Banking

The Big Interview: Algebris’ Lasagna on upcoming launches, reaching UK investors and bridging cultural gaps

Alex Lasagna first joined Algebris – a London-based asset manager specialising in financials – in 2010, just one year after the global financial crisis reached its peak.

The now-deputy CEO, who had been on the company’s board as a non-executive director since 2006, was asked by founder and CEO Davide Serra to become directly involved in the business four years later in a bid to diversify it away from a “one man, one fund outfit”.

Argonaut’s Norris: Everybody loves an uncorrelated return when the market goes down

“Algebris started off in the days when financials and long/short equity funds were still very much in vogue, but by 2010, further business diversification was needed,” Lasagna says. “A very large chunk of our business is in credit or financial institutions, and this was the case during one of the worst bear markets for financials we have seen.

“From 2008, then we saw the European debt crisis some years after. I have the scars on my back from seeing AUM dwindle. But, it has distinguished the diversification of the business.”

Algebris, which now has more than €17bn of assets under management, had its “first lightbulb moment” when, in addition to covering the capital structure of financial institutions across equity and credit, the firm decided to launch a subordinated hybrid credit fund for financial institutions.

“Back then, it wasn’t an obvious move, because we still did not have the backstop of central banks, providing liquidity to banks – so credit was just as risky as equity,” Lasagna explains.

“That ended in 2011 when the backstop came in the form of LTRO and then TLTRO [long-term refinancing operations and targeted longer-term refinancing operations], which isolated debt from equity and meant it became more sustainable.”

It was then that Algebris began raising assets substantially, according to the deputy CEO.

“In 2012, when we had €600m to €700m in assets, we managed to convince a very large institutional investor – a family office and one of the top gurus in the industry – to get his feet wet with us. He gave us €500m, which we turned into €800m for him, so he was a very happy camper.”

This led to Algebris diversifying its suite of funds to include unconstrained global credit and Italian equity vehicles, as well as investing in non-performing loans secured by residential real estate assets in Italy.

Bridging the cultural gap

Perhaps most importantly, it allowed the firm to launch its UCITS fund platform, which Lasagna says was “very much his type of business model” following his time as product specialist at Merrill Lynch Investment Managers.

Following roles at Bologna-based think tank Nomisma and JP Morgan in Milan, the Anglo-Italian was employed by Merrill Lynch to “bridge the cultural gap” between the brokerage and Mercury Asset Management following an acquisition in 1997 – the former of which Lasagna describes as “very much a brokerage with an American culture” and the latter of which he says was “a blue-blooded, Anglo-Saxon business”.

Sanford DeLand’s Brotherston: ‘We don’t want to be the biggest, but we want to be the best’

“I grew up between the UK and Italy. I had an English grandmother who had a very strong influence on the family, and so we all ended up at school in the UK, which is where I then spent most of my working life as well, typically acting as a bridge between the two cultures,” he explains. “This extends beyond being able to speak different languages; it is the cultural elements rather than the bilingual elements that are key – and these skills still help me today.”

Since Lasagna joined Algebris, it has opened offices in Boston, Singapore, Milan, Luxembourg, Rome, Tokyo and Dublin. It also has six UCITS funds available.

However, the firm’s current focus has returned to the UK – where its headquarters resides – as a “strategic growth market”.

“It is an investment hub; there is an enormous amount of intellectual capacity [in the UK] that still attracts talent on the management side. It will continue to be our hub,” the deputy CEO says.

“What it hasn’t got any more, however, is the passport into Europe. So, we have had to move away from the UK into Ireland for our passports, in that we have an Irish ManCo, we have Irish products, and they are all predominantly managed out of London. So, from that point of view, our business model hasn’t changed at all.

“The UK is a huge market and it’s a market that is more attracted to equity income and dividend yield, rather than continental coupon income credit deals, so the UK market is a great diversifier for us.”

Additionally, Lasagna points out there are now 57 people in Algebris’s London office, and therefore a “significant presence of high-calibre people”.

“There is no reason why we can’t raise assets [in the UK], we just needed somebody to go out and introduce the products in the right way,” he continues. “And now, we have some significant firepower behind us.

“While Covid has been terrible in many instances, it has acted as an accelerator in terms of our digital footprint and our efficiency. The lockdown has allowed us a bit of rest and to get our ducks in a row before we go out all guns blazing in September.”

New trust launch

One of the biggest plans for September in the pipeline for Algebris, according to Lasagna, is the launch of a closed-ended, private equity-style impact fund, which will be able to invest up to 10% of its portfolio in venture capital and will have a strong bias towards green technology.

“There are four themes that we want to look out for. One is renewable energy and infrastructure of the future. The second is recycling, from water to plastic, and which technology can help us to recycle existing material.

“The third is smart cities, which is a huge theme all to do with sensors in cities and will help optimise everything from traffic lights to parking in order to reduce wastage. Then the final smaller theme, which we are very excited about, is tech in agriculture; the use of drones and biological fertilisers, as well as solutions to reduce water wastage. “

The vehicle will be headed up by four people – three of whom have come from one of Italy’s largest utilities companies. While thee employees have already joined the team, Lasagna expects them to ultimately hire a pan-European team of between seven and ten people as the trust spends its first 12 months raising capital.

“In some cases, the technology we will be invested in still hasn’t been invented yet, so why we want to keep an eye on the fund’s size and see how fundraising over the 12 months goes. Somewhere between €200m to €300m is probably the right target size, then we will see how it builds from there,” he says.

“Algebris will be seeding this new green fund with €50m of its own capital – that is how much we believe in this strategy.”

Looking beyond September, Lasagna says he will adopt the same philosophy of hiring “top-quality people” to expand the firm’s reach and presence, and to communicate the message that while Algebris is a financial specialist firm, it also now offers a wider remit of products available to investors as UCITS vehicles.

“We are growing, we are investing in that growth, and we want to keep hiring the right people both on the sales and investment side of the business,” he concludes.

“I wouldn’t call what we do niche or narrow, but it’s certainly not a generalist approach. This has worked well for us, because we don’t do a million things, but the ones that we do, we, we tend to do well.”

Most Related Links :
todayuknews Governmental News Finance News

Source link

Back to top button