Having risen to the top echelon of The Bank of New York Mellon Corp.'s $1.2 trillion asset management business, Jonathan Little decided to leave it all behind to established London-based Northill Capital LLP, a company with about $1 billion in capital to invest in specialist money managers worldwide, in November 2010.
Since then, Mr. Little has received hundreds of business proposals, from the flaky to the intriguing to some that have resulted in investments. Northill now owns stakes in four money managers: hedge fund manager Alpha Strategic PLC; high-yield and distressed-debt specialist Goldbridge Capital Partners LLP; and Wellfield Partners LLP, a