Bramdean Asset Management chief executive Nicola Horlick is in the middle of a whirlwind UK tour prom-oting new venture Bramdean Alternatives Limited. From Glasgow to Southampton, the woman who made her reputation in UK equities has been promoting alternative investment.
She says: “It is a Guernsey-based investment company with a full listing in London. It will be the first vehicle ever to invest across private equity, hedge funds, real estate, commodities, infrastructure, anything that we think we can make money out of for our investors in fund form.”
Horlick is bullish on the opportunities in alternatives, feeling the time is right. She says following the example of high net-worth and ultra-HNW investors who diversified into commercial property before the rest of the retail market, the same pattern will be played out in alternatives.
“Just as after the last bear market, people were looking for areas to diversify into and chose property, now property has become completely mainstream. I see the same happening with private equity and hedge funds. You will see the same trends in the portfolios of the mass affluent as we have seen with high-net-worth investors.
“In the high-net-worth market four years ago, they had only 10 per cent in alternatives. This year, CapGemini is predicting a rise to 22 per cent and for the ultra-high-net-worth market 24 per cent. There is no reason why the mass affluent should not also have access to this market.”
But Horlick says to access some of these areas, mass-affluent investors need to use a pooled investment vehicle. “To get access to a private equity fund such as Terra Firma, you would need between £10m and £20m.”
Horlick says the links that Bramdean has forged with leading private equity firms means investors will be able get access to private equity managers with proven track records. “If you look at the performance of private equity over a 20-year period, the top-quartile funds have done 23 per cent a year but the bottom-quartile funds have only managed 4 per cent. It is absolutely vital to get into top-performing funds.”
Horlick says Bramdean Alternatives has links with some of the leading private equity managers such as Guy Hands’ Terra Firma and Thomas H Lee. To secure access, BAL has already committed £100m to six leading funds.
She says the selection of the right hedge funds for the new firm is going to be a key area. BAL has formed a partnership with RMF, part of Man Group, to run the hedged allocation. This will give access to funds that are otherwise closed to new investment.
Horlick says she is pleased that the FSA is allowing retail investors access to alternatives, realising that this is not something it can stand in the way of, nor should it, given the returns available.
But she says access should be restricted to funds of funds or vehicles like her own as it is “too complicated and too difficult” for people to enter on their own.
She says investors should be more wary of the vast number of funds than the risk and people should consider far more than the 10-15 per cent allocation normally cited.
“I would have 50 per cent, personally. I regard this as much less risky. There is an awful lot of rubbish written about hedge funds. A properly constructed one should underperform a bull market but massively outperform a bear one,” she says.
BAL will invest around 50 per cent in private equity, 30 per cent in hedge funds and the remaining 20 per cent in other alternatives such as structured finance and leveraged real estate funds outside the UK. This will break down as 20 private equity funds, 10 hedge funds and five or six specialist funds.
“We are looking to have 30-40 positions so it is very concentrated. I have always run my portfolios in a very committed way.” Otherwise, she says, you “diversify away too much risk, ending up with lacklustre performance”.
In addition to direct investment in the UK listing, investors can also invest in the new company through Axa International’s offshore bond, which she says will be attractive to IFAs and their clients.
“It is a very good provider, creating an outstanding product, the likes of which does not exist at the moment,” she says.
BAL will also have an international feel and Horlick has been touring the Middle East and Far East promoting the firm. She says it is important for the liquidity of the share price to have a wide spread of investors.
The initial placing closes at the end of this month and the official target is between £75m and £250m. Horlick says: “Hopefully, we will raise £250m.”
If it hits this target, it would be the biggest amount raised by an alternatives fund at IPO.
“If we raise £180m, I am sure everyone will say ‘oh, it is a desperate failure’ but that will be the biggest fundraising in the alternatives space.”
She also has big plans for the specialist wealth management service for women, Bramdiva. Surprisingly, this involves the Middle East, where she says there could be up to £40bn in the hands of women who cannot get advice.
Horlick is frustrated by the Superwoman tag she has been landed with. “Do people write about a man and say what age he is, what clothes he is wearing or how many children he has? No. I have a great passion for my business. What I do in my private life is up to me.”
She wants to encourage younger women into finance and show that they can have a career and a family but she says this is separate from running Bramdean.
“We are not just making a German bank or a French bank rich, we are making ourselves rich. At the end of it, we can give it all to charity if we choose.”
For someone worth an estimated £20m, Horlick says the money has become less of an incentive. “I just like the intellectual challenge,” she says.
Born: Nottingham, 1960
Education: Cheltenham Ladies College and Balliol College, Oxford LLB
Career: 2004 to present: chief executive, Bramdean Asset Management; 2002-2004: chief executive officer, SG Asset Management (UK); 1997-2004: joint managing director, SG Asset Management (UK); 1992-1997: managing director, Morgan Grenfell Investment Management; 1991-1992: director, Morgan Grenfell Investment Management (UK business including private clients); 1989-1991: director, Mercury Asset Management (UK pension fund business); 1984-1991: Mercury Asset Management, joined Leonard Licht’s team as trainee fund manager (worked with Leonard until she left MAM in 1991); 1983-1984: graduate trainee, SG Warburg; 1982-1983: sold animal foodstuffs for family business Roy Wilson, Dickson Ltd
Likes: Skiing. It is the only time I ever really manage to get away from things
Drives: BMW X5
Book: The Alchemist by Paolo Coelho
Film: Four Weddings And A Funeral
Album: Dark Side Of The Moon by Pink Floyd
Career ambition: I am very lucky to reach the top of my profession at a very young age, partly because I was fortunate enough to work for an employer that was very meritocratic. I am now in the situation that I am not motivated by money, I am motivated much more by the intellectual challenge.
If I wasn’t doing this I would be… Running another fund management business but I have a great interest in broadcasting, particularly radio, so maybe a presenter on Radio Four, maybe Women’s Hour