Coeli set for Luxembourg base as part of growth push
Coeli, the privately owned Swedish asset manager is gearing up for a significant change in its business focus to take advantage of the nascent European single-market opportunities flowing in particular from AIFMD, and is preparing a move to Luxembourg to grow its business, according to its Luxembourg-based managing director Johan Lindberg.
So new is his role that the company started its move towards business in the jurisdiction as recently as January 2013. It was still awaiting its local asset management licence in early March.
There are several key reasons for the move, Lindberg (pictured) says. One is that Coeli itself is moving along with changing market opportunities. Contact is increasing with institutional investors, in turn leading to discussions about where to best locate a platform for growth in mind of distribution, and ideas about how to create conditions to attract external teams should that be required to support growth.
The levels of expertise available in terms of other facets of asset management – administration and back office for example – also were important factors in opting for the building of a Luxembourg base, Lindberg suggests.
Looking ahead, there will be increasing opportunities in areas such as alternatives, thanks to implementation of AIFMD regulations.
A UK pension fund “for example, will probably not even begin the job of due dilligence on any Swedish so-called ‘special fund’ [as defined in Swedish funds law],” Lindberg says. However, once these funds become AIFs under AIFMD, it becomes a different matter.
One of the more ambitious prospects put forward by Lindberg is around the way he and Coeli plan to eventually effectively reverse the manager’s business back into Sweden from Luxembourg.
The usual work will continue in Sweden until the authorisation and licencing process is complete and in place for the Luxembourg business, Lindberg says.
Switch and reverse
However, once that is achieved,the business will be switched around.
“We will set up funds in Luxembourg and establish a new Luxembourg fund ‘ManCo’. That will mean the office in Stockholm becomes a branch to the new Lux Co,” he says.
The existing level of institutional investor interest experienced by Coeli means this is expected to generate additional sales.
“Many of them, we believe, will go into the products when the [Lux] licence comes,” he adds.
The development of the Luxembourg business is expected to result in more people employed in sales and distribution, although details on this are yet to be determined. The location is good in this sense, because Luxembourg authorities are positive about the funds industry, Lindberg says.
The next six months are expected to be about bedding in the business following its authorisation and licencing. The focus then will turn to issues of currency classes and new fund launches, most likely with a focus on absolute return products.
Having a Luxembourg platform in place also makes it easier to contemplate attracting alternatives, including hedge fund teams to the business. It will not be a platform for all, he stresses, but be particular in selecting its partners.
The idea of exporting business out of Sweden in this way is something that the Swedish funds industry will increasingly have to contemplate. The market is a mature one, so managers need to decide whether to stay or move out abroad.
One positive aspect about the Swedish market is that it does not make a huge difference whether the product is from Sweden, Luxembourg or elsewhere, as compared to other Nordic markets such as Denmark, where the local investment associations still dominate, Lindberg says.
Ultimately, the benefit of the Swedish market is that a Swedish manager can consider Luxembourg this way to attract capital to grow, without losing the ability to do business in Sweden.
Lindberg says Coeli is also confident because it believes it can offer something different via its platform than what is offered by the bigger universal banks, particularly because they are increasingly seen as index-like, rather than active managers.