Tuesday, 31 May 2016
Last updated 3 days ago
Jul 8 2013 | 1:30pm ET
Daniel Rummery acknowledges that with tens of thousands of protesters in the streets and the stock market in the basement, the “timing could have been better” for the launch of a Brazil-based placement agent, but his official announcement struck an optimistic note:
“Despite current troubling economic times, we at LatAm Capital are very excited about the resulting distressed and credit opportunities emerging from recent market turmoil which has opened a whole new wave of possibilities.”
Rummery moved to Brazil about 18 months ago to found LatAM Capital, leaving New York-based Ridgeway Capital, a boutique placement firm he co-founded in 2007. Before that he worked with TARA Capital, a European hedge fund marketing firm. Over the course of his career he has raised $1 billion for Brazilian managers.
“[I]f you're a New York placement agent,” Rummery told FINalternatives in a recent phone interview, “you're always stumbling around to try to find the next good fund that you can work with because it's very hard to get a New York-based manager which has $2 [billion] or $3 billion in assets and a five-year track record that wants to use a placement agent.”
In Brazil, on the other hand, Rummery has found “a select number of managers” who have raised a “seriously phenomenal” amount of money and yet are unknown offshore.
“I thought 'There's a really nice arbitrage here.'...These managers,...many have developed really big businesses with $2 [billion], $3 [billion], $5 billion in assets which supports large teams, which means they're institutional and largely much more investable than a brand new hedge fund from New York with only $100 million.”
Brazil, says Rummery, does not have a “big divergence of strategies,” so São Paulo-based LatAm tries to “cherry pick the best...the most institutional ones, the ones that we can work with.” Right now, that means four Brazil-based managers: Advis, GAP Asset Management, FinVest and JIVE.
Although a $25 million placement with a long-only manager on behalf of a pension fund on May 1 has “not done well,” and Rummery estimates appetite for equity-based Brazil managers as “low to negative,” he feels there will be a turnaround, perhaps “in the next six months.”
In the meantime, LatAm has shifted its marketing efforts toward non-performing loans—a “unique space” in Brazil—and toward its secondary business: working with Brazilian family offices and pension funds looking to increase their international exposure. Rummery says that Brazilians recently freed from cumbersome restrictions on investing abroad and seeking exposure to different markets are looking to big, liquid, U.S.-based managers, “the macro guys, the money strategy guys, the equity guys.”
LatAm raises capital for both funds and direct transactions and although now rather Brazil-centric, its area of operations includes Mexico, Columbia and Peru and it is involved in all major alternative asset classes, including private equity, real estate, real assets (infrastructure, energy and natural resources), credit and liquid products.
LatAm Capital is currently a five-person operation. In addition to Rummery, there's Michael Kilian, vice president of sales; Andrew Billington, head of UK sales; Mayuri Mehta, operations; and Marina Porto, investments and research.
Despite the current market turmoil, Rummery says the opportunity set represented by Brazil is “phenomenal.”