentiment in global equities collapsed amidst an increasingly downbeat global growth outlook as S&L investors redeemed $4.3bn from long ETPs and poured $3.1bn into short ETPs tracking major equity benchmarks. US and South Korean equities suffered the heaviest punishment, with S&L investors responding to deepening concerns of a Chinese hard-landing and fresh fears of a European banking collapse with stark reversals in positioning. At the same time, the zero and sub-zero rates environment has also added to dampened global growth outlook; the BoJ’s negative deposit rate introduction accelerating risk-off positioning in S&L Japanese equity ETPs with $720 million outflows
Investors are increasingly using S&L ETPs for a variety of reasons. There is wider product availability, greater product knowledge from improved educational resources, and increased demand for hedging tools and leveraged instruments available. There is also a move towards independent, transparent and exchange traded instruments such as ETFs and ETPs.
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Wealth & Finance International | May 2016 | News
Women More Prone to Missing out When It Comes to Pensions Holly Mackay, Founder and MD of Boring Money responds to comments from Bank of England’s Chief Economist, Andy Haldane, on the topic of complex pensions. After years of tinkering from successive governments, pensions are baffling. They have changed in every recent budget and investors have had to digest ever-changing contribution and lifetime allowances, plus complex interim measures. At the same time annuity rates have been falling, leaving pensions looking worse value.
Are initiatives such as LISAs the solution? The Government has attempted to harness the popular ISA brand to encourage long-term savings, but there is a danger that ISAs also become excessively complex in the process, and therefore lose all the appeal that made them popular in the first place.
Our recent Census report showed that women are particularly vulnerable in this respect, telling us they lack confidence and knowledge and hold fewer investment products as a result. The women we have talked to as part of our soon-to-launch ‘Ladies Losing Out’ campaign have given us a clear message: They are putting off pension savings because they find it impenetrable. Women are missing out on the potential advantages of pension saving because the structure is so opaque.
When a rocket scientist like Mr Haldane says he doesn’t understand pensions it’s a great big wake-up call to the industry; customers don’t understand pensions. The solution to the pensions crisis is not wagging fingers, telling people they should save more, and banging on about education, it’s about getting smarter about communication; governments and providers need to do more to help people navigate the pensions minefield. The government also needs to address the issue of permanently moving the goalposts.
To our mind, this is a fundamental problem in encouraging broader pension savings. If investors feel that they can save faithfully for years only for the rules to be undermined by a government short of cash, they will look to alternative options or not bother saving at all.
By Holly Mackay, Founder and MD of Boring Money, https://boringmoney.co.uk/
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Outstanding Park First Figures Welcomed by Trusted Investment Partner Investors now in their third year with Park First - the UK’s leading provider of secure off-airport car parking - are receiving their predicted 10% return on investment. That is the standout figure among impressive new statistics just released by the dynamic British company, and great news for Cheshire-based Direct Airport Parking Investment - an accredited Master Agent for Park First, licensed to sell its buy-to-let opportunities to investors.
with more acquisitions in the pipeline • It is 100% self-funded, with no bank debt or financing of any kind • It has invested more than £5 million in new technology for its car parks, including state-of-the-art CCTV and security systems with the same Automatic Number Plate Recognition used by the UK police, and new user-friendly online booking systems.
Park First owns and operates thriving off-airport car parks around some of the UK’s busiest airports, including London Gatwick and Glasgow. Founded just six years ago, it has grown to become the UK’s biggest provider of off-airport car parking, with almost 12,000 car parking spaces owned outright and more than 5,000 managed for its investors.
Peter Tomlinson, Senior Investment Consultant with Direct Airport Parking Investment, said: “These figures are great news for our investors, who are a key part of Park First’s continuing success story. They show that Park First is maintaining strong growth going forward and meeting its pledges to those who have wisely chosen to invest with the company and are now sharing in its success.”
It has achieved success by following a tried and tested formula of buying existing businesses with a proven track record of success, then investing heavily in operational improvements to bring them to industry leading standards. Its plans for future growth include sites around Luton, Manchester and Birmingham international airports.
For more about Direct Airport Parking Investment Limited and investing in Park First, visit www.directparkinginvestment.co.uk or call 0161 820 4956.
Investors can share in Park First’s success by purchasing individual car parking spaces on its award-winning sites, benefiting both from ongoing rental income and capital growth predicted at 25% over a six-year investment. An assured 8% return is paid to investors in years one and two, rising to a predicted 10% in years three and four, and 12% in years five and six. Latest figures from the company show that its year three investors have been paid their returns at 10%, which is also now assured for year four. The figures have been welcomed by Direct Airport Parking Investment, which as a Master Agent for Park First is responsible for selling its car parking spaces as buy-to-let property investments to clients worldwide. The figures also show that: • Park First has assets worth over £256 million under its management, with more than 17,000 off-airport parking spaces at major international airports across the UK • It has created more than £64 million in capital growth for its investors • It has paid more than £41 million in rental returns to its investors • It is the UK’s fastest growing airport parking company, having purchased 10 existing businesses in the past three years alone and
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Wealth & Finance International | May 2016 | News
Two Thirds of Brits Happy Not Knowing What’s in Their Bank Account Researchers investigating the nation’s attitude towards money matters have discovered millions of people are not getting to grips with their finances, and many have little or no detailed understanding of their own financial position. The study of 2,000 adults shows 58 per cent aren’t sure about their hourly rate of pay, while 70 per cent can’t say exactly how much they pay in income tax. In addition, two thirds of people can’t say accurately how much is in their bank account, while 64 per cent aren’t sure of the precise amount they owe on their credit cards.
Indeed, researchers found that when conducting the weekly food shop, either online or in store, less than half keep a close eye on what they are spending. And despite 85 per cent of people commuting to work daily, of these only 38 per cent have a firm grip on what the journey costs. And only 23 per cent can confidently say exactly how much they spent on their last holiday. Just 17 per cent of those with a pension are clear on exactly what they contribute on a monthly basis. A further 46 per cent of those questioned didn’t know they could get tax relief on pension contributions. While more than a third of people say they want to get a better hold on their finances, a similar number find talking about money is awkward, uncomfortable, or confusing. Nineteen per cent of adults don’t talk about money with anyone. But of those who are prepared to talk to others, 59 per cent will confide in a partner and 20 per cent would rather talk to mum than anyone else.
But almost a third of adults believe life is too short to worry about money, and 62 per cent expressed no intention to try and get a better grip on their finances in the near future. A spokeswoman for Newcastle Building Society, which commissioned the study of 2,000 adults said: “Our researchers discovered that in the first instance, most people – eight in 10 – think they have a good understanding of their current financial position. “But when you dig deeper and ask those same people about the detail around their financial affairs, from what they earn to what they pay on things like mortgages, rent, and other bills, they’re less certain.
The spokeswoman for Newcastle Building Society continues: “For most of us, money is hard earned, so being prepared to put time into personal financial planning is a worthwhile investment.
“Pensions is an area that baffles many. Forty per cent of those who have a pension aren’t clear on how much they pay in, or even that there are tax benefits to doing so.”
“It’s significant that nearly half of people we surveyed (48 per cent) find that talking about money is reassuring, motivating or empowering, and those who want to fully understand their options to get a better grip on their financial future could consider seeking professional financial advice as a good start point.”
In reality, while people can guess roughly what they earn, what they pay in bills and what they what owe on credit cards, very few can say for definite. The study shows while four in 10 people can name every single bill they pay, only 15 per cent of them can say how much they pay on each to the last pound. One in 20 people don’t have a clue how much they pay on bills – either because a partner does it for them or because it comes out of their account automatically. And half of those polled only have a rough idea of how many bills are coming in and what they pay on them. Astonishingly, only 45 per cent of people were able to say how much they spend on the mortgage or rent each month down to the last penny or pound. When it comes to spending habits, the average adult finds it hard to track their spending day to day.
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Wealth & Finance International | May 2016
Real Estate Fund Manager of the Month - US Ethika Investments is a renowned real estate investment firm that provides investors access to a unique platform by tactically investing in opportunistic real estate assets primarily in the United States. We spoke to Andres Szita, Chairman at Ethika Investments, to find out more about his firm and to talk us through their highly innovative fund strategy. 1605MS05 12
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At Ethika, their advisers employ an entrepreneurial investment strategy designed to consistently achieve attractive risk-adjusted returns by creating capital appreciation opportunities through repositioning, restructuring, redevelopment and intensive post-acquisition asset management of underperforming assets. As a result of their expertise, Ethika’s team has over $5 billion in diverse real estate transaction and development services experience, encompassing investment management, asset management, operational repositioning and design/development management.
2016 has been an exciting year for Ethika, primarily due to the launch of their new real estate fund at the closing end of 2015. The fund focuses on opportunistic investments in the top 30 U.S. markets that will create value through significant renovations and operational improvements. Named the Ethika Investment Diversified Opportunity Fund II, the platform is targeted to attract $250 million in equity capital from both new and existing investors, resulting in nearly $1 billion of new acquisitions over the next several years. In sticking to their tried and tested strategy, the Ethika Diversified Opportunity Fund II will adhere to Ethika Investments’ vertically integrated investing approach that includes sourcing real estate assets with positive fundamentals in compelling locations at prices below historical values and replacement costs. The launch came on the heels of full deployment of Ethika Diversified Opportunity Fund I, which last year delivered an internal rate of return of 22.3% and a 2.1x net equity multiple to investors after investing in 17 properties across 13 different markets.
As a company immersed in the real estate industry, Szita has noticed a number of trends in their industry, unsurprisingly stemming from the 2008 Global Financial Crisis. “Since the financial crisis, financing has remained conservative,” says Szita. “This is positive, as it has helped keep supplies generally in check. New construction loans, for example, were a lot easier to come by in the last cycle, which of course resulted in a market oversupply.” “Alongside this, leverage has also remained conservative, since many deals ended up underwater during the financial crisis. This has refocused the attention of fund managers primarily to high quality assets in high quality markets – concentrating equity in the country’s Gateway and top 20-40 markets.”
Alongside their investment strategy, Ethika have a number of other features which allow them to distinguish themselves from their competitors. As Szita outlines: “As a vertically-integrated investment firm, we not only serve as a fund and capital manager, we can service every investment that we do,” explains Szita. “In taking on a value-add investment, we can very quickly put a strategy in place that encompasses everything from sourcing the asset, underwriting the asset, escrow, design, construction, repositioning, accounting, investor relations and property management, consolidating the entire process to a single operation, again minimising risk and the room for error.
