The $700 million Rātā Foundation has taken a 25 per cent stake in Alvarium Wealth/Pathfinder while also awarding Pathfinder a $10 million mandate amid a clean-out of its Australasian equities managers.
Under the deal revealed today, Rātā will own a quarter of Alvarium Wealth Management Holdings – the parent entity of the NZ Alvarium wealth and Pathfinder fund businesses. The top holding company, Alvarium Investments, also covers the group’s property empire, which is not part of the Rātā deal.
The acquisition by Rātā, formerly known as the Canterbury Community Trust, coincided with a shake-up of the charitable fund’s Australasian equities panel that saw Pathfinder and Forsyth Barr selected in place of Harbour, Nikko and Australian manager, Alphinity.
Rātā targets an allocation of 5 per cent to trans-Tasman equities, implying a total Australasian shares portfolio of about $35 million with Pathfinder given $10 million and the remainder to Forsyth Barr.
In January Forsyth Barr investment banking director, Megan Glen, replaced Andrew Johnson as an independent member of the Rātā investment committee.
Glen serves alongside former Forsyth Barr senior executive, Shane Edmond, and Ngāi Tahu Holdings chief operating officer, Sam Inglis, as independents on Rātā committee.
Leighton Evans, Rātā chief, said the community trust had processes in place to manage any potential conflicts of interest as stipulated in the statement of investment policy and objectives (SIPO),
“All our fund managers including those that we have an interest in will be held to these high standards,” Evans said.
He said managers were also subject to review from both internal management and the Rātā external investment adviser, Mercer.
While Mercer provided a long list of potential trans-Tasman share managers for the most recent review, Evans said the Rātā investment committee made the final decision.
“Reducing the number of three to two [Australasia equities] fund managers aligned allows us to benefit from Pathfinder’s nimbleness and strong ESG implementation while leveraging Forsyth Barr’s scale and extensive analysis team,” he said.
According to a statement, the community trust would look to grow the Pathfinder/Alvarium Wealth footprint, especially in the South Island.
The investment arm of Christchurch high-net worth Gough Family Office owns more than 40 per cent of the ultimate Alvarium holding company.
“Rātā involvement with Pathfinder and Alvarium will be limited to shareholder and governance levels, without engagement in day-to-day operations,” Evans said.
He said the Alvarium deal marks the first direct ownership in a NZ private business for the community trust, which has ambitious goals in the illiquid asset class.
Including the latest purchase, Rātā now has 9.3 per cent of its portfolio in direct investments with an end target of 30 per cent allocated to the sector.
The Rātā SIPO says direct investments include co-investments with NZ-based private equity and infrastructure fund managers and “other like-minded investors”.
“… fully implementing an asset allocation strategy, which includes direct investments, will require time,” the SIPO says.
“A transition period from the previous portfolio to the target portfolio is necessary.
“The Trustees acknowledge that during this transition period, the allocation of the Rātā investments will be a variance from the new target allocation and ranges.”
As part of the strategy to raise overall exposure to growth assets (including the direct component), the Christchurch-based fund will also exit allocations to hedge fund-of-funds and NZ bonds.
In 2023, Rātā updated its investment philosophy to take into account “our history, relationships, knowledge of our community, tikanga and aspirations alongside financial, economic, social, and environmental elements”.
Alvarium has a complicated history in NZ after the company then known as LJ Partnership entered the country with a purchase of 50 per cent in hedge fund-of-funds firm NZAM followed by taking a similar stake in Pathfinder two years later – later assuming full ownership of the two managers.
In 2021 Alvarium folded the former NZAM and Pathfinder businesses into the Alvarium Wealth wrapper while acquiring Auckland financial advisory firm, Newton Ross, in the same year.
The NZ Alvarium business formally separated from the global parent in 2023 as the offshore company merged with Tiedemann Investment Advisors via a Nasdaq SPAC to create a business advising-on or managing US$60 billion.
Andrew Williams co-founded Alvarium (previously known as LJ Partnership) in 2009 in the UK before moving to NZ in 2017.