Mayfair Capital Investment Management is continuing its evolution from a private-client money manager into a more institutional investment manager.
The firm, which was founded by former Jones Lang LaSalle colleagues Guy Brogden and James Thornton in 2002, has been restructured, is re-launching two of its funds and is aiming to increase its £350m business to £1bn within two years.
The changes have been in gestation for some time but the catalyst for application was the appointment in April of former Grosvenor chief executive Stephen Musgrave as a non-executive director.
Prior to that, founders Brogden and Thornton “both did everything”, but following a review they now each have a defined focus and new job titles, with Thornton becoming chief investment officer and Brogden chief executive officer.
A business plan drawn up in May sets out dual strategies to expand the committed capital under management, and win new business by capitalising on a wave of merger activity currently washing through the fund management sector.
“We want to be more proactive about winning new business as well as pick up disaffected individuals and teams that may be looking for new homes given the current changes in the market,” says Thornton.
The redefined roles see Brogden leading non-organic growth by bringing on new people and mandates and exploring corporate opportunities, as well as working more closely with director Ned Pumphrey on transactions.
Thornton will lead organic growth and take responsible for investment strategy, making the chief investment officer role much more visible.
In relation to business in hand, the firm, which is also home to executive director Rob Palmer, who manages money for clients of Schroders through the MC Property Unit Trust, is boosting investment in two of its existing funds.
The former MC Special Opportunities fund is being relaunched as the MC Property Growth Fund No 2. The relaunch follows the firm’s first growth fund, which was launched in 2003 and wound up at the top of the market in 2007. Plans are for it to increase from its current £12m to £50m.
Thornton, who is the fund’s director, explains that the move to relaunch the funds was undertaken “to differentiate between the income side and the growth side”.
On the growth fund, he said that given market conditions “it feels right” to change the name of the fund as part of its relaunch because “the window for picking up distressed opportunities has closed and the fund is orientated towards seeking capital growth”.
The fund is able to invest in quoted securities, indirect vehicles such as unit trusts as well as joint ventures, and has found a sweet spot in residential development funding, taking preferred equity positions with profit participation in three London projects.
The vehicle’s first project, an investment in a residential development at 2 Hyde Park Square, W2, has just matured, generating a return of more than 25% in 12 months – a strong performance that could help the fund to emulate its forerunner, which returned a net IRR of 16.95% a year over its four- year life.
“The success of these sorts of funds,” says Brogden, “is influenced by the unavailability of bank debt, which means there are more opportunities to put together capital growth stories. Developers are looking for funding all over the place.”
Thornton adds that the “riskier” nature of the fund also attracts institutional investors such as pension funds, which are using it as a complement to their core portfolios and a way to gain exposure to investment propositions higher up the risk curve.
Attracting new investors was also one of the motivations behind the restructuring of the £38m MC Income Plus fund from a closed-ended UK limited partnership with a unit trust feeder fund to an open-ended exempt property unit trust to cater to pension fund investors.
As an open-ended unit trust, it has plans to build on the firm’s flagship PITCH fund, or Property Income Trust for Charities.
More than 90% of the fund’s original investor base has remained invested through the restructuring, which was carried out without incurring stamp duty on the transfer of assets.
As well as institutional investors, the overhauled fund will target corporate and local authority pension funds and pensions funds run by charities as well as SIPPs and SASS and aims to grow to £100m.