With conservative financial activity now a prevailing theme across the financial landscape, many banks have remained reluctant to lend in the sector over the past number of years. However, according to Szita, this development has really paved the way for private lending. “With heavier banking regulations, from Dodd-Frank domestically to the Basel III regulatory agreement globally, requiring banks to hold more of their secured product on their balance sheet, the door has been opened for private lenders,” explains Szita. “As such, private equity real estate fund and debt fund capital has been able to step in and take the place of banks, with the opportunity to earn some attractive yields.
“Moreover, the midsize niche that we’re in is also a true differentiator,” adds Szita. “A typical deployment for Ethika usually sits between the $15 to $50 million mark. We’re nimble and can take on these sorts of assets and stabilise them, increasing value on our net multiple goal of 2.0x over the fund’s investment.”
“The evolved lending landscape has created a great wealth of capital amongst investors and fierce competition among borrowers,” adds Szita. “Any investor that is leaning away from more core assets is finding themselves dealing with the non-banking lenders more frequently. The positive aspect is, of course, that for investors focused on value-add in non-core assets, these groups have the opportunity to be nimbler and are not as boxed in as the bank lenders have traditionally been.”
As a result of their success, Ethika has grown to provide a highly diverse client base, and building and maintaining relationships with their clients is at the heart of everything Ethika does. “Our fund partners vary throughout each real estate cycle, but are generally a 65/35 split between foreign and domestic capital sources. We service a wide variety of investors, from large institutional pensions to private sovereign wealth funds.”
With the financial markets always being susceptible to uncertainty, Ethika’s investment process is grounded upon diversification and consequently leaves them less vulnerable to volatility. “We make sure to look at opportunities in such a way that they’re not purely cycle driven,” says Szita. “Instead, we like to invest when we see a rapidly improving market on a macro level, while identifying what we deem pockets of opportunity, be that market specific or pertaining to particular asset classes.”
Despite the shifting road ahead, Ethika remain confident that their company will continue to strive and find the pockets of opportunity that may come along the way. “Of course, we will be primarily focusing on our new fund throughout the course of 2016,” says Szita. “While growth pace has slowed significantly, we still strongly believe that of all the major economies in the world, the U.S. still has the best underlying monetary policy and pricing fundamentals for growth and strong investment returns moving forward.”
“Generally speaking, Ethika prefers to buy into assets that aren’t perfectly stabilised, allowing us to acquire properties at a very attractive price. We’re generally more of the mind-set of taking a higher stabilised yield in the future, rather than pay full price today. If we can buy a perfectly stabilised asset, you don’t have a clear path to grow the value. With no room to improve the asset, you’re at the mercy of the market. Whereas with a value-add investment strategy, there is a clear path to improve the property to make it competitive, using the fact that the asset is not performing at its fullest potential to then build the value.”
Company: Ethika Investments Name: Andres Szita Email: aszita@ethikainvestments.com Web Address: ethikainvestments.com Address: 1880 Century Park E #1016, Los Angeles, CA 90067 Telephone: +1.310.954.2009
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Wealth & Finance International | May 2016
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Real Estate Fund Manager of the Month - Luxembourg Advanced Capital Group’s reputation as a financial innovator extends back to 2000 with the set-up of its first Private Equity Fund of Funds. With a keen focus on time critical high-growth opportunities, Advanced Capital Group has approximately $1 billion in assets under management. The firm adheres to a disciplined investment strategy through diversification and active management of specialized alternative investment funds. Advanced Capital Group ranked #2 on Preqin’s list of the world’s best-performing Private Equity Fund of Fund managers, a testament to its leading innovative, well-timed and value-oriented investments.
Advanced Capital Group manages four generalist Private Equity Fund of Funds: ACI, ACII, ACIII and ACIV, and additionally manages funds in the Opportunistic Real Estate and Traditional Energy sectors. This increasingly global portfolio of investments reflects the firm’s intention and ability to take advantage of investment opportunities worldwide.
Advanced Capital are committed to maintaining the highest standards of probity in all their activities with all stakeholders, investors, managers, colleagues, regulatory bodies, the private equity industry and the wider community as a whole. Reflecting the firm’s commitment to build sustainable investments, we adhered to United Nations Principles for Responsible Investment (UNPRI), the framework which allows us to further incorporate environmental, social and governance issues into their investment process. They are also proud and committed supporters of the globally renowned charity Oxfam in its fight against poverty and injustice worldwide and members of the Aspen Institute, the reference organisation for the encouragement of enlightened leaderships.
“Advanced Capital is an investment firm that strives to serve its investors by prudently guiding part of their capital towards areas and sectors which, by and large, are not yet in the mainstream of an investor’s attention. Fundamentally, it’s why we are unique” writes Robert Tomei Chairman of Advanced Capital Group on the company’s website. “As global investors our professionals predominantly spend their time gathering high-grade, real-time intelligence on geopolitical, economic, capital market and sector trends to assess relative value amongst a wide range of investments within the private market universe” he adds.
Maintaining a very close relationship with their investors is very important to us; their goals are at the heart of the firm’s strategy. To this end, Advanced Capital provide them and other stakeholders with continual disclosure around the firm’s portfolio investments, structure and operations and demonstrate how they work to create long-term sustainable value.
On the firm’s approach to investments, the Chairman adds, “By no means a straightforward process, we are constantly vigilant of markets and conduct our own self-assessment. A depersonalised, rigorous approach which stimulates independent, intellectual debate together with a focus on thorough quantitative and qualitative analytical support, lies at the heart of our success, as is fostering a vested and highly motivated team. It is our conviction that other factors of our success are driven by sound governance and a culture based on transparency and integrity.”
As part of this landscape, Advanced Capital endorse the Private Equity Principles of the Institutional Limited Partners Association (ILPA), the leading private equity investors’ organisation which encompasses the largest most sophisticated investors in the world. Above all, ILPA recognises the need to establish best practices among investors and their investments managers. Its principles of transparency, governance and alignment of interest have been accurately developed with the wider goal to improve the long-term benefit of the private equity industry as a whole.
Corporate Social Responsibility Advanced Capital is driven by the belief that socially responsible investing and the consideration of the wider impacts of business is a core pillar in the guardianship of assets in today’s society as well as generally being good business, concerning their four generalist funds.
Ensuring that Advanced Capital stay at the forefront of developments in global international affairs and in the latest macroeconomic trends, they support The Royal Institute of International Affairs (Chatham House), a world-leading multi-rewarded Think Tank. Meanwhile, their memberships of the Italian Private Equity and Venture Capital Association (AIFI) and European Private Equity and Venture Capital Association (EVCA) allow Advanced Capital to always keep a state-of-art domain within the private equity industry.
As such, values and activities are enshrined in their approach to the wider global milieu in which we sit. They see this as an integral driver of the firm’s success over the last 14 years.
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Private Equity Fund of Funds Since its launch, Advanced Capital’s Private Equity Fund of Funds has invested exclusively with specific, targeted, leading international managers, ensuring consistently high returns based on an appropriate level of market risk. Advanced Capital’s prides itself on being an early mover, allocating a significant portion of its funds towards counter-cyclical distressed and debt strategies in anticipation of a market correction. Energy Advanced Capital Energy Fund (ACEF) is a global Private Equity Fund of Funds targeting the on-going reshaping of the energy and power industrial landscapes. The fund explores buyout, growth and restructuring opportunities within the energy markets globally through investments in a number of leading funds across the traditional and alternative energy sectors. Real Estate Investments Focussing on one aspect of the work, we now take a look at Real Estate sector which is encompassed by the hard work of the firm’s Seth M. Lieberman, Chief Investment Officer for AC Private Equity Real Estate. Fittingly awarded Real Estate Fund Manager of the Month, Seth certainly boasts an impressive 32 years of industry experience in both the US and in Europe. Indeed, Seth has a wide range of industry experience ranging from business development, senior and mezzanine finance, and equity investments, to restructuring of distressed properties and debt. Lieberman has held senior positions with UBS Investment Bank (MD), Hypo Real Estate (Joint MD), Lehman Brothers International (ED), Credit Suisse Praedium Funds (Principal) & GE Capital (Director). In addition, he has earned a B.A. in Economics (Cum Laude) from Tufts University and is a member of the Urban Land Institute Europe Executive Committee, its Advisory Board and ULI Global Audit Committee. Mr Lieberman is a board member of Kvalitena AB. The Advanced Capital Private Equity Real Estate International Fund (AC PERE) is a Real Estate Fund with a global perspective and a focus on opportunistic and distressed debt real estate assets. AC PERE aims to capitalise on illiquid market conditions and primarily invest in distressed property and property debt investments, to deliver superior risk-adjusted returns. Ending this article on a positive note, the last word goes to the Robert Tomei, Chairman of Advanced Capital Group, “Advanced Capital’s consistently successful track record of 14 years has placed us amongst the best performing managers in the business. Their flexible, value-oriented approach has reduced exposure to exuberant valuations and takes advantage of excessive pessimism or relatively neglected areas of opportunity. This is underpinned by the firm’s fundamental commitment to outperform markets while preserving principal”.
For further information, please contact: Company: Advanced Capital SGR S.p.A. Name: Seth M. Lieberman, CIO Real Estate Investments Email: sml@advancedcapital.co.uk Web Address: www.advancedcapital.com Address: Via della Spiga 30, 20121 Milano, Italy Telephone: +39 (02) 3031771
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Business Elite - COO of the Year 2016 Aioi Nissay Dowa Europe is the automotive arm of MS&AD Group (Mitsui Sumitomo Aioi Dowa Japans largest insurance group) and operates Toyota Insurance Management Ltd. We got in touch with their COO, Michael Kainzbauer, to find out more about the company and how they continue to succeed in the highly competitive automotive market. At Aioi Nissay Dowa Europe, we are Toyota’s main captive insurance and solutions provider in the regions of Europe and Africa. Toyota is the largest shareholder of MS&AD and for half a century we have had a strong partnership in both Japan and worldwide. Toyota Insurance Management was established in 1999 as a joint venture between Aioi Nissay Dowa Europe and Toyota Financial Services Europe. Today, Toyota Insurance works across 23 markets in Europe.
selling, among others. Our clients include Toyota customers, retailers, insurance customers, retailers’ customers, and large corporations. Despite the myriad services we provide, our objective is quite simple. This is to ensure the right insurance products are available for Toyota customers, at the right time, at the right price and to the right quality. By doing this, we are able to support Toyota Motor Europe, Toyota Financial Services, National Marketing and Sales Entities, retailers and partners alike in meeting the needs of our customers.
Alongside our continued growth, we have enhanced our set up including acquisitions e.g. of the UK ‘s leading telematics insurance and big data providers, “Insure the box” and “BIG Telematics”. These acquisitions have tremendously benefitted our growth strategy, and will continue to do so in the future.
