The UK/US investment banking and asset management outfit GP Bullhound said it has been approved to be a Luxembourg alternative investment fund manager, and has opened an office and will consolidate its private equity fund operations in the grand duchy.
GP Bullhound has had grand duchy-domiciled investment vehicles since 2017 and had been using a third party AIFM to help run the funds. It will now take all functions in-house at its newly opened Luxembourg location.
The switch goes slightly against the grain, as assets under management and staff numbers at third party managers in Luxembourg have been growing steadily in recent years, in large part driven by the UK’s decision to leave the EU.
Searching for speed
The company sought the AIFM license to “manage its own funds and be in complete control of the entire investment process--from distribution to final exits,” it stated in a press release.
Operations are simply “not the same when you have full control of your own funds,” Alek Jakima, director and conducting officer at GP Bullhound’s Luxembourg office, told Delano in an interview prior to the announcement. “I’m not saying we faced challenges, per se. But if we needed to sign a deal, or get it done very quickly--and actually the way we operate sometimes requires very fast decisions--we are not dependent on anyone else.”
In addition, being an AIFM “helps us with marketing,” he said. “A big part of our activity is driven from the UK. So, of course, Brexit was a kind of a bottleneck for us in terms of fundraising. Now we can do this on our own from Luxembourg.”
It likewise allows more flexibility on structuring vehicles. “We can really design the funds the way we want, not the way the provider preferred. It’s not that our providers were not happy to do things in the way we wanted. They didn’t always have knowledge or expertise to do so.”
Speed and flexibility were the decisive factors for seeking the AIFM licence, but not cost. “I would say it’s cost neutral,” Jakima commented.
Advisory and investments
GP Bullhound’s original business was in investment banking, advising technology companies in Europe, the US and Asia on “fundraising, structuring, M&A, etc.” It then started providing asset management services separately, in the private equity space. The PE segment will be the main--but not only--focus of its Luxembourg office. “We are looking for an investment banker to join us in Luxembourg... to advise local tech companies.”
Its new Luxembourg location already has six employees, a figure that could rise to eight or nine by the end of the year, Jakima said. Among the other roles to be recruited is a new portfolio manager.
The firm specialises in the technology sector, and in particular internet and software companies, such as those in digital media, e-commerce and fintech. It invests “in the growth phase... so in the companies that are already on the market that we believe are or will very soon become market leaders.” The 22 year old firm’s notable exits include Spotify, Slack and Busuu, with Revolut, Klarna and DuckDuckGo currently in its portfolio.
The technology sector is “where we are most experienced and where we have access. The companies we’re dealing with or investing in, never at the same time, are tech companies in Europe.”
From Jersey to Luxembourg
It has €1bn in assets under management across all its vehicles, namely several investment funds and unregulated co-investment vehicles, and a special purpose acquisition company. Roughly €50m is domiciled in Jersey, with the rest in Luxembourg.
Its funds are closed-ended with a maximum 10-year lifespan. When the last Jersey-based vehicle closes, all the firm’s funds will be domiciled in the grand duchy, Jakima stated. “We started in Jersey, then we moved to Luxembourg. And now you can see we are quite committed to Luxembourg by setting up our own shop here. All the next funds will done from here.”
The company said that the launch of two new funds--GP Bullhound Credit Solutions and GP Bullhound Fund VI--“is just a few weeks away.”
The firm attracts the standard set of institutional investors, such as pension funds and family offices. But one twist is the large number of wealthy techies among its investor base. They have either dealt with the company themselves or know it by reputation. “We are very proud to be a really big asset manager for tech entrepreneurs in Europe and in the US.”
Global fund hub
The company stated that its Luxembourg office will serve as its “operations and compliance centre focusing on fund management activities, such as portfolio and risk management and valuations, marketing of new funds and local investment banking activities.” Jakima said the local operation will support the firm’s investments wherever they are: “We will cover asset management for GP Bullhound globally.”
The firm received its AIFM authorisation from the Luxembourg Financial Sector Supervisory Commission (CSSF) on 9 March and formally announced the start of operations in the grand duchy on 4 April.
The company also announced on Monday that it opened an office in Zurich. GP Bullhound said it had roughly 150 staff at its 12 sites. The firm’s other offices are located in London, San Francisco, New York, Paris, Hong Kong, Berlin, Stockholm, Madrid, Manchester and Marbella.
The firm wants to have a substantial role in Luxembourg’s technology community and “not just be an AIFM” in the grand duchy, Jakima said. It aims to “advise the whole tech ecosystem in Luxembourg, to be really present. This is very important for us.” GP Bullhound is “not just in Luxembourg because of Brexit.”