The fund manager of Banco Santander has a Project to separate business from illiquid assets, one of the areas that has grown the most in recent years and already has 1,900 million euros under management. The Group wants to value this division and try to market these venture capital funds to external institutional investors.
The calls alternative assets or illiquid assets they are financial investments apart from classic stocks and bonds. They are channeled through venture capital funds that invest in unlisted companies, in private debt, in infrastructure… These funds have high minimum investment amounts and take at least seven years to repay the money. Therefore we speak of illiquid assets. These characteristics make them products aimed at institutional or very demanding clients.
Santander Asset Management, the asset management unit of the Santander Group, entered the alternative asset segment less than three years ago, with the signature of Borja Díaz-Llano. The Barclays manager led a team of 13 people (located in Europe and Latin America) responsible for identifying business opportunities in this area.
In just over two years Santander has attracted more than €1,000 million in venture capital investments and has firm commitments for another €900 million for the next few years. One of the funds raised is Alternative Leasing, which invests in financial leasing contracts in the form of purchase and subsequent rental of machinery and industrial equipment for Spanish SMEs. It also launched another fund investing in international trade finance instruments. And he marketed another fund dedicated to buying hotels.
This is investing in unlisted assets
- illiquidity. Venture capital funds invest in unlisted companies, private loans, international trading vehicles or infrastructure. The money pledged by the investors will be paid out gradually according to a set schedule. And it will be paid back after seven years when the investments made have been amortized.
- Crowd. Previously, the minimum investment amount for these funds was at least €100,000 (in some cases even €500,000). Now, with a new law the government just passed, the minimum investment is reduced to just 10,000 euros.
- qualification. The illiquidity of these investments combined with the sophistication of some products means that the distribution of these funds is severely restricted. Normally, only institutional investors (insurers, mutuals, pension funds, private banks…) can invest in these funds. A private investor who wanted to invest would have to demonstrate a certain minimum level of knowledge.
changes of address
The driving force behind the creation of this division was Mariano Belinky, CEO of Santander Asset Management until November 2021. His successor is Samantha Ricciardo (of BlackRock), which has already started to make some strategic changes in the manager, such as the decision to spin off the illiquid assets unit. Santander sources have declined to comment on the moves.
Ricciardi has decided to put Luis García-Izquierdo at the head of the illiquid assets departmentpreviously Head of Business at Santander AM in Latin America.
Banco Santander is one of the world’s largest private lenders. It supports hundreds of companies to get funding outside of the market. “The wealth management division can become a bridge between the part of investment banking that originates these loans and the customers who are looking for something more profitable than in traditional fixed income,” managers’ sources explained when they began the project’s launch.
Now that this division of unlisted assets has gained prominence, Santander wants to give it a bigger role. According to market sources The ultimate goal of the split is to increase visibility and attract investors from outside the bank to their venture capital funds.which increases third-party sales.
Investments in illiquid assets have skyrocketed in recent years, coinciding with the long period of low interest rates. Institutional managers (insurance companies, pension funds, investment offices for wealthy clients…) have allocated an increasing proportion of their portfolios to this type of investment.
Most of the venture capital funds that Santander has launched do so under the umbrella of the subsidiary in Luxembourg. Once registered, this type of vehicle will be distributed in all countries where the bank is present.
The investment arm of the Santander Group manages assets of more than 200,000 million euros and is present in 12 countries (Spain, Portugal, Germany, Luxembourg, Great Britain, Poland, Mexico, Brazil, Argentina, Chile and Puerto Rico).