Despite the very competitive automotive market environment, we continue to do well and continue to expand in terms of territories and product development. The key challenges are IOT and connected devices solutions alongside with new mobility concepts, EV, Hydrogen and the enhanced autonomous driving technology. With this in mind, we will continue investing into future solutions by working closely with our long term partnerships.
As we are backed by the largest insurer in Japan – MS&AD Holdings, we are able to draw on a wide variety of skill sets and industry expertise. This allows us to cover all aspects of insurance activities that would normally be split between a broker, an agent, an insurer, a reinsurer, an administrator and so on. This allows us to look at insurance opportunities in a holistic way, taking each potential element into account from both an individual perspective, and also as a part of the whole solution.
Looking further into 2016 and beyond, we are confident that will continue to grow and prosper. As previously mentioned, we will continue to address the many changes and developments happening in our industry. Furthermore, we also need to watch the political consequences of issues in Europe such as the potential exits of Britain and Greece from the European Union.
As for my role, I act as Group COO of Aioi Nissay Dowa Europe Companies and as CEO of Toyota Insurance Management Europe, as well as undertaking BOD assignments in different group companies including Insure the Box Group. I have been working here since 2000, and throughout this time have been involved across various different areas.
As the leader of a highly successful company, I am incredibly proud to have our success recognised by Wealth & Finance magazine. Furthermore, it will provide us with the motivation to continue supporting MS&AD and Toyota’s future profitable growth and development.
Prior to this experience, I spent many years with top consulting and audit firms. I initially began as the CEO for the German office and moved on to various additional and different roles on a European level before taking on today’s roles several years ago.
Despite our success to date, we are always careful that we are not caught resting on our laurels. In fact, we never rest in order to create permanent improvement and efficiency improvement via Kaizen activities to create better operations, permanent enhanced customer satisfaction and a world with less accidents and ensure that everyone can be safer than ever before.
As for the company, they opened their first office in the UK , which then extended to offices in France, Germany, Nordics, Spain and Italy. Soon after, to expanded our horizons even further to areas such as Russia, Kazakhstan, Poland and many more. In terms of our services, we provide a highly diverse range of services in order to cater for our broad range of clientele. First and foremost, we provide automotive insurance solutions for Toyota related dealerships and large dealer groups. Alongside this, we also provide services and maintenance products for vehicles. Our insurance solutions are quite extensive, and include extended warranty, classic car, fleet, telematics and cross
Michael Kainzbauer Email: michael.kainzbauer@toyota-im.com
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CEO Of The Year 2016 in Commodity Trading and Risk Management Aspect is the leading global provider of multi-commodity trade, risk and operations management solutions (E/CTRM) delivered Software-as-a-Service (SaaS) in the cloud. With more than 487 customers in 86 countries, it’s one of the fastest growing solutions with rapid deployment, affordable subscriptions, and immediate ROI for all size companies. Commodities support includes oil, petroleum products, metals, biofuels, coal and petrochemicals.
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AspectCTRM is a full-featured E/CTRM suite for front, middle and back office with support for financial and physical trade activity. It’s available in three editions: Lite, Standard and Enterprise, expanding in functionality according to the needs and budgets of clients. Aspect is the only E/CTRM solutions provider with market data and analytics tools delivered with its trade and risk functions on the same platform, for convenient price uploads to CTRM. Because AspectCTRM resides in the cloud, there are no software, hardware or IT investments required by clients. On premise installations are also available. Clients are able to trial AspectCTRM before investing in a system, which removes significant financial risks. Aspect solutions are available on desktop, tablets and mobile devices and through its Aspect Partner Program (APP). Aspect was incorporated in 2000 and so this is our 16th year. Aspect has offices in Houston, New York, London, Moscow, Bengaluru and Singapore Aspect aggregates data from commodity exchanges and commodity-related news sources in real time to allow commodity trading firms to understand how the market is moving now and in the future. This information is used to make important decisions concerning the buying and selling of commodities such as oil and oil-related products, precious metals, base metals, concentrates, coal, agricultural products, food products and many other commodities. Once such buy/sell decisions are made and executed, the AspectCTRM solution helps trading firms to manage their profit and loss, and perhaps more importantly, market risk. Every trade can be managed from trade execution and capture, through P&L and risk management, on to mid-office functions such as management of logistics and storage, right through to back-office functions such as cash management and payment reconciliation. Aspect’s latest product, AspectSTP, allows direct and seamless integration between commodity exchanges where the trading is executed and its AspectCTRM solution. Straight-through processing is critical for trades to be efficiently processed throughout the supply chain with no re-entry which causes costly mistakes. Aspect differentiates from the pack by providing all of its solutions via the cloud meaning clients do not need any hardware, software or IT expertise to successfully operate Aspect’s solutions. The only thing required is an Internet connection and a browser such as Explorer, Safari, Firefox, etc. With this, Aspect’s solutions may be implemented in record time, perhaps 4 to 6 weeks, rather than the very lengthy timeframes experience with using older technologies. On being awarded Business Elite CEO of the Year 2016 Frankly, I am very flattered and deeply honoured to be recognised in this way. This is especially rewarding as individuals cannot apply for the award, a research team has to ‘discover’ the candidates based on their work and success. Winning any such award always depends on a team of people and the team at Aspect is the best I have worked with over more than 30 years of managing companies. Their motivation, dedication and expertise makes it easy for any CEO to manage a business. The challenges at the helm of the business Aspect started as a ‘cloud’ company some 16 years ago. Way back, few understood the benefits but over the last 3 or 4 years, this has changed.
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The fear, uncertainty and doubt associated with new ways of doing things has evaporated and there’s an overwhelming acceptance of cloud solutions and the benefits they bring. This has led to Aspect’s astonishing success with an increase in contracts for its AspectCTRM solution growing by 71% in 2015 over the prior year. The main challenge here is to maintain the momentum and continue this level of organic growth.
Aspect is constantly changing and the changes are often fundamental. In Q1 2016, Aspect outsourced all of its product development, infrastructure and quality assurance to India having spent many years with its development centre in Russia. The migration has just been completed but we have a challenge ahead to stabilise the processes, improve productivity, quality and provide more flexibility. The management team understands the challenge and I’m confident we will see it through.
The second area is the development and exploitation of indirect channels to market. Many solution providers have partnerships but none, other than Aspect, are able to train others to sell and implement its solutions without the help of the vendor. Aspect has achieved this by deskilling the implementation process and thus shorting the time needed (and the costs) to implement what are very complex systems.
Coupled with this, Aspect has just undergone a major reorganisation starting with the management team but effecting just about every team member. This was done to ensure that Aspect can quickly and effectively absorb new firms under our acquisitions programme, codenamed, ‘Project Acorn’. It means the roles and responsibilities have changed for many people at Aspect and, whilst this can be challenging, I am confident that each will ‘step up to the plate’ and succeed. Aspect has won many awards for its technology and innovative solutions. This all comes done to the team and I know how readily each will embrace the changes.
The final challenge concerns inorganic growth. Aspect has a program of planned acquisitions in the coming years and this will test the corporation’s ability to rapidly absorb new entities and technologies. And so, we have spent the past quarter reorganising to ensure we are ‘acquisition ready’.
Industry based challenges and future plans Not really. The commodity trading industry is under tremendous pressure right now with shrinking lines of credit, regulatory changes and the ultra-low price of many commodities. However, each of these pressures drive new clients to Aspect’s solutions. We are in the right place at the right time… by design.
Prior career background I started in the IT industry back in 1979 and spent the first 11 years at the National Computing Centre (now NCC). I refer to this part of my career as my apprenticeship and I did computer operations, programming, systems analysis and design, project management and eventually I managed two of their business units. From here, I joined a series of US-based firms in senior management positions – Legent Corporation (systems management), Seer Technologies (application development environment), Point Information Systems (customer relationship management) and Youcentric (customer relationship management). I then joined Carnegie Information Systems (customer relationship management) as CEO. Almost all of these firms bought other firms and/or were sold and I gained a lot of experience in mergers and acquisitions. I joined Aspect in 2005 as CEO. Aspect is the toughest job I have had, but it’s also the best job I ever had. I think it was Confucius that said, ‘Find a job you love and you will never work another day in your life’. Many at Aspect feel the same way.
This falls in line with my thoughts above concerning the challenges at Aspect, namely, continuing our exceptional organic growth through direct and, more recently, indirect sales channels plus driving our acquisitions program Concluding remarks It’s difficult to explain to others about life at Aspect but employees often use the word ‘family’. Aspect people feel like part of a family and Aspect always puts family first … even when some employees forget that their immediate family is more important than their ‘Aspect family’. We do things differently but that’s beyond the scope of this article. We run a meritocracy. Aspect is blind to gender, race, creed or colour. Three of the four members of the Executive Management team are women – no ‘glass ceiling’ here – and this balance continues throughout the company. The London office has 22 members of staff with 12 countries of origin represented and more than 12 languages spoken. Aspect only ‘sees’ contribution and capability in people and that drives all of us forward.
Clients Aspect and its solutions appeal to commodity trading firms of all sizes but that wasn’t always the case. Aspect’s approach was to ‘avoid’ tier-1 clients – the large integrated majors, global trading firms and national energy companies. Why? Because each already had a solution and business there was drying up for the market leaders. Aspect focused on mid-tier clients where often the only ‘system’ in place was spreadsheets, very complex, easily-broken spreadsheets. A rich functional capability coupled with delivery via the cloud was perfect for such firms especially as lines of credit were increasingly difficult to secure and new regulations meant spreadsheets were no longer acceptable. This has now changed in the last two years as tier-1 firms are now turning to Aspect as its reputation grows for massively reducing the cost of commodity trading and risk management systems; hence, firms such as Sumitomo, Mitsubishi, Trafigura, BP, Hess, Aegean, Klesch and Gulf are now Aspect clients
Company: Aspect Name: Steve Hughes Email: stevehughes@aspectenterprise.com Web Address: www.aspectenterprise.com Address: Castlewood House, 77 – 91 New Oxford Street, London WC1A 1DG, United Kingdom Telephone: +44 (0) 207 632 0170
Challenges in 2016 as a CEO of the company As CEO, my main challenges concern our outsourcing program and ensuring we are ‘acquisition ready’.
