Pavilion expands global reach

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This article was published 29/06/2016 (3566 days ago), so information in it may no longer be current.

It may prove to be good luck — hopefully not folly — for Winnipeg investment advisory firm Pavilion Financial Corp. that it announced its first European acquisition two days after results of the Brexit vote.

Employee-owned Pavilion — founded by Assante Capital founder Marty Weinberg in 2006 — has acquired London-based Altius Associates Ltd. along with its Singapore operation just as the European and global markets were reeling from the British vote to exit from the European Union with all the uncertainties that entails.

Altius and Pavilion’s Sacramento, Calif.-based LP Capital Advisors will be rebranded as Pavilion Alternatives Group.

The Altius deal, Pavilion’s fifth acquisition since 2010, is part of a methodical growth strategy at the company.

Daniel Friedman, president of Pavilion Financial Corp., the Winnipeg-based parent company, is responsible for leading its growth strategy.

“Our overall objective is to be able to provide a comprehensive generalist and specialized investment advisory service primarily to institutional investors,” he said.

Pavilion provides advisory services for the management of about $570 billion worth of its clients’ assets — give or take a few billion, Friedman said.

In addition to the alternative asset advisory business, Pavilion operates an advisory group that focuses on traditional asset classes, and a research and agency trading operation. The latter function — which executes about $50 billion worth of trades every year — does so only on behalf of its clients.

The firm also operates a family wealth management business for ultra-high net worth individuals in Canada from offices in Winnipeg, Montreal, Edmonton, Vancouver and Toronto.

Pavilion earns a fee for service for advising institutional investors on the best way to allocate their funds. It researches fund managers and, in some cases, will operate as an outsourced chief investment officer.

The latest acquisition expands the firm’s geographic reach into Europe and Asia in the more specialized alternative assets advisory business. That asset class now represents about $60 billion of the $570 billion in total assets it provides advisory services towards.

Many of Pavilion’s clients are pension funds that would allocate from five per cent to 20 per cent of their assets into the so-called alternative assets class, which include private equities and private equity funds, real estate, real assets (such as timber) and hedge funds.

Because they are private assets and more illiquid, there are greater complexities involved in the management of those assets.

‘It is obviously more and more of a global economy when something in England impacts the entire globe’– Donn Cox

“When we set out to do what we were going to do we said to ourselves, ‘Here are the things we believe we need in order to do an even better job for our clients as well as to diversify our client base and have a real value proposition for institutional clients that require these areas of expertise,’” Friedman said. “And one of the key areas we identified was building and developing a specialized advisory platform for alternative asset classes.”

Donn Cox, the Sacramento-based head of what will now be called Pavilion Alternatives Group, said he’s already received 10 invitations from fund managers to discuss the Brexit implications.

“It is quite interesting,” he said in a telephone interview from Los Angeles, where he was attending the annual investor day for the large U.S. private equity fund KKR Co. LP. “It is obviously more and more of a global economy when something in England impacts the entire globe.”

Cox said such market downturns create particular opportunities in the alternative asset markets whose best performing vintage years — the year when funds are invested — were 2009 and 2010, when the public markets were lagging badly.

Pavilion does not manage any of its own money and Friedman said while it has peers in the industry, it offers a highly specialized service.

“In the context of an employee-owned firm, we do believe we have a very special offering,” Friedman said. “On the one hand, we are diverse and supported by a lot resources that the clients require and are asking for, and at the same time we operate as an employee-owned firm that is entrepreneurial and has an entrepreneurial culture.”

martin.cash@freepress.mb.ca