Stefan Nilsson of the Hedge Funds Club sat down for a quick chat in Sydney with Andrew Bradshaw and Tiffany Besnard from 26 Degrees’ prime brokerage team.
What can you tell us about changes at 26 Degrees in response to shifts in the prime brokerage market?
Andrew Bradshaw: “I think the key here is that it takes what we’ve done before and continues to focus on the institutional side of the business. It’s really about focusing there. There are clear opportunities for us in that space. On the hedge fund side, we all know that the Tier 1 guys have moved away. The institutional opportunity is a reflection of what’s happening there. The rebrand is to align those new business opportunities.”
Are you seeing increased interest in your prime services from smaller and newer fund managers?
Andrew: “We have had an incredible response to the meetings and trips we’ve had in Asia. Asia is the real focal point for us, just because of the way the market is. We are marketing a full-service offering, supported by Morgan Stanley as our prime. That really resonated well with the clients who otherwise can’t get access to those Tier 1s. That includes the algos, the short book and all the rest of it that goes with that. Very strong, from an offering perspective. On the service side, it is the cap intro, the consulting, outsourced trading and so on. All those things have resonated very strongly in the emerging manager space. They are just not getting access to that. So, they are stuck between commoditised retail brokers – that don’t have additional service offerings or don’t have cap intro – or they just end up in conversations with the top tier. If you look at the combined offering, it is resonating very strongly.”
Cap intro is a service which is one of your focuses now. How are you delivering that part of your service?
Andrew: “We have conducted an outreach to Asian family offices who will allocate to funds that are sub a hundred million or under three years’ track record. We are building a database with those guys and we’re attributing their preferences in that database as well so that we can match that against our manager client base and make those connections. There is a tailored solution if you like. Beyond that, we are developing ways to publicise our managers at scale, including the use of media for that. Podcasts and those types of things which we think will resonate very strongly. It’s like ‘Tell us who you are without having to read the factsheet’. I think that is going to go really well.”
Tiffany Besnard: “It is not just APAC family offices. We have made some inroads in the US. There is quite a lot of interest among US allocators with an interest in APAC managers. Then we will expand to Europe.”
In general, what are hedge funds in APAC looking for in a PB?
Tiffany: “Say, algos, access to a robust stock loan offering, cap intro, service. We have an office in Cyprus and now building out London, so it already is a 24/5 offering as it stands and that really resonates with smaller managers.”
Andrew: “It’s also the back end. We have developed the IT and systems for the middle-office and back-office parts of our business. Being able to build bespoke solutions and integrate them with people’s service providers is also something really important. We can provide those services.”
You recently announced a collaboration with Noviscient, an innovative fund platform in Singapore.
Andrew: “This is a strategic initiative. We spoke to Scott Treloar and his team. I think we both share similar target market clients. Our offering works well with their platform. It’s absolutely something we want to work on. It’s early days, we’ll see how it goes.”