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Birtenshaw is a registered charity which offers a wide of education and care services to support children and young people with various types of physical impairment and learning disability. CEO David Reid discusses the firm’s vast service offering and the current state of public funding for young people with Special Education Needs and Disability. Birtenshaw was established in 1956 by a group of parents as a special school for young children with cerebral palsy. Today our firm provides a wide range of services for children and young adults, with severe learning disability, including Autism Spectrum Conditions and/or significant physical disability, including complex health needs. The firm runs also a range of therapeutic health and wellbeing services. Although Birtenshaw is positioned within the voluntary and community sector, or what many people refer to as the ‘not for profit’ sector, I take the view that we should operate as a ‘social enterprise’ on sound business principles with the aim of making a profit. However, in our case the profit is not for shareholders but ‘profit for purpose’ so that we can re-invest and continue to expand the range and diversity of our services. We have been very successful at that over the last few years. Between 2012/2013 and 2015/2015 Birtenshaw’s turnover grew by over 326% whilst in 2014/2015 the bottom line improved by over 40% and in 2015/2016 by a further 126%. This has enabled us to increase the number of children and young people supported by our services in that time by over 280%. Birtenshaw’s vision is “brightening lives, building futures” for disabled young people, whether that be people who are physically disabled or learning disabled. Our vision is based on the philosophy of ‘ordinary life principles’. What this means is simply that young people with Special Education Needs and Disability are supported to take part in meaningful and enjoyable activities and have the same learning and social opportunities as other children. My own career background is mostly in the public sector; having worked for three North West based Local Authorities. Overall I have almost 30 years’ experience working in social work/care. From a young age I knew that I wanted to be a social worker and in particular to work with disabled children. Some of the younger members of my family are disabled and I saw the struggle they and their parents had to access quality services. I have always felt strongly that disabled young people should be able to access a range of quality services that helps to improve the quality of their life. I joined Birtenshaw in 2006 after making the decision to move from the public sector to the so called ‘not for profit’ sector. At the time I noticed a growing trend for local authorities and councils to have their funding restricted, and I wanted to move into a sector where I could have more influence over the allocation of resources and funding.
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Since my arrival at Birtenshaw I have worked tirelessly to grow the firm and expand our service offering so that we can meet the ever increasing needs and numbers of young people and children across the North West and beyond with special needs.
Although there is nothing unique in offering education or care services to disabled children and young adults, Birtenshaw is differentiated from its competitors because of the high quality of care, cost effective approach and versatile service offering.
Recent developments include the opening of a state of the art special school in 2012 with the aim to provide quality education services which are cost effective and cater to children and young people at every level of the disability spectrum, although in particular those with the greatest need.
Over recent years we have noticed that local councils and authorities are purchasing our services more often, because as I predicted efficiency targets are a prevailing trend in the Special Education Needs and Disability sector, and many public sector providers have seen their funding significantly reduced over the past few years and their capacity to provide services themselves has decreased accordingly, leading councils to outsource to firms such as ours.
Birtenshaw School provides the ideal physical environment for the specialist learning needs of its pupils, with purpose built facilities. Consequently, the school is able to provide a spacious, calm and safe environment in which young people can thrive. Our facilities fully support the creative learning curriculum and “Total Communication” approach to this specialised area of education. Each of the classrooms is equipped with all of the state-of-the-art education technology such as touch screens and iPads which you would expect to find in any modern school.
Another key trend which is putting a strain on the public purse is the increased number of people living for longer with significant physical impairment and the increasing number of people being diagnosed with autistic spectrum conditions. Advancement in medical services and knowledge has helped medical professionals to diagnose Autism more easily. Whilst I believe that medical advancement has a part to play in this, I also believe that there are other, as yet unproven, reasons for the significant increase in the number of people presenting on the autistic spectrum.
In addition, the school has a range of specialist facilities which underpin its special education needs functions by working with sensory experiences (sight, sound, touch, smell and so on) to develop senses, co-ordination and communication for each pupil, promoting interaction, concentration, calmness and confidence. These facilities include a sensory integration room; a multisensory dark room; on-site hydrotherapy pool with multisensory sound and light system as well as a soft play area. The school’s multisensory input is supported by its fulltime occupational therapist who completes a detailed sensory profile for individual pupils, producing a ‘sensory diet’ for the school’s professionally trained staff to follow. Outside of the classroom, the school has also provided safe enclosed outdoor play spaces and a horticultural garden, and the school is currently developing a sensory garden, to allow pupils the chance to learn in their own way outside of the classroom.
I have a number of growth strategies in place to assist Birtenshaw to continue our phenomenal growth to build on our current level of success and expand into new sectors, allowing us to help more people with Special Education Needs and Disability. When we built the new school three years ago we drastically underestimated the demand for our services, although we have just received confirmation for the DfE to enable us to increase the number of registered placements at the school, we are also looking into a number of expansion plans, including redeveloping our previous site into new classrooms, and creating an early years’ service.
I am delighted that the success of Birtenshaw School is recognised at national level as it has been nominated as a finalist for the second year in a row in the Times Education Supplement Awards (TESAwards). In addition, we have only just learned that the school has also been nominated for a national Diversity Award by a parent of one of the children.
During the remainder of this calendar year we will be opening at least another four children’s homes, to compliment the recently opened children’s short break centre (formally called respite) which is designed to provide an enjoyable positive activity based experience for the child and a break for their parents/carers.
In September 2014 we opened a new special education further education college. The intention was to provide the same quality of learning for students up to the age of 25 years old. The college has now achieved Independent Specialist status with the DfE and the Education Funding Agency and is already oversubscribed.
Although the new school and future new education services are exciting new ventures for Birtenshaw, approximately 60% of our business is care services and allied health support. In the longer term we are keen to expand geographically. Our services are currently based exclusively in the Greater Manchester area, albeit with a national reach but we are planning to expand into Merseyside by 2017, with a view to eventually operating on a national basis
Birtenshaw School has been graded independently as an Outstanding School and we look forward to a formal Ofsted inspection in the near future. In addition to our education services, we operate a number of care services for young adults and several children’s homes (which make up the majority of our service offering) have been rated by Ofsted inspectors as Outstanding.
Ultimately we anticipate that the number, diversity and age range of the people we support will continue to grow over the coming years, and we are keen to ensure that we meet this need and can provide quality, cost effective education and care services to meet the needs of some of the most vulnerable disabled young people in our society and ensure that they experience an improvement in the quality of their lives.
Given the quality of our services it is no surprise that many Birtenshaw employees are nominated for national awards. In the last few months, a manager and a support worker form care services have got through to the national finals of the GB Care Awards, two other front line leaders are finalists in the National Learning Disability and Autism Awards and my deputy CEO is a finalist in the E3 Business Awards as an ‘Outstanding Woman in Business’. It is the quality of the people in my team that makes Birtenshaw such a success.
Company: Birtenshaw Address: Darwen Road, Bolton, BL7 9AB Phone: 01204 304 230 Website: www.birtenshaw.org.uk 27
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Business Elite MD of the Year 2016
As the UK’s largest friendly society, LV= have more than five million members and customers and exist to grow the value of their business for the benefit of their members. When asked about why their company has grown from strength to strength, Rowney simply says: “We do this by putting our customers at the centre of everything we do and by living our mutual and ethical values. We offer our products and services direct to customers, as well as through advisers and brokers, and through strategic partnerships.” Formerly known as Liverpool Victoria, the company rebranded as LV= in 2007. Since then, the LV= brand is now recognised for being modern and vibrant and well placed for an even more successful future. A testament to their success is that they have over 5.7 million customers, of which 1.1 million are members. Furthermore, within life and pensions, they are the top provider of individual income protection in the advised market and a leading provider of enhanced annuities.
LV= is a modern and leading financial mutual which is focused on doing the right thing for the people that buy their range of insurance, investments and retirement products. In an interview, Richard Rowney, Managing Director of Life and Pensions at LV=, lifts the lid on how the company’s client-centric approach has underpinned their success.
Although the company is very forward-thinking, to say that the company has been around for quite a while is an understatement. LV= was founded in Liverpool in March 1843, with the aim to help people on low incomes maintain a standard of living for their families and save for their funerals so they didn’t burden their families with this expense after they had passed away. 173 years on, the LV= Group employs over 6000 people. The Life and Pensions area that Rowney controls has over 1,000 employees based across main centres in Bournemouth, Exeter and Hitchin plus a network of regional offices. As you can imagine, managing such an enormous team can be quite a daunting task. However, Rowney believes that the degree of specialisation is what allows them to perform so well. “We help our customers protect their health, wealth, family and wellbeing,” says Rowney. “To do this we specialise in a number of areas. Firstly, our Retirement Solutions business covers our retirement and investment businesses, from pensions and annuities to equity release and bonds. Secondly, our Protection business includes a range of award winning products and services including a market leading position in income protection. Lastly, our Protection and Retirement Financial Advice Services include our automated online advice offering via our Retirement Wizard. All of these services combine to create the success behind our Life and Pensions team.” Prior to LV=, Rowney accumulated a wealth of experience and expertise that has added to his current role. “In the early 1990s, I joined Barclays, which gave me my first insight into the financial services industry,” explains Rowney. “During this time I held a number of different positions, including business risk director, chief operating officer of premier banking and integration director for Woolwich and Barclay’s retail bank.” It was in 2007 when Rowney joined what was then known as Liverpool Victoria, where he was instrumental in their rebranding as LV=. “I started as a group chief operating officer in February and was appointed to the board in August 2007,” says Rowney. “As group COO, I was responsible for the transformation programme that saw LV= successfully re-brand and develop functions to support the trading
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businesses that have delivered significant growth over recent years. In 2010, I was appointed managing director of LV= Life and Pensions - leading a strategy to become the UK’s leading retirement and protection specialist.” LV= ‘s position as leaders in their industry is something Rowney takes great pride in, and as such he is constantly ensuring that the company is always embracing any new technology or trends that come along the way. “Our continual challenge is to utilise digital technology,” says Rowney. “We’ve made great strides into embracing digital, but technology progresses quickly, so it’s important for us to continue to move at pace to be at the digital forefront - replacing our legacy systems enabling us to become more efficient and easy to do business with.” Alongside the continuing developments in technology, there are also challenges facing Rowney in the retirement industry too. “At the moment, we are nearing the end of a period of transition in the retirement industry,” says Rowney. “Driven by the pension freedoms changes in 2015 and now the FAMR review impacting people heading into retirement. With retirement being viewed as a series of smaller stages, which require multiple decisions, it’s important for customers to understand the decisions they are making. We’ve been proactively looking at ways to help people reaching retirement, making advice affordable to everyone through utilising automated online advice, but there is more to be done to get people thinking about their retirement sooner.” “Looking towards the long term, these challenges include how we engage with our current generation to talk about saving for retirement, and we really need to challenge the ‘buy for today over saving for tomorrow’ culture. Auto-enrolment has attempted to improve one part of this but I still believe we need to do more as an industry to engage people to think about their retirement, at both ends of peoples working lives, to save enough for retirement and to make the right decision at retirement.” “Furthermore, there appears to be no let-up in the pace of regulatory change, with the launch of the secondary annuity market and forecast tax changes are areas that will keep the life industry busy over the coming years.” Despite these challenges, Rowney remains optimistic that they are more than capable of meeting the demands of their industry. A motivating factor for him is receiving recognition from Wealth & Finance magazine, which he believes is further evidence of their success. “I was very surprised to be receiving this award,” says Rowney. “Nonetheless, our Life and Pensions business has gone from strength to strength in recent years, so this is testament to our hard work paying off to be officially recognised.”
