AMWatch

Qblue Capital aims to conquer the world

Former ATP CIO Bjarne Graven Larsen's new asset management firm Qblue Capital has major international ambitions: "Others will end up copying us."

Photo: Carsten Bundgaard

When the now defunct FIH Erhvervsbank initiated a major strategic shift five years ago, it sold off its entire corporate loan portfolio and thereby effectively terminated itself, one of the bank's two co-CEOs began to think in a new direction.

Those ideas has now led to the founding of asset management firm QBlue Capital, with Bjarne Graven Larsen as majority stakeholder holding 52 percent ownership -- the remaining shares are distributed among five partners, all of which used to work for Danish pension fund ATP.

Now the firm aims to conquer the world.

"Our ambition is for QBlue Capital to set a new industry standard. Others will end up copying us. We will become a leading global player with a systematic approach to asset management," Graven Larsen tells AMWatch's sister media, FinansWatch, in an interview.

Graven Larsen spent more than three years of his accelerative career in FIH, and before then he made a significant impact on the global investment milieu serving as Chief Investment Officer for ATP.

Inspiration from ATP years

ATP's idiosyncratic capital management structure, optimally insulated against external shocks and risk factors from both equity and fixed-interest markets as well as inflation, resulted during Graven Larsen's CIO tenure in a flood of IPE awards.

However, what if one could utilize the best methods of ATP's systematic approach, concentrate solely on listed asset classes and offer global pension funds a comprehensive, funds-based package?

Those were the thoughts of the former FIH executive five years back. The idea remained an idea at the time, and Graven Larsen continued his salaried career within organizations such as Novo A/S and Canada's Ontario Teacher's Pension Plan until the summer of 2018.

"What we built up in ATP and Ontario -- it can't be found elsewhere. Throughout the years, I have been asked many times about how things might be structured, if our structure were to be reproduced. However, there aren't any solutions on the market," says Graven Larsen, who each day considered starting his own operation.

Began with a meeting in Sweden

"During a few months in Canada, when I again had the time to pause, my old business plan once again began to stir. Then Fredrik Martinsson contacted me about an entirely different project he was engaged with and requested my help. So, we agreed to meet in Malmö as soon as returned home in the summer of last year," he tells.

Martinsson served in various leading roles at ATP's investment division and cooperated with Graven Larsen, who, as CIO working under the current Danish central bank Governor Lars Rohde, held the executive responsibility for ATP's aggregated capital.

"The idea for QBlue Capital started right there during our meeting in Malmö," he says.

As soon as the final approvals from Denmark and Luxembourg are settled, the firm will be ready to launch its first fund, which curates 12 different strategies across markets for equities, bonds, currencies and commodities.

The fund is completely market neutral and will thus, for instance, balance between short and long equity positions. Returns will be harvested from a quantitative and systematic selection of 'buy' and 'sell' positions, resulting in a "alternative risk premium," -- and Graven Larsen guides for 5-6 percent in annual rate of return.

The fund's risk budget will run parallel to a balanced portfolio with 50 percent exposure in equities and bonds, respectively.

QBlue Capital plans for its first fund's alternative risk premium strategy to be marketed and sold after the summer bank holiday to a global audience of institutional investors -- primarily pension funds -- from throughout the world.

Additional funds en route

This construction might seem to be minted from the same mold used by ATP's scrapped Alpha division. However, QBlue is conceived in a 'broader" sense, Graven Larsen discloses.

The firm's administrative setup is inherently scalable and Graven Larsen thus expects that the first fund will attract EUR 2.7bn in AuM over time, and it will then begin a soft closing, meaning that only exsisting investors will have the opportunity to inject more capital.

"We have given much thought to the whole asset management market. Even though the sector is under pressure, we offer a product that can render us a leading global player. We have a clear plan for launching the subsequent funds," Graven Larsen reveals.

Pressure on conventional asset managers comes both from passive index strategies in the form of exchange traded funds as well as demand for more alternative investments in, for instance, private equity and infrastructure.

Squeezed prices

One consequence of of all this is that investors are no longer willing to pay the same active management fees -- a development that Graven Larsen, ironically, played a highly significant role in effectuating as a buyer of investment products.

"Indeed, I am getting a dose of our own medicine," he says with a grin, adding:

"Similar funds typically have an annual ongoing fee of 2 percent plus a performance-related surcharge of 20 percent. I have have seen many fine products over the years, managed by capable people. But it is simply too expensive. Our prices will lay substantially lower than the major international funds," he says.

Although the final price structure is not yet finalized.

Systematic sales process

As soon the relevant authorities have granted their final approvals and the fund is able to launch, QBlue expects to raise further capital to cover increased costs for the period until its first clients bite the hook.

"I will personally take part the in the sales process. But familiarity with the right pension funds is not enough, nor is knowing exactly whom to contact within the organization -- that does help, of course. However, we are obliged, also within this field, to take a systematic approach to broaden our reach by as much as possible," he says.

English Edit: Daniel Frank Christensen

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