Rolland says NewAlpha’s selection process for seedings has evolved as its activity as emerging managers’ incubators includes now a larger perimeter.
“Our initial DNA was to back emerging hedge funds and alternative firms through seedings. But we have seeded 5 long-only strategies since then and among them, some have been awarded in France only one year after we seeded them,” he argues.
“Originally, NewAlpha AM’s scope was rather on funds and managers which were just launched or were to be launched. Teaming up with Prime Capital proves that the situation has changed. We have enlarged our focus to include more established managers seeking acceleration capital for existing or new products and support for their development,” Rolland adds.
Over the coming months, two partnerships, with potentially one focusing on SRI, and three fintechs investments could be soon announced by NewAlpha.
Also, the firm has plans to launch a second private equity fund.
NewAlpha currently tallies 28 active partnerships with companies managing some €10bn in assets.
It makes four to five seeding deals a year and that volume is set to rise.
Regarding the outlook for the rest of 2016, Prime Capital’s Weber believes volatility will likely last over the coming months given the macroeconomic uncertainties we are facing.
“If we look globally at alternative strategies, we are most concerned about illiquid securities, be it in emerging markets or in certain types of structured products for instance. A repricing did not occur there the same way it happened recently in equity markets.
“What matters for our strategy is less the direction of one particular market but having a good risk decorrelation across asset classes,” he says.
NewAlpha’s CEO Rolland points out that a lack of visibility currently characterises markets and spots a divergence between a negative macro outlook and a favourable micro sentiment.
“On the one hand, central banks seem helpless to resolve market issues, managers speak of a switch in market regime and that goes along with political uncertainty and volatility on commodities . On the other hand, energy prices are low, as are interest rates and stock valuations are not that expensive,” he comments.
“On top of that divergence, volatility sustains in financial markets because of the liquidity issue. By seeding Prime Capital’s strategy which has been resilient in the market turmoil, NewAlpha is in the right place at the right time,” Rolland concludes.