Name: Richard Rowney Company: LV= Web: www.lv.com
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New Consultation Announced on the Proposed Corporate Offence of Failing to Prevent the Facilitation of Tax Evasion In a new consultation published on 17th April, the Government has outlined the latest incarnation of its plans to hold corporate bodies criminally liable for failing to prevent the facilitation of tax evasion. This new consultation has been anticipated ever since the original consultation in July 2015, which led to the publication in December 2015 of the first draft of the legislation. A revised draft of the legislation is annexed to yesterday’s consultation.
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On 11 April, the Prime Minister’s office issued a press release announcing that the draft legislation was being brought forward in light of the London Anti-Corruption Summit on 12 May. The press release also referred to plans for a cross-agency taskforce, led by HMRC and the NCA, to investigate illegality arising from the Panama Papers.
Indeed, when one looks at the draft provisions relating to the facilitation of foreign tax evasion, it is difficult not to feel a sense of unreality. The draft law states that the tax evasion must be both an offence under the law of the country relating to evasion of tax payable in that country and a tax evasion offence under UK law. In addition, the facilitation of the tax evasion must be both an offence under the law of the country where the evasion takes place and an offence in the UK. These provisions sensibly contain a “dual criminality” protection, which means a company cannot be prosecuted in the UK in relation to facilitating a tax offence which would not be criminalised under UK law. Even so, one has to question the practicality and public interest in prosecuting companies in relation to foreign tax. A prosecutor would need to call expert evidence about foreign tax law, to prove both the evasion offence and the facilitation offence. Except in the most egregious cases, this is likely to be an insurmountable hurdle, given the varying (and difficult to interpret) thresholds of evasion and avoidance created in tax regimes across the world. Those defending the company would seek to sow confusion in a jury by turning any trial into an abstruse debate about foreign law.
To be clear, the draft law is not a means by which the Government could seek the prosecution of those implicated in the Panama Papers. The law would, for example, have no application whatsoever to the type of offshore investment scheme which David Cameron’s father managed. The law does not expand the definition of tax evasion under UK law, nor does it criminalise what some regard as immoral tax avoidance. However, the timing of the consultation is no doubt calculated to deflect the current waves of criticism concerning the Government’s broader approach to combating tax fraud. What is the offence? The substance of the offence remains the same as originally proposed, namely to criminalise corporate bodies which fail to prevent an associated person from facilitating the fraudulent evasion of tax, either in the UK or overseas. The offence utilises the “failure to prevent” model of strict liability found in section 7 of the Bribery Act 2010, and replicates the definitions of “associated person” and “relevant body” almost exactly. The associated person who facilitates a tax evasion offence can therefore be legal or natural, and can perform services for or on behalf of the corporate as an employee, agent or subsidiary.
The facilitation of foreign tax evasion bears the hallmarks of a similar provision – section 71 Criminal Justice Act 1993, which has sat on the statute books for many years but which has never, to our knowledge, been successfully prosecuted. This section created an offence of aiding or inducing conduct in relation to the evasion of certain defined taxes within the EU. To commit this offence, the evasion itself occurs in the EU (outside the UK) but the assistance or inducement of that evasion occurs within the UK. If prosecuting the evasion of EU taxes under section 71 CJA 1993 has proved impossible over the past two decades, what prospect is there of this foreign tax facilitation offence being successfully enforced? It is simply not in the public interest to create criminal offences which stand no realistic prospect of being prosecuted in practice. In the vast majority of cases, where the authorities of a foreign country have suffered a tax loss, the most pragmatic – and arguably the more just – solution is to place the culpable suspects on trial in that foreign country (and if they are in the UK, to extradite them to the foreign country).
There are three important differences between the draft law published yesterday and the draft published in December 2015. These are as follows: 1. An expanded definition of the circumstances in which a prosecution can take place of a foreign company for failing to prevent the facilitation of foreign tax evasion. 2. A restricted definition of the circumstances in which facilitation of UK tax evasion can occur. 3. A new defence whereby the corporate commits no offence if it was reasonable not to have any prevention procedures in place.
The second difference The draft law sets out what constitutes the relevant tax evasion offences alleged to have been facilitated. Unsurprisingly in the UK, this includes an offence of cheating the public revenue, but also covers any offence “consisting of being knowingly concerned in, or taking steps with a view to, the fraudulent evasion of tax.” The facilitation of this offence is committed where a person with the necessary knowledge and intent, aids, abets, counsels or procures the commission of the offence. The facilitation is also committed where a person is knowingly concerned in the commission of the tax evasion offence. However, a company cannot be criminally liable where the associated person was involved in “encouraging or assisting the commission of the offence” – the wording found in the December 2015 draft. This somewhat woolly language has now been removed, with the result that the concept of facilitation is now firmly based on well-established criminal law concepts of accessorial liability.
The first difference The offence relating to UK tax evasion facilitation applies to all companies and partnerships, regardless of whether they are incorporated or formed in the UK. In contrast, the offence relating to foreign tax evasion facilitation requires one of the following: 1. That the relevant body is incorporated/formed in the UK; 2. That the relevant body is carrying on a business or undertaking (or part thereof) from an establishment in the UK; or 3. That any act or omission forming part of the foreign tax evasion facilitation offence takes place within the UK. This third permutation did not appear in the draft law published in December 2015. Its inclusion in today’s draft law means, for example, that a Brazilian company, with a business located solely in Brazil, would be criminally liable in the UK if it fails to prevent one of its agents performing an act in the UK that constitutes an offence of facilitating the evasion of Brazilian tax (e.g. a telephone call in London which facilitates the evasion of Brazilian tax). On one view, expanding the draft law in this way simply reflects ordinary principles of jurisdiction under UK criminal law. However, prosecuting foreign companies for their failure to prevent foreign tax evasion, especially when they are not even carrying out any business in the UK, is almost inconceivable in practice.
The third difference The draft law provides the corporate with the same defence to both the UK and overseas offences. To rely on this defence, the corporate must prove that, at the time of the facilitation, one of the following applied: 1. That the corporate had in place such prevention procedures as it was reasonable to have in place; or 2. That in all the circumstances, it was not reasonable to expect the corporate to have any prevention procedures in place.
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This second defence was not found in December 2015 draft. It has no precedent in the Bribery Act 2010. Its introduction marks a policy shift which gives greater protection to a corporate suspect. It seems to recognise, quite rightly, that small to medium entities should not be unduly burdened with creating compliance procedures if they reasonably perceive the risks of tax facilitation in their business to be non-existent. Whilst the guidance elaborates helpfully on how reasonable prevention procedures might be developed, it has nothing useful to say about the circumstances in which an absence of procedures might be reasonable. The devil will be in the detail, of course, because the reasonableness of the procedures will be determined by the risk profile of the particular corporate. The consultation invites respondents to suggest case studies on this point. Conclusions There are many statutory and common law offences which criminalise tax evasion. There are the so-called “professional enablers” provisions under the Serious Crime Act 2015 criminalising those who facilitate offences including tax evasion. There are far more serious criminal offences of money laundering under the Proceeds of Crime Act 2002, which criminalise all dealings with the proceeds of tax evasion. What distinguishes the proposed offence from all of these existing laws is the stringent obligations it places on corporates to monitor persons associated with them. The clear objective of the draft law is to impose on the corporate the compliance burden of policing its employees, agents and subsidiaries, with the aim of creating more responsible corporate citizens, thereby helping to stamp out tax evasion at its source, or helping HMRC to identify tax evasion it might not otherwise detect. Over the past few years, the Government has repeatedly said that it is serious about investigating and prosecuting aggressive tax fraud. But it also knows how difficult it is to gather evidence and secure convictions, particularly where the evasion involves opaque offshore structures. Only last week the House of Commons Public Accounts Committee lambasted HMRC’s “woefully inadequate” prosecutorial record. Given HMRC’s stretched budget, and to improve HMRC’s prosecutorial record, it is no doubt politically expedient to criminalise the easier targets – the corporates which fail, even inadvertently, to prevent the facilitation of tax evasion, and which may have little appetite for contested criminal litigation. A cynic would say that business is being asked to bear the burden of HMRC’s inability to prosecute the true tax evaders. However, that perspective ignores the raft of other measures, both domestic and international, that are being planned so as to bolster the fight against tax evasion, not least the introduction of the Common Reporting Standard in 2017. Businesses can take limited comfort from the fact that the consultation emphasises that they need only act proportionately to the risks arising in their sectors, so as to develop compliance procedures which are reasonable rather than all-encompassing. However, it is not easy to square that position with the Government’s insistence on criminalising the failure to prevent the facilitation of foreign tax evasion – a prospect which any significant multinational business would rightly regard as a compliance nightmare. For this reason, as well as the significant legal difficulties of proving the commission of foreign tax crimes, the authors believe that the offence should be limited to the failure to prevent the facilitation of UK tax evasion. Corker Binning is a law firm specialising in business crime and fraud, regulatory litigation and general criminal work of all types.
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Wealth & Finance International | May 2016
Business Elite 2016 For over 30 years, Greenfield Estate Agents has specialised in property sales, lettings and property management. We spoke to them to find out more about their firm, and got their unique insight into the ins and outs of the UK real estate industry.
