Exclusive: New Paris boutique reveals ambitions, launches first fund

clock • 6 min read

Paris-based asset management firm Sepiam was established last October, following the approval of French financial market regulator AMF.

A trio of founding partners stands behind the launch of the boutique, including chairman Damien Grulier, chief executive officer and chief investment officer Yohan Kadri-Caillaux (pictured) and managing partner Sébastien Lippens.

Prior to co-founding Sepiam, Damien Grulier, who tallies 18 years of experience, has held roles of head of Risk Management & Quantitative Research at Exane BNP Paribas and Raymond James Asset Management International among others. His background also spans the software industry as he developed risk related softwares at Reuters and has been a co-founder of French carpooling service BlaBlaCar.

Grulier was a fellow colleague of Yohan Kadri-Caillaux, numbering 15 years’ experience, at Raymond James Asset Management International and Convictions Asset Management where Kadri-Caillaux worked as asset allocation and multi-asset portfolio manager.

Kadri-Caillaux started his career as an analyst at Richelieu Finance, where he met third Sepiam co-founder Sébastien Lippens, who made his debut in the asset management industry in 2004. Lippens served as a portfolio manager with Axitis and Compagnie de Gestion Privée – he was also partner in the latter company – and worked most recently as managing partner, fund selection head and portfolio manager at Brussels-based investment firm La Cambre Funds.

Sepiam, which means “secure and protect” in Latin, reflects the trio’s philosophy regarding asset management.

Speaking to InvestmentEurope, Kadri-Caillaux says: “Our professional backgrounds naturally led us to a combination of the best of the two worlds: the innovation of a fintech start-up and the family-office-like, tailored investment solutions approach. In fact, we did not want to oppose styles or methods because we believe that these are both cyclical. Therefore, flexibility is key for us to uncover value continuously where it stands, as opposed to follow a particular index or investment style.

“Hence, we define Sepiam’s philosophy as quantamental: Building portfolios that combine the strengths of all management styles, using in-house quantitative tools for data analysis purposes with a fundamental approach. Big data and quantitative analysis tools do support investment decisions but we have the final say through our picking.”

First fund focused on European small caps
Sepiam has started its mandate management activity and is on the brink of launching a French Sicav, Sepiam Funds, at the end of February. The first sub-fund of the Sicav will be named Sepiam Europe Small Caps and will be jointly managed by Grulier and Kadri-Caillaux.

The pair will deploy a proprietary investment process allying advanced technologies and fundamental analysis, for a portfolio of around 70 positions. A key advantage of the strategy, according to Grulier and Kadri-Caillaux, remains its unconstrained approach regarding styles, sectors, countries or benchmarks.

“We have decided to focus firstly on European small caps because we have a huge investment universe of around 2,000 names, meaning lots of opportunities to exploit. We apply a liquidity filter and remove stocks which have not enough floating trade volume to avoid any liquidity bottlenecks.

“Sectorial filters can be implemented as well if the macro view is bad for a particular sector. Each stock is rated and ranked through diverse factors, providing a smaller list of names for the fund. We then apply a fundamental approach to make our stock picking,” explains Sepiam’s CEO and CIO.

The boutique targets both institutional clients and private clients directly and indirectly through French IFAs (CGPIs) and family offices. It is also in the process of opening an office in Brussels during the first quarter of 2018 to target Belgian private clients.

As for Sepiam’s discretionary mandate management business, it relies on open-architecture to a broad extent, as it selects external funds and ETFs, depending of the alpha that can be generated on specific asset classes and strategies.

“In the case of US large cap equities for instance, we would rather favour ETFs which, in our view, shall not be seen as solely passive investments. In fact, the emergence of thematic, smart beta and factor investing products has shed a different light on the role of ETFs,” Kadri-Caillaux points out.

Outlining the firm’s present exposure, he says Sepiam keeps a positive stance towards equities and is diversified in terms of geographies (US, emerging or other developed countries), while favoured sectors include technology, financials, services, industrials as well as certain thematics such as robotics or pricing power.

“In the scope of a diversified portfolio, we would add other strategies or asset classes to this strong equity exposure. These include, but are not limited to, high spreads credit sectors such as subordinated debt, and/or flexible emerging market debt,” adds the boutique’s CEO-CIO.

Asset management 3.0
Launching a new asset management company often goes together with the implementation of innovative models and processes.

Hence in order to stand out of the crowd, Sepiam has fully embraced the digital revolution taking place in the asset management industry. Kadri-Caillaux argues the sector has entered a new era in which technology is unavoidable and essential.

“To that end, we have set up Sepiam as a 3.0 asset management company. Sophisticated tech is core to all our processes from idea generation to performance, data and risk analysis but not solely. We are only a boutique sized company; consequently, we have designed our own software in a way it could fulfil all middle and back-office functions as well as high-end customised reportings. Having automated this enables us to work efficiently at a much lower cost. We save a tremendous amount of time,” expounds Kadri-Caillaux.

And the ‘secure and protect’ motto that is at the heart of Sepiam’s founding trio finds its place as well in the very details of the manager’s process.

“As previously said, we have developed the company’s working platform internally . All three of us have a long track record in the asset management field and we have strong tech knowledge. Therefore, based on our previous experiences, it was easier to meet our needs in terms of setup and design of the platform (more than if we had asked an external developer with no experience in asset management).

“Our platform is online with the latest technologies of cyber-security and high availability: double authentication with a mobile key number, geo-redundancy, pro-active monitoring of intrusion attempts automatic recovery in case of disaster,” lists the company’s CEO-CIO.

Kadri-Caillaux adds regulation tightening has been another reason why Sepiam embraced tech in its processes.

“If you are under equipped on the tech side, good luck in being compliant with Mifid II rules and the other directives implemented recently. Adaptation to such texts remains costly. We observe that a majority of French asset management companies have yet to toggle in the tech world. At Sepiam, we have a better management of our costs thanks to the platform we designed,” the Paris-based boutique’s CEO-CIO suggests.