Benjamin Trickett

Apex Group Ltd. (“Apex Group” or “The Group”), a global financial services provider, today announces its appointment by agri fund manager Laguna Bay, for the provision of fund administration services. 

Laguna Bay is a full-service fund management and direct investment platform specialising in food and agriculture. Apex Group has been appointed to provide fund administration services to Laguna Bay Fund 2, which is set to raise up to A$1 billion for investment in a diversified portfolio of high-quality food and agriculture investments in targeted regions across Australia and New Zealand.

Laguna Bay Fund 2 is Laguna Bay’s third investment vehicle, and second flagship fund, having successfully originated, structured, managed and exited institutional grade assets in its first two vehicles.

Fund administration is at the core of Apex’s single-source solution, delivering timely, accurate and independent services, underpinned by market leading technology platforms. According to a recent Total Economic Impact (TEI) report^[1] by Forrester Consulting, clients of Apex Group’s single-source solution achieve, on average, cost benefits of $5.39m, with a net present value of $2.75m over a three-year period.

This appointment follows Apex Group’s continued growth in Australia and New Zealand, including the strategic acquisitions of Mainstream Group and MMC, and new client wins in the environmentally-driven real asset space including Octopus Investments Australia, New Forests’ Tropical Asia Forest Fund 2, Federation Asset Management’s Sustainable Australian Real Asset Trust and INVL Asset Management’s Sustainable Timberland and Farmland Fund II.

David Potter, Head of Business Development – Australia at Apex Group comments: “We are pleased to announce our appointment to provide fund administration services to Laguna Bay’s new fund as they build a portfolio of low-risk sustainable food and agricultural assets. Apex Group’s range of scalable fund administration services will enable the Laguna Bay team to focus their time and resources on the active management of their investments and implementation of sustainability initiatives.”

Benjamin Trickett – Managing Director, Funds Management at Laguna Bay further adds: “The Apex Group team have demonstrated an ability to deliver their services on a local scale and to provide a tailored approach suitable to the unique requirements of an Australian investment vehicle. We look forward to working together to invest Laguna Bay Fund 2 with the highest levels of governance and operational efficiency.”

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[1] https://www.apexgroup.com/our-story/the-total-economic-impact-of-apex-group/

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While Covid-19 has changed daily life for people around the world, the shock to the global economy and markets has started to subside. Nevertheless, the pandemic is set to have a longer-term effect on allocation decisions.

Although private equity is viewed as non-core by many global institutions, interest in the asset class has been building for several years. As returns from listed equities markets have moderated and asset classes have become increasingly correlated, a growing number of institutional investors are attracted by the opportunity for greater diversification offered by alternatives.

In the 2020-2021 Australian Institutional Investor Survey of Private Equity & Venture Capital Investing, carried out by Private Equity Media and sponsored by Apex Group, institutional investors revealed how their approach to the asset class had changed during the pandemic.

According to the survey, the average allocation to private equity in an institutional portfolio stands at 5.6%, up from 4.1% in the previous 2019-2020 survey. However, appetite varies significantly, with allocations among survey respondents ranging from 2% to 14%.

Commenting on the results, David Potter, Head of Business Development for Apex Group in Australia, said: “This increase in allocation is consistent with our own experience in this sector, with clients receiving serious mandates to acquire private asset locally and globally. Our observation is that the sector will continue to grow despite Covid market conditions.”

Alongside infrastructure, private equity and venture capital remains the preferred alternative asset class, although few institutions are planning to increase their allocations; this is primarily due to legislative changes to the superannuation investment environment.

Positively, the survey revealed that there’s little appetite among institutions to reduce their private equity exposure: more than 55% of respondents planned to keep allocations unchanged or were undecided, and just 20% planned to either increase or decrease allocations.

Higher expectations and local investments

While allocations are likely to remain unchanged in the coming year, most respondents anticipate making fresh commitments in the near future, which could favour new managers. Regionally, North America remains the top destination for institutional capital with a global strategy, but there is also more willingness to invest in Australia & New Zealand-focused strategies ahead of other regions. South America is the least popular region with respondents.

The lower interest rate environment, which has existed since the Global Financial Crisis of 2008, has driven investors towards higher-growth parts of the listed equities market, such as technology. This has resulted in significant returns for investors and driven equity markets higher over the past decade. However, as valuations start to look more expensive with limited potential upside, institutions globally are looking for greater returns elsewhere. This is making some institutions turn to private equity.

And those institutions are expecting higher returns. Just over half (55%) of respondents are targeting a net return of 15%. Meanwhile, around one-third are targeting a return of listed equities plus 3%. Just 10% of respondents are targeting returns of less than 12%.

This might seem surprising when looking at the track record of such investments for respondents, as two-thirds report historical returns from private equity of 12% or lower. However, they are probably well aware that past performance is no guarantee of future returns. Yet, with interest rates starting to increase around the world in response to higher inflation, such returns may not be sustainable in the longer term.

More value for money and transparency

It’s not just higher returns that investors are placing a greater emphasis on. They are also looking for more value for money. Some 22% of respondents thought that their private equity and venture capital investments didn’t offer this, suggesting fund managers need to do more work in this area. Nevertheless, two-thirds of respondents said that their private equity and venture investments had met performance expectations.

Institutions also value their relationships with GPs, communicating and engaging with them more regularly during the pandemic. But they are not afraid to make greater demands of them; just over half of respondents have renegotiated fees with existing GPs for new funds.

One of the biggest gripes highlighted by respondents was the information received from GPs. As such, it’s little surprise that two-thirds of respondents said they had asked for more transparency in valuations, while just over half asked for greater transparency for new investments.

When choosing a GP, institutions place a higher emphasis on the investment strategy and past performance than any other attribute. And despite the growing global trend for incorporating environmental, social & governance (ESG) criteria into investment processes and allocation decisions in the broader market, the survey showed that ESG remains the least important of seven key factors for institutional investors in Australia.

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