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Our company was established in 1983, and today we have offices in Kingston, Surbiton, Tolworth and New Malden. We cater for a highly diverse range of clients, ranging from first time buyers to the elderly. As such, we deal with clients in different ways, tailoring to their specific wants and needs. Alongside this, we use smart thinking and cutting-edge technology to keep our clients up-to-date with their property sale & purchase. Added to our expertise, we work with Move With Us, who are a national network of carefully selected independent estate agents working together to ensure a ‘best in class’ service to the public. As active agents of the network, our members pride themselves on building loyal, reputable and professional local businesses that depend greatly on the quality of service they provide to their clients. This involves raising our standards every day, and we do this by ensuring that our staff are regularly trained and fully qualified in estate agency practice and customer service. As you can imagine, keeping up to speed is incredibly important in the real estate industry. As demand soars and supply remains tight, the average price of a property coming to market in England and Wales has passed £300,000 for the first time. As a result, we need to keep up with the demand from our buyers with the intention of gaining new properties to sell. Challenges facing both first-time buyers and those trading up are highlighted by the fact that the average price has increased by 50% in just 10 years. Moreover, affordability constraints are further emphasised when considering that the average wage growth has only grown by 22% over the last 10 years. We need to help our buyers secure mortgages and have enlisted top quality mortgage advisers to implement this. As well as catering to the needs of our customers, we believe that it is also important to give back to our community too. We work closely with the local community and we have a close relationship with the schools that we sponsor including Coombe Girls, Grand Avenue, Tolworth Infants and Juniors. We are also the main sponsors for Our Lady Immaculate School. Furthermore, we are sponsoring a new local group called “Express”, who are a non-profit community organisation based in the borough of Kingston Upon Thames who support people with autism. More specifically, we regularly sponsor the comedy nights at the local Cornerhouse Theatre in Surbiton which are organised in aid of the group. Additionally, we are keen competitors for the annual Dragon Boat Challenge at Canbury Gardens, Kingston. This initiative supports some of our favourite charities, including Cancer research UK and The Friends of the Princess of Wales’s Royal Regiment, which is a military charity that has been set up by the Regiment to provide on-going support for our soldiers and their families. Ultimately, our aim is to make buying and selling property as smooth and hassle free as possible for our customers by providing a conveyancing service that is fast, professional and most importantly competitive. And of course, along with a first class service and a proactive approach.
Company: Greenfield Estate Agents Web: www.greenfield-property.co.uk
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Business Elite Pharmaceutical MD of the Year 2016
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RelonChem has been in business since 2002 with their offices based in Widnes, Cheshire. As an independent generic company they manufacture and distribute therapeutic products to deal with diabetes, pain management, hypertension, gastric ulcer, breast cancer, immunosuppressant’s, fungal infections, viral infections such as cold sores, osteoporosis and prostate disorders.
As a company, we are more committed to produce quality products and the focus will always remain the same. We are well known for our best and dedicated customer services with all our customers. We are always focused on making sure that needy patients get their medicines in time by putting special emphasis on the planning and supply chain. In regards to the people we work with we serve all the mainlines, multiple retailers and wholesalers, supermarkets and we also supply NHS contracts. The generic market at present in the UK is very competitive and challenging. Investing in new products especially niche products is the key for future growth. My focus has always been to reinvest into new product development and I am glad we have a good pipeline of new products which can catalyse the future growth. Before joining RelonChem, I completed my master degree in Pharmaceutical Sciences and have gone on to acquire more than 17 years’ experience in the pharmaceutical industry. I have worked in pharmaceutical manufacturing, formulation development, regulatory affairs, commercial and sales before I became Managing Director of this company. I am both surprised and truly honoured to have won this award. I would like to thank all of my colleagues who made this possible. Winning this award gives me a sense of recognition and further encourages me to achieve more and more. Looking ahead to the future we will be looking to launch number of new products and also identify more products for development so that the community can benefit from quality and affordable medicines. We will also be looking to enter in to the new dosage forms either by acquiring new licenses or by developing new products. Arguably the biggest challenge for both myself and the company will be sustain the current growth and grow further from there making sure all the targeted new products are launched in time. Increased competition, new players, volatility in pricing and the increased compliance costs will continue to be the challenges in the pharmaceutical industry.
Company: RELONCHEM LIMITED Name: SATHISH KUMAR K. J Email: sathish@relonchem.com Web Address: www.relonchem.com Address: Cheshire House, Gorsey Lane, Widnes, WA8 0RP Telephone: 01515561865
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Celebrating its tenth year, CapAsia is a private equity fund manager focussing on the provision of private capital to infrastructure opportunities in the emerging markets of Asia. We spoke to them to find out how they have succeeded over the past decade, and learned more about their niche investment area.
2016 marks the successful finish of our first ten-year fund, The South East Asian Strategic Assets Funds, and we have two other funds under management. We are headquartered in Singapore, where we are licenced by the Monetary Authority of Singapore, and have offices in Malaysia and Indonesia. CapAsia’s infrastructure Funds intend to offer investors a well-defined investment proposition that is circumscribed by the core investment characteristics of infrastructure. CapAsia is aware that investors in its funds expect investments made by these funds to consistently exhibit specific investment and performance features such as a lower risk/ return profile and current and yield elements that are distinct from those from other alternative asset classes such as buy-out funds and real estate. In general, it is expected that infrastructure funds offer more downside protection in economic downturns and are less exposed to commercial risk due to the monopolistic nature of the markets in which such companies operate. Equity investments in infrastructure often are further de-risked through current yield returns from dividend payments. Due to the lower risk of the investment, investors should expect lower returns than from alternative assets classes. In our investment area, infrastructure companies often operate as natural or commercial monopolies due to either regulation or high barriers to entry. As such, the nature of the services provided should involve limited commercial and market risk. Infrastructure companies have long time horizons and are normally capital intensive. Furthermore, infrastructure investments should offer stable and predictable cash flows that are only to a limited extent affected by downturns in the economic cycle. The stability and predictability of cash flows stem from the natural monopoly character of the infrastructure service provided (for example toll roads or bulk water supply), the stickiness of demand (telecommunication infrastructure) or longer term purchase contracts (power generation but also higher education). Also, the financial performance of infrastructure investments should display a lower correlation with the macro-economic environment than other alternative assets. Within infrastructure the degree of correlation with the economic cycle differs. Investments in container terminals typically are more leveraged on the economic cycle than, for example, urban toll roads.
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Devarshi Das
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Finally, infrastructure investments may have some hedge against inflation or, in the case of emerging markets, foreign exchange risk. On the former, concession contracts may contain tariff escalation mechanisms that allow increases to account for inflation. Further, in emerging markets under local regulation or the terms of a concession, the costs of materially important inputs such as those of internationally traded commodities like fuel stock for thermal power plants or that of hard currency denominated debt, are often allowed to be treated as passthrough costs. With our flagship fund now finished, our main focus is on our two other funds: the Islamic Infrastructure Fund and the CapAsia ASEAN Infrastructure Fund. Across our funds, we have invested in several countries: Kazakhstan, Pakistan, Thailand, Malaysia, Indonesia and the Philippines, and across several sectors: thermal power, renewable energy, toll roads, social infrastructure and telecoms infrastructure. We take great pride in the fact that our first fund was a top performing fund for its 2006 vintage (according to Preqin) and delivered a gross money multiple of 2.3x and net of 1.7x. Gross IRR was 18% in USD. Furthermore, across our second and third funds we manage approximately USD 240m for our institutional investors and our limited partners. When looking back on our successes to date, we believe that this is primarily due to the fact that we are active investors, and we take our roles on the boards and committees of our portfolio companies very seriously. Moreover, we are based in Asia and have extensive experience in the geographies in which we invest. We also try to take a flexible approach to exits, although most of our exits are through trade sales, we have also been able to exit through the public markets. In terms of our strategy, we are diversified across several emerging markets, and most of them are investment grade. We believe our markets provide investors with geographic diversification and also exposure to the growth dynamic in these emerging markets. The demographic dividend of our markets is well understood, and the structural shifts to an emerging middle/consumer class, and continuing urbanisation provide significant demand for infrastructure and services. In some of our markets, we are able to be an early mover, such as backing renewable energy projects, and this can allow us to take advantage of attractive economics. In thermal power and transportation, we typically provide expansion or buyout capital to existing assets, where the continued growth in demand provides attractive upside. As for our clients, they are all accredited and qualified institutional investors. These include some of Asia’s leading banks and financial institutions, pension funds and development finance institutions. Looking further into 2016 and beyond, we are very optimistic about the future of our company. We are continuing to deploy capital from our third fund this year, and manage the performance of our existing assets across both of our remaining funds. Only once we are substantially in our third fund will we look to raise additional investment capital, although that is certainly something that we will consider.
Company: CapAsia Name: Co-CEOs Craig Martin (craig.martin@capasia.com) and Devarshi Das (ddas@capasia.com) Web: www.capasia.com
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Ones to Watch in Hedge Funds 2016 VFS is the fund administration arm of the Bank of Valletta Group, Malta’s largest banking group. The company’s core activities cover both the provision of fund formation services, as well as a full suite of fund administration services to collective investment schemes. VFS assists various international fund promoters in setting up their fund structures in Malta. Redomiciliation of funds from offshore domiciles, passporting of UCITS to EU markets, handling of cross border mergers into Malta-based UCITS funds also form part of the company’s holistic assistance to its client base.
The Bank of Valletta group was first mover on the island to set up a fund administration activity; to this date, VFS still boasts of being the leading firm in fund administration in Malta, representing over 30% of the market in terms of Net Asset Values of funds domiciled and licensed on this island. Malta’s legal and regulatory infrastructure, as well as its permeating can-do mindset has ensured that the funds industry continues to grow from strength to strength, attracting towards it both the setting up of investment funds in Malta (retail and alternative funds), as well as service providers to same. Within this context of a highly competitive fund administration environment, with over 27 companies offering fund administration, VFS has retained its market leadership.
services, ranging from regulatory reporting for AIFMD, Common Reporting Standards and FATCA, production of fact sheets, monthly management accounts and on-going regulatory reporting. In view that VFS forms part of the largest banking group in Malta, support to this sector takes a deeper dimension, thanks to the provision of custody services, brokerage, opening of bank accounts, as well as hedging arrangements. Through our holistic approach, our clients are assured of all forms of administrative and related support, allowing fund managers to focus on their own internal core competences: the investment management function. VFS Achievements In order to be able to achieve these milestones, VFS invests heavily and continuously in its IT infrastructure and the development of employees, aiming to improve their skills, knowledge and competences. This ensures the provision of a qualitative service and meeting clients’ expectations.
VFS’s philosophy is to deliver services in a professional, timely and accurate manner whilst addressing the demands of our customers. This belief builds upon the creation of long lasting relationships with clients, reinforced by reciprocal trust, commitment and engagement. VFS Services Such commitment is further evidenced by the diverse hedge fund strategies serviced by the company, the provision of ad hoc services required by this segment, as well as through our support in assisting fund promoters in choosing the best suited hedge fund framework. Malta’s regulatory framework caters for the diverse risk profiles of investors, whilst addressing the needs arising from the investment managers’ strategies. VFS’s active participation in providing its support in the pre-structuring phase, as well as the on-going management of the licensing processes, is testimony to the company’s commitment to the hedge fund industry’s continued growth and development.
