Established in July 2020 during a global pandemic, investment platform Titanbay has since seen its staff headcount jump from less than a handful to count nearly 50 personnel.
The London-based platform seeks to connect investors with either no or very limited access to the private market with top-tier private market funds.
While major institutions with long-term relationships are able to participate in new funds, some of the top quartile funds represent the promised land for small and mid-sized institutional investors. This is either because of ticket sizes or the fact that they tend to be oversubscribed.
"Philosophically, the way we thought about Titanbay is that we want to enable more investors to access private equity and other private markets with the same degree as the leading investors," Titanbay's Chief Executive Officer Thomas Eskebæk says in an interview with AMWatch. says.
A data computer scientist by education, Eskebæk describes Titanbay as a next generation asset manager, combining traditional money management and technology through a platform that allows more investors to access to a slice of the USD 5.7trn that private equity firms have under management, according to a report by McKinsey.
We see the Nordics as a very interesting market, and as a market that is somewhat underserved in terms of private market access, and we believe we can add flavor to the investors across Nordics
Fund selection with Lego
Every year, Titanbay starts with a top down approach to get a strategically diversified portfolio suitable for the macro environment.
If everything goes as planned, investors subscribing to the platform will gain access to between 8 and 12 funds annually, and Titanbay plans to curate reviews of the funds and managers in each strategy annually.
It is the firm's head of investments Alex Bozogolu who decides which funds are in and out alongside the firm's four-person investment advisory board, which includes the CIO of the Danish Lego family office Kirkbi, Thomas Schleicher.
"We will probably reach 8 or 9 funds this year. We believe that this is enough to diversify our offering, but not to the level that we become a supermarket," Eskebæk says.
In 2021, the lion's share has been core buyout funds in the large and mid-cap segment alongside some more growth-oriented funds. The team can decide to go for opportunistic funds if special situations occur. Last year, the fund selection team opted for a distressed debt fund managed by Fortress Credit, for example.
When asked, Eskebæk says he is unable to mention other managers on the platform due to regulation, as they are still fundraising. However, there is a mix of large buyout strategies as well as more niche strategies including distressed and venture capital.
What does Titanbay do to prevent biases in the fund selection process?
"I think our structure doesn't allow that because we combine our own head of investments with an investment advisory board. That said, we don't feel it's an issue at all. Even though we build long-term relationships with some of the best managers in the world, that obviously doesn't mean that we won't assess from fund to fund. We're very pleased about the funds that we have managed to bring to the platform so far," he says and continues:
"In addition, we have a structured due diligence process that we go through with all funds, which reviews performance against a set of pre-defined criteria."
How much capital have you been able to pool for these funds?
"The latest one is about USD 40m and we're expecting to reach around USD 300m this year."
Do you consider this a satisfying first year?
"Yes, absolutely. We're quite pleased about our pace and what we have achieved, and we're now getting to the size where we can start to have conversations on a different level with GPs as well."
Strong ties to the Nordics
Eskebæk and Kirkbi CIO Schleicher are not Titanbay's only Nordic connection. In fact, co-founder and chairman of the board is Finnish Jussi Nyrola, who used to head up EQT in his native country, and now runs Talomon Capital, a long/short hedge fund based in London.
"Jussi [Nyrola] and I have known each other since 2013, and had been discussing different ideas. He comes from a strong asset management background at EQT, and I come from a more tech and computer science background while also having worked within asset management," Eskebæk says, referring to his previous roles at venture capital firms Oxx VC and Eight Roads, which is backed by global asset manager Fidelity.
To build Titanbay's presence in the Nordics, the firm hired experienced asset management business developer Jason Funk eight months ago to fill a position based in Copenhagen.
"We see the Nordics as a very interesting market, and as a market that is somewhat under-served in terms of private market access, and we believe we can add flavor to the investors across Nordics," Eskebæk says.
You say that access to private markets for small and mid-sized institutions is underserved. What do you base this on?
"It's a combination of what's available today, but also the fact that we have seen a big interest in high-quality private markets offerings. Being based in London, the small to medium-sized institutions and family offices in the Nordics don't have access to the same broad offering as in London, where there's a big opportunity range. At this stage, we don't see the same variety and opportunities as in London, and we believe that we can add flavor to that," Eskebæk says.
We think we can become well positioned to this global opportunity. For general partners, we add value by opening a massive underserved pool of capital from smaller institutions, and we're on track to reach our AUM target for this year
Don't buy into democratization logic
In recent years, the term democratization of private equity has appeared with increasing frequency as more investors considered how to operate in the low-yield environment.
While Titanbay does play into this theme, democratization implies that it fits everyone, and Eskebæk is under no illusion that the firm's services are not suited to all investors.
"We don't buy into that logic of democratization because it is a complicated asset class that needs to be part of a well-diversified portfolio. With that said, we do think more investors can benefit from private markets," Eskebæk explains.
He points to the fact that the relative size of the public market is decreasing while the opposite is true of private markets. This is partially due to small and micro-cap companies increasingly turning to private equity to fund their growth ambitions, which in turn tend to keep the companies under private control for longer.
One area where the firm sees strong potential for its services is within the wealth management segment.
"From our perspective, there are a lot of private banks and wealth managers that don't have a private markets offering today. We have designed ourselves to be extremely modular and flexible so we can fit into existing processes," Eskebæk says.
Titanbay writes that it provides small and mid-sized institutions and private investors access to private market funds with low minimums and low fees. This raises the question of how the CEO defines these.
"In terms of minimums, there's a lot of regulatory complications to that question – the most generic answer is EUR 125,000, but it's obviously determined by local regulations as well," he says, and continues:
"In terms of fees, we have strived to be transparent from the start. Our fee structure is 1 percent subscription fee and 50 bps management fee annually, and then comes the cost of running the underlaying funds. We don't receive commissions or kickbacks from the GPs."
Eskebæk states that this structure has so far been quite well received by the market, although Titanbay is not trying to become a price leader.
Will continue to invest in growth
Titanbay is venture backed by investors with experience from EQT, CVC, Morgan Stanley and one of the CEO's former employers in the form of Bain & Co -- and the company will keep investing significantly to scale its operations, Eskebæk underscores.
At the time of writing, the company has nine job openings.
"We think we can become well positioned to this global opportunity. For general partners, we add value by opening a massive underserved pool of capital from smaller institutions, and we're on track to reach our AUM target for this year," he says.
What is your AUM target for 2022?
"We do have AUM targets for next year, but I cannot share them. It's commercially sensitive information. Looking ahead, though, we see this an exciting opportunity for Titanbay and for investors, as access to private markets is a strong global trend, and making these investments available for a much broader set of investors is a global opportunity," Eskebæk concludes.
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