Tokyo-based Keiko Sydenham is a well-known face to many Hedge Funds Club members. She started investing in hedge funds in 2003 and has since then worked on both investments and capital raising for alternative investments. She recently resigned as Managing Director at Blackstone to launch LUCA, an online platform where accredited investors can compare, invest in, and monitor alternative investment opportunities such as private equity funds, hedge funds, venture capital and pre-IPO companies. Hedge Funds Club’s Stefan Nilsson checked in with Keiko to find out more.
You have just launched a fundraising business focused on Japanese investors. How is the fundraising climate in Japan at the moment when it comes to alternative investments?
I believe that the fundraising climate in alternatives is on a tailwind. It has shown steady positive growth for at least the last five years with a long-standing negative interest rate environment. Institutional LPs are fully aware of the importance of alts allocations in their portfolios. It is pretty stunning how they can switch their liquid investments into private assets. More investors invest or consider investing in 10-year closed-end funds, such as PE, VC, real estate and private credit. However, some LPs cannot make ideal allocations to alternatives due to their size and administrative complexity. LUCA wants to solve that challenge.
For which kind of alternative investment strategies do you currently see demand?
Demand is diverse by investor types, but LPs who look for higher return and growth are doing PE and VC. I believe more LPs are getting active in the PE and VC spaces than a few years ago. LPs who look for a stable income source are more into real assets such as core+ real estate and Infrastructure. Private credit is always in high demand for most LPs. Hedge funds are also back in popularity with the rising volatility.
You have opted to build the business around a digital platform. Have Japanese institutions evolved and are now taking advantage of digital solutions?
The fundraising process of alternative investment products is quite labour-intensive but has been kept as a very manual process for a long-time. The industry has been struggling with scarce resources, with no automated platforms, organised data-set or the right talent pool. We believe Covid-19 inevitably pushed digitalisation of the process forward, at least when it comes to people’s mindset. This is just the beginning, we believe. A digital platform can provide fair access to information and investment opportunities to more investors in a transparent and efficient way. And LUCA’s mission is to provide investors with that access.
You have spent many years working on alternative investments at big institutions such as JP Morgan and Blackstone. What made you now make the move and launch your own boutique?
Thanks to a decade of my experience at those big institutions, I understand the landscape of the investors and the whole industry. More importantly, I learned the demands and challenges for each different type or size of investor and GP. I thought with the quickly changing time of digitalisation, this is a good time for me to solve those challenges for the investors in Japan and for the GPs.