Over the years, VFS’s commitment and reputation have been widely recognised and evidenced through the numerous awards presented to VFS by various specialist entities. These achievements have undoubtedly been validated by our client base, who have also contributed to the growth of the company through their endorsement and recommendations.
Company: Valletta Fund Services Limited Name: Joseph Camilleri Email: jcamilleri.vfs@bov.com Web Address: www.vfs.com.mt Address: TG Complex, Suite 2, Level 3, Triq il-Birrerija, l-Imriehel, Birkirkara BKR 3000 MALTA Telephone: (356) 2122 7148
VFS strives to be proactive in terms of the dynamic nature of the market, the growing sophistication of investors, the evolving regulatory framework, as well as the challenges and demands faced by the fund managers. We aim to ensure ease of setting up and running a fund in Malta by offering a one -stop solution approach for structuring of funds, redomicilaitions, cross border mergers and passporting. The company’s commitment to further support new start-ups and the existing client base is also manifested through the provision of ancillary
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Challenges Facing Hedge Fund Start-ups eVestment is a global leader in institutional investment data and analytics. The company provides data and insights for institutional investors like insurance companies, pension funds, foundations, banks, endowments and more and also provides a wealth of insight and analytics solutions to traditional and alternative asset managers.
For a hedge fund, attracting investors early on and as the fund seeks to grow is crucial to success. Without a strong and growing base of assets, a hedge fund may have challenges fully and successfully executing its investment strategies. Institutional investors and their consultants continue to show interest in hedge funds and thus represent a huge opportunity for new hedge funds to grow their AUM. But what are the best ways to attract these investors and consultants?
looking for a fund that is fully or partially owned by a woman or a member of a minority group. Perhaps there are schools that are known for turning out successful hedge fund managers. Investors may be looking for hedge funds with key professionals who attended those schools. So, as an example, a pension fund may be looking for a hedge fund with X% returns, partially owned by a woman, based in London, with an activist strategy and key professionals that attended a short list of top universities. If a new hedge fund happens to fit these criteria but isn’t in an industry database – or is in the database but their profile is missing one or more of the criteria the investor is searching for – they simply won’t be found.
One way is by ensuring industry databases like eVestment are updated with as much data as possible from a hedge fund’s inception and going forward because increasingly big institutional investors are using databases to search for managers to whom they will consider awarding investment mandates.
So for the hedge fund starting out, it’s crucial to create and keep updated profiles in databases like eVestment and to make sure those profiles are updated as completely as possible. eVestment continues to work with hedge funds so they understand the importance of transparency and populating databases as they seek to build their funds and attract new assets. We continue to add new data fields at the request of our investor and consultant clients who tell us what kind of data they would like to see while they screen and search for fund managers. We have found that over time hedge fund managers have become more interested in transparency as they understand that such transparency is the first step to attracting large mandates from these institutional investors.
eVestment’s clients are institutional investment consultants and institutional investors – like pension funds, insurance companies, foundations, endowments and sovereign wealth funds — and the asset and hedge fund managers that invest money on their behalf. On the traditional, long-only side, asset managers have long shared a wide variety of data with eVestment to ensure their products are visible to consultants and investors when they look to award new investment mandates. As institutional investors and their consultants have become more interested in hedge funds, they are seeking similar levels of transparency and data as they search for hedge funds to consider investing with. So for a new fund looking to attract investors – and institutional investors have billions to invest – being in a database like eVestment is crucial to asset raising success.
By being in an industry database like eVestment, new hedge funds have the ability to be searched for and found by investors. If new funds are not in these databases, these funds are essentially invisible and don’t exist to big investors who increasingly are using databases as their first and sometimes only source for finding new managers and new investment vehicles.
Investors are increasingly looking for more than just returns when they search for hedge funds, which can be a plus for the hedge funds that are starting out and may not have a very strong returns story right out of the gate. Of course returns are and will always be an important part of the story. But investors, when they are searching for managers and vehicles with which to invest, are looking for other things as well.
Company: eVestment Name: Christophe Frèrebeau, Director, Head of Europe, Middle East and Asia Web Address: www.evestment.com Address: 2nd Floor, 60 Fenchurch Street, London EC3M 4AD, United Kingdom Telephone: +44 (0) 20 7651 0800
Because institutional investors seek to have balanced portfolios, they are frequently looking for new investments opportunities that compliment or balance their existing investments. So they may be looking for a fund with a specific investment focus, style or geographic focus that is missing from their portfolio. Additionally, many institutional investors have diversity mandates in their investments, so an investor may be
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Employment Tax Changes: Mistakes with Expenses Could Be Expensive!
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For those working in banking and finance, employment tax changes that came into force last month could be very costly indeed – in both time and money. Employers must now change their treatment of expenses and ensure the right sign off procedures are followed or face severe penalties. For those working in finance, likely to have higher levels of travel and greater expenditure on corporate entertaining than other industries, the risk of falling foul of HMRC is especially high.
Following the introduction of real-time reporting for Pay as You Earn (“PAYE”) the Government’s attention is now turning towards other areas which impact upon an employer’s compliance and reporting obligations. These changes in employer reporting, which came into effect from 6 April, brings a number of challenges ahead for employers.
If you are an employer who pays rates in excess of those stated above, then you will be required to re-negotiate the amounts you can pay free of tax and National Insurance with HMRC. It will be necessary to undertake a sampling exercise to demonstrate the amounts being reimbursed are reasonable. HMRC typically expect a sampling exercise to be based upon: • A random sample; • 10% of the eligible employees; and • A minimum period of one month.
What changes have come into force? From 6 April 2016 P11D Dispensation Agreements will no longer apply and have been replaced by the business expense payments exemption. Employers will be required to “self-assess” the tax and National Insurance treatment of benefits and expenses paid to, or on behalf of an employee. Where an employer is satisfied that an expense has been incurred “wholly, exclusively and necessarily” in the performance of the employee’s duties, details of those expenses will not need to be reported on an employee’s Form P11D. However, where the costs incurred do not meet the conditions set out above, details will need to be included on an employee’s P11D or, where agreed with HM Revenue & Customs (“HMRC”) as part of a PAYE Settlement Agreement.
Once obtained, the agreement to pay the bespoke scale rates will be in place for up to five years. The importance of checking and reviewing Employers will no doubt want to know if the introduction of the business payments exemption will require changes to their existing procedures. HMRC will expect employers to undertake a regular review of their expense procedures and have published guidance within their Employment Income Manual (EIM 30270). The level of checking will vary depending upon the number of employees within the organisation. Employers will need to be able to demonstrate that someone other than the employee is responsible for ensuring that the amounts being reimbursed relate to a qualifying business expense.
Whilst the underlying conditions which need to be satisfied have not changed, the onus placed upon the employer to “get it right” has never been greater. It will be important to ensure your systems and controls can cope with the demands being placed upon you as an employer. Ask yourself the following questions: • When was your staff expenses policy last reviewed and updated? • Are all employees aware of the policy and the basis upon which expenses are paid/reimbursed to them? • Who is responsible for authorising the repayment of expenses in particular those expenses for senior management? • Are you confident that your systems are able to distinguish those expenses which have been incurred “wholly, exclusively and necessarily” by your employees?
Employees should always be expected to submit fully detailed expenses claims, together with supporting receipts and explanations as to who they met and where the meeting was held. Furthermore, from a point of the employers own cost controls adopting a more detailed review process will help to ensure that where excessive claims are being submitted, the appropriate action is taken to ensure such excesses are not repeated. Can we expect more changes? The simple answer is yes!
If the answer to any of these questions is “I don’t know” then now is the time to review and update what is in place. Without these controls you will potentially have difficulties submitting accurate forms P11D to HMRC, bearing in mind they can charge penalties where incorrect or incomplete returns are submitted.
In addition to the introduction of the business payments exemption, voluntary payrolling of benefits in kind also came into effect from 6 April 2016. Given the Government’s need to balance the books during the lifetime of this Parliament we are likely to see a move across to the compulsory payrolling of benefits.
Benchmark scale rates One exception to the business expense payments exemption regime is where an employer pays fixed rates for reimbursed expenses, for example, subsistence payments whilst away on company business and those payments are in excess of the HMRC Benchmark rates
We are awaiting further developments in respect of the use of PAYE Settlement Agreements, and of course, the introduction of the Apprenticeship Levy from April 2017 will add a real cost to all employers.
The table below summarises these rates. Time away from home and normal place of work 5 hours 10 hours 15 hours
Maximum allowance
Company: haysmacintyre Name: Nick Bustin, Director of Employment Taxes Web Address: www.haysmacintyre.com Address: 26 Red Lion Square, London WC1R 4AG Telephone: +44 20 7969 5500
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Investing in Crowdfunding Projects Crowdfunding is ideal to open up the African Real Estate Market Realty Africa is established by Patrick Chella and Erik van Eeten, two seasoned professionals from the Netherlands and has a diverse team of people with a lot of banking, investment and IT expertise. Patrick Chella spent his youth in Zimbabwe before moving to the Netherlands to study and work in the Investment and Banking Sector.
Erik van Eeten started his career at IBM as a Business consultant and transferred to the Investment and Banking Industry. Realty Africa has a lot of expertise in the local markets with one co-founder born and raised in Zimbabwe as well as through the benefit of local teams which we establish in each country. Erik van Eeten imparts his expertise about Realty Africa and the opportunities of investing in Sub-Saharan Real Estate projects via their platform.
where the landowner can meet developers and architects to achieve common interests and create joint ventures and more services will follow. How does crowdfunding fit in the local tradition and how can the local community benefit? We believe in the future of the African Real Estate markets. From an investment perspective and more importantly from the Impact that these developments have on the local community. We have a large variety of projects in the pipeline which includes Social Housing, Student Housing, Eco Lodges but also middle-income housing and luxury apartments. Africa has a long history with crowdfunding. Whole communities would pull funds for creating a building. For instance, the University of Botswana was largely “crowdfunded�. This process of financing not only facilitates the funding but also creates a feeling of mutual ownership and care for the longer term. We are enabling the African community to take this concept to the next level to get access to the international retail and professional investment community. With our additional services, we support the local developers already in the pre-finance stage. These services will also deepen our knowledge of the local markets, which is to the benefit of all our customers.
Can you give a brief overview of what your company does as a property crowdfunding platform? If I am asked to describe Realty Africa, I have to distinguish between two groups. We not only see the investors as our customers but also have a very strong focus on the developers. From the start, we took the concept of investing in Africa very seriously and wanted to develop a new approach towards fiduciary responsibility and investor security in the crowdfunding space. It took longer to setup than we anticipated, but for investors, we can offer great investment opportunities in Real Estate which are fully securitized and well suited for retail, professional as well as institutional investors. We thoroughly vet all investments with the help of our service provider Deloitte and we stay involved to manage and monitor the investor interests until the end. We perform site visits and use drip financing to protect the investors. Large investors are welcome to perform their due diligence as well, even before the project lands on the platform.
With crowdfunding growing in a variety of sectors, to what extent do you feel that businesses and investors are now starting to a pay attention to projects using this investment method? It is a misconception that crowdfunding is only for small amounts and non-professional investors. Crowdfunding is a way of democratising investments. In our view it is ideal for investors who would like to have more control. You can select the project that you like instead of a mandate to a fund manager. At the same time, investing in real estate in Sub-Saharan Africa is also an ideal way for professional investors to spread risk in an investment class with higher yield and which is maybe outside of your expertise. Investors who prefer Impact investments
At the same time, we want to really empower the local landowners, developers and architects in Sub-Saharan Africa. We developed a total service portfolio which we will launch in stages. These will support the local professionals and enable their businesses. Qualified projects have access to international funding on our crowdfunding platform. We are also soon launching our RA Connect platform
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can participate in Social Housing or Ecolodge projects. So property crowdfunding in Sub-Saharan Africa offers many opportunities to all kind of investors. When the pipeline grows, we are looking for partners to establish a managed fund or REIT of African Real Estate. How can your Company’s expertise benefit our readers? With our local teams and with the help of our service providers, we have a lot of knowledge of the local African markets where we are active. Many investors regard investing in Africa as very risky and scary. With our ECO System we are able to open up this market and to offer access to opportunities which were otherwise not available before to most investors. The additional services are vital in creating a stable company base and to support the core business of empowering the local people and of finding interesting, trustworthy and transparent investment opportunities. Another interesting service we offer lies with a select group being the Diaspora Community, those living abroad outside their country of origin. With our network, we can not only provide investment opportunities in their home country, but we can also support an ambition to build a house back home. With the same structure we use to check on development projects for our investors, we can check on the quality of your build and make sure that only money is paid when the work is performed. We call this Diaspora Construction. What can you tell about the reputation of your firm? Realty Africa is a new company and the first projects will be online in the next couple of months. As a new business, we have to take good care of our reputation. Reputation is very important in Africa and therefore, we can’t rush the due diligence process and asked one of the Big Four to be our service provider. Also, we are actively expanding our local teams to gain even more knowledge. In parallel, we are also actively seeking for large investors or institutions that love Africa and that want to work together with us to open up this market and possibly underwrite some of the projects. The opportunities are endless and the double-digit returns provide an excellent opportunity compared to the current savings rates in Western Europe or the USA. How can investors and developers sign up to access the services on your website? Everybody can visit www.realtyafrica.com and signup or read the information that is available. After signup, we are legally required to perform a KYC on our investors. Professional and Institutional Investors can contact us on our Institutional Contact Page for more information.
Name: Erik van Eeten Email: erik.van.eeten@realtyafrica.com Website: www.realtyafrica.com Address: Sumatrastraat 54, The Hague, 2585CT, The Netherlands Phone: +31-852013894
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Wealth & Finance International | May 2016
Socially Responsible and Ethical Investing Made Easy
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Virtuo Wealth Management Limited is a highly renowned financial advisory company who provide a wide range of financial services, and have become a well-known, deeply ethical investment practice. In this article, they reveal the myriad benefits behind ethical investing.
At our company, the values of integrity, honesty and ongoing excellent service have served us well since our inception in 2010. It is something that we continue to build on and take in great pride in working ethically, and partnering with people who share the same values of ourselves.
the next time you are reviewing your financial arrangements – banking, pensions, life assurance, savings, ISAs etc – take a step back and look at whether you are financing companies whose activities you are against, and whether you are actively investing in your future, of that of your children, to make a positive difference. After all, it is your money and your choice.
Furthermore, Virtuo Wealth Management Limited is a member of the sustainable investment and finance association (UKSIF) and the ethical investment association (EIA). We actively seek out companies with a record of involvement and good performance in terms of business practices.
Although ethical investing is becoming more and more popular, a lot of potential investors are still in two minds as to how much of a difference it will make. However, if one recognises that the most influential part of modern life, whether you like it or not, is the money system, then until this changes, animals, humans and the environment will continue to be abused in the name of profit. Socially Responsible Investment aims to maximise long-term profits balanced with concern and respect for wider social issues.
Generally speaking, socially responsible or ethical investing is categorised as any investment strategy which seeks to consider both financial return and social good. The areas of concern recognised are often summarised as those of the environment, social justice and corporate governance. As such, socially responsible investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights and diversity, whilst avoiding businesses involved in alcohol, tobacco, gambling, pornography, weapons and/or the military. At our firm, we are constantly aware of the significance of ethical investment, and it’s in our DNA to want, wherever practical, to examine responsible investment in a form that suits each client’s situation.
It is easy to feel that an individual cannot influence the money system, but we believe this is not the case. The faster Socially Responsible Investment grows, the greater the pressure on the investment institutions, banks and insurance companies to move away from those areas involving socially irresponsible practices. The rapidly increasing concern amongst the public over the treatment of animals, people and the environment is, we believe, making companies involved in these areas less viable as a long term investment. In other words, the economics of Socially Responsible Investment are now more widely recognised as a sound long term investment strategy. The combination of consumer and investment pressure can bring about lasting change – change which will benefit people, animals and the environment.
Ethical investment can be a highly rewarding endeavour for investors, as it offers them the opportunity to avoid the companies whose activities they would not want to support, and they only invest in those operating within a moral framework that reflects their own moral stance. This process is nothing new, and the first ethical investment fund in the UK was launched in 1984 by Friends Provident as a direct result of their Quaker roots. Over three decades later, there are dozens of these type of funds from many of the UK’s leading fund management groups. Whatever your concern, people, planet, animals, faith, there is now an ethical fund that will match your views.
In terms of its financial merits, investing in an ethical and socially responsible way is now acknowledged as a sound medium to long-term strategy. While there will be those who are happy to make easy money at the expense of others, the rapidly increasing trend for individuals, charities and companies is to seek profit responsibly via ethical investment. After all, who would disagree with investing in companies that have good employment records, manufacture products that people want to buy at a fair price, and on which a good profit is made? It is important to remember that much of Socially Responsible Investment concerns the positive sides of business life such as respect for the community (local and global) and for the environment.
Moreover, the concept of ‘ethical’ is going to vary between individuals, and one man’s meat is another man’s poison. In our experience, there are certain key moral issues that are deemed to be beyond the pale for all investors, but beyond that it is possible to apply more personalised and bespoke views upon the manner in which one’s money is invested. This includes, for an increasing number of investors, not just avoiding certain activities but actively investing in a positive way; to support companies contributing to a sustainable future. Time has proved that investing ethically is not a handicap to investment performance, it is actually a significant benefit.
In these troubled times, an enlightened attitude to our responsibilities to future generations is imperative in business, if a company is going to survive. As such, we believe that this form of investment is mutually beneficial for both investors and society as whole.
After nearly five years advising on ethical investments at our company, it is still interesting to note that far too many investors with social, moral or environmental concerns have yet to make the link between their areas of concern and their money. The link is, in reality, quite simple; if you do not actively choose to invest in a socially responsible fund, most, if not all, of your concerns will be compromised by your investments. So,
Company: Virtuo Wealth Management Ltd Email: ask@virtuowealth.com Web: virtuowealth.com Address: 53 George IV Bridge, Edinburgh, EH1 1EJ Telephone: 0131 225 3543
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Winners Directory Business Elite CEO of the Year 2016 Company: ADVFN PLC Email: clemc@advfn.com Web Address: http://uk.advfn.com/ Address: 26 Throgmorton Street, London EC2N 2AN Telephone: +44 (0) 207 0700 961 Business Elite CEO of the Year 2016 Company: Crescent Petroleum Email: mail@crescent.ae Web Address: www.crescentpetroleum.com Address: P.O. Box 211, Corniche Al Buhaira, Sharjah, United Arab Emirates Telephone: +971 (6) 572 7000 Business Elite CEO of the Year 2016 Company: Maria Mallaband Care Group Ltd Name: Philip Burgan Email: sarah.shone@mmcg.co.uk Web Address: www.mmcg.co.uk Address: Westcourt, Gelderd Road, Leeds LS12 6DB Telephone: 0113 2382690 Business Elite CEO of the Year 2016 Name: Kelvin Kirby Company: Technology Associates Limited Email: info@techassoc.com Web Address: www.techassoc.com Address: Technology House, Shottery Brook Office Park, Timothy’s Bridge Road, Stratford-upon-Avon, Warks CV37 9NR Telephone: +44 (0) 1789 292 150 Business Elite 2016 Company: Moneyweb Limited Name: Paul Robinson Email: paulrobinson@moneyweb-ifa.com Web Address: www.moneyweb-ifa.com Address: 11 Betton Business Park, Racecourse Road, East Ayton, Scarborough, YO13 9HD Telephone: 01723 378234
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Business Elite MD of the Year 2016 Company: Delivered Health Solutions. Ltd Name: Barbara McCall Meeks Email: Barbara.meeks@deliveredhealthsolutions.co.uk Web Address: www.deliveredhealthsolutions.co.uk Address:The Bridge Business Centre,Cheshire House,Gorsey Road, Widness,WA8 0RP Telephone: 0151 422 9335 Business Elite MD of the Year 2016 Company: Hunters Solutions Limited Name: Mark Hunt Email: markhunt@hunterssolutions.co.uk Web Address: www.hunterssolutions.co.uk Address: 15 Fish Street, Northampton, NN1 2AA Telephone AND 01604 621110 Business Elite MD of the Year 2016 Company: Wick Hill Ltd Name: Ken Ward Email: info@wickhill.com Web Address: www.wickhill.com Address: River Court, Albert Drive, Woking, Surrey, GU21 5RP Telephone: 01483 227600 2016 Tax Firm of the Year Company: Lamont Pridmore Name: Graham Lamont Email: info@lamontpridmore.co.uk Web Address: www.lamontpridmore.co.uk Address: Offices throughout Cumbria Telephone: 0800 234 6978
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Copperstone Capital is an investment management firm founded in 2009 with offices in Moscow, Russia and London, United Kingdom. We manage wealth for high net worth individuals and institutions through various hedge fund strategies. 16 Sadovnicheskaya Street, Moscow, 115035, Russia T +7 495 988 0010 F +7 495 951 1410 www.copperstonecapital.com
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