Mercer Buys Fund Manager to Access Private Markets

Mercer is to buy a Swiss fund manager to expand its access to private markets, the company has revealed.

The consultant is to acquire SCM Strategic Capital Management, subject to regulatory approval, to expand its advisory and outsourced investment reach. SCM has invested $11 billion in private markets since its inception in 1996 and advises or manages portfolios with a net asset value of $4 billion.

“Increasingly our investment clients are seeking advice regarding alternatives investment strategy, either through a custom portfolio or a delegated solution,” said Phil de Cristo, president of Mercer Investments, adding that the company already had good reach in the sector.

In January 2012, Mercer announced a structure shake-up that would see it better poised to act as a fund manager on behalf of its clients, rather than just offer them advice.

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At that time, de Christo said: “Investments is a high-growth business for Mercer that has grown at a double-digit rate over the past nine quarters.”

This growth has continued with the firm today citing funds under management of $108 billion around the world.

Announcing the acquisition of SCM, de Christo said Mercer clients had been demanding more access to alternatives through its channels. This meant, de Christo said, that it would retain SCM’s investment team, based in Switzerland. SCM is a specialist in private equity, real estate, and infrastructure.

For its part, a note on the Swiss manager’s website said a “new chapter in the history of SCM” was about to start.

“As a result of the merger, SCM will be functionally integrated into the private markets business of Mercer Investments and the number of private markets investment professionals will increase from about 30 to about 50 globally,” the note—penned by the founder and CEO Stefan Hepp, and the CIO Ralph Aerni—said. “Besides staff in Zurich, London, and Frankfurt, the combined entity will have a significant presence in the USA where SCM has no offices to date. The Asian presence will be increased in Hong Kong and extended to Australia.”

After a quiet first few months the job, University of California (UC) Regents CIO Jagdeep Bachher has announced major personnel changes almost daily over the past several weeks.

The raft of new hires includes a public pension CIO (Sam Kunz, plucked from Chicago’s police fund), the founder of a real estate firm (Thomas Fischer, now an investment officer), noted academic Ashby Monk, and two of Bachher’s former colleagues.

Alumni of the Alberta Investment Management Corporation (AIMCo) now hold three of the top UC investment jobs, including Bachher himself. Prior to joining the Oakland, California-based office in April, he spent several years as deputy CIO at the $70 billion sovereign wealth and pension fund.

"In hiring, I target people with experience who’ve had leadership roles. Hence, CIOs at other institutions who want to go back to investing have been very attractive." —Bachher on building UC's team

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He has brought with him Arthur Guimaraes, now UC’s COO, and Brian Gibson, who serves as senior investment advisor.

Other asset owner recruits include Niclas Winterstorm, who spent years with Norges Bank Investment Management, investor of the world’s largest sovereign wealth fund. Faced with the opportunity to hire Winterstorm, Bachher created the role of operational risk management director for him.

“I’ve known him for a while and thought, ‘He can really add value,’” Bachher told CIO. “So let’s create a job for him.”

In taking over UC’s CIO role and creating the team, he describes his strategy as three-fold. “First, you must make sure you absolutely understand the organization and the people you have, and be sure that talent has the opportunity to grow and blossom.” In addition to the new hires, Bachher has promoted several existing employees.

“Second,” he says, “you need to bring in external people. Target those with experience who’ve had leadership roles. Hence, CIOs at other institutions who want to go back to investing have been very attractive. Finally, I was intent on absolutely making sure that we don’t hire based on having a job to fill. Instead, we searched for excellent talent, and in some cases created a role for them.”

Bachher is still recruiting for a number of senior positions at the $91 billion fund, including senior managing directors of fixed income and public equity, head of risk management, head of real assets, chief of staff, and at least two people for the sustainability team. (Interested?)

New Hires:

-Arthur Guimaraes, COO & Associate CIO (ex-AIMCo)

-Brian Gibson, Senior Investments Advisor to the CIO (ex-AIMCo and Ontario Teachers’)

-Ashby Monk, Senior Advisor to the CIO

-Sam Kunz, Managing Director, Asset Allocation & Investment Strategy (ex-CIO of the Policemen’s Annuity and Benefit Fund of Chicago)

-Niclas Winterstorm, Director, Operational Risk Management (ex-Norges Bank Investment Management)

-Lindsey Adams, Director, Real Estate (ex-San Francisco Public Employees’ Retirement System)

-Jessica Hans, Senior Investment Analyst, Private Equity & Real Assets (ex-Monsanto and Blackstone)

-Matt Webster, Senior Investment Analyst, Private Equity & Real Assets (ex-Chertoff Group)

-Sheng-Sheng Foo, Senior Investment Analyst, Public Equity (ex-California Endowment, a $3 billion foundation)

-Thomas Fischer, Investment Officer, Real Estate (ex-Otto Finlay Investment, a real estate operating company)

Promotions:

-Paul Teng, Director, Deputy Head, & Acting Head, Public Equity (formerly Investment Officer)

-Edmond Fong, Managing Director, Cross Asset Class Investments (formerly in absolute return unit)

-Susie Ardeshir, Investment Officer

Exits:

-Mel Stanton, Deputy CIO (now retired)

-Peter Taylor, CFO (now president of a private foundation)

-Brian Johnson, Director, Real Assets (now managing director of the University of Southern California’s endowment)