Wealth & Finance International - February 2017

Wealth & Finance International 80 Connecting Clients to their Capital onnection Capital is not an advisory firm, nor does it operate under a traditional fund structure”, Clair Madden opened her conversation with us. “Our clients can participate directly in deals and funds of their choosing, all sourced, evaluated, structured and managed by a highly-experienced team of professionals. This flexible model gives them the opportunity to build their own bespoke portfolio of alternative investments without having to hand discretion over to a fund manager. Connection Capital is one of the leading private equity investors in the UK for management buy-out or growth capital transactions requiring up to £7m of equity. The firm has over £180m of assets under management.” “I am a founding Partner at Connection Capital and I manage the client side of our business as well as our commercial property and alternative asset fund investment activity” Claire explained to us. “I am a member of our executive committee and investment committees. My time is spent supporting our investment teams on new investment and portfolio matters and client relationship management.” “We have a great team at Connection Capital – as we are quite an unconventional financial services business we have attracted individuals who thrive in an entrepreneurial environment where the investments we structure and manage are so varied. Many of our clients, many of whom are entrepreneurs or finance professionals, get involved with our investments by introducing deals, helping with sector knowledge on due diligence or providing board resource to drive value post completion.” It is a team which has brought numerous successes over the past year. “Our clients funded four private equity deals in 2016 – two growth cap- ital, two management buy-outs – which made us one of the most active investors in the UK lower market last year. We believe this asset class should play a part in an investor’s portfolio. The average investment by Connection Capital across those deals was £5.3m. This is a highly-under- served part of the UK private equity market as most institutional money has been directed at the mid/large cap market. This means that acquisi- tion valuations in our sector have remained relatively low compared to the big jumps seen in the mid and large buy-out markets – vital since sensi- ble entry valuations are a significant component of private equity returns. Our clients were also active participants in the alternative asset funds we negotiated access to in 2016 – strategies included commercial litigation funding, consumer digital venture, mezzanine, collateralised loan obliga- tions. We completed a fast-turnaround exit last year, delivering impressive returns to clients within a very short space of time – we negotiated the purchase of discounted loan notes and equity from a departing director of a private equity backed IT business. The business was sold three months later and our clients enjoyed a 1.3x return and a 180% IRR.” And the feedback they have had from clients after these successes has been understandably positive. “Our clients like the fact that they have control over investment decisions and can invest in deals and funds that they would find hard to access themselves. They like the interest factor that direct investing brings – particularly with our private equity investments. To see a private equity transaction through to exit as a direct stakeholder in the business is an experience most investors don’t get. In the current low interest rate environment, our clients are often willing to accept more risk and illiquidity in search of yield and many welcome exposure to strategies such as litigation funding which are uncorrelated to equity markets/global economy.” The coming year presents opportunities for those involved in alter- native investment as portfolios continue to diversify. “2017 will be an interesting year – the current investment environment lends itself to at least some exposure to alternatives in a portfolio. We believe it is key to driving overall returns. Our firm is regulated by the FCA and we can only deal with clients who are suitably qualified to make their own investment decisions when it comes to the sort of opportunities we offer so, like any investment business, any changes in regulation may have an impact on us. Our clients’ appetite for investment after the Brexit vote last year did not wane and many saw it as an opportunity rather than a threat.” “‘Disintermediation’ in the financial services industry in the UK is growing - investors want to access investment products directly rather than via intermediaries and are happy to take the time to do so. The explosive growth in the P2P lending market is evidence of this. I think the investment and advice industry will need to continue to innovate and recognise that investors want to take more control over at least a proportion of their investment portfolio and that alternatives will be an important component of that.” Company: Connection Capital LLP Name: Claire Madden Email: [email protected] Web Address: www.connectioncapital.co.uk Address: Woolverstone House, 61–62 Berners St, London, W1T 3NJ Telephone: 0203 696 4010 Connection Capital is a leading UK alternative asset investment platform for self-select investment opportunities, for private clients and family offices. It offers its clients access to direct private equity and mezzanine deals, direct commercial property investments and access to specialist funds with diverse alternative asset strategies. We spoke with Claire Madden, a Founder and Managing Partner of the business, regarding the services, successes and future of the firm. “C 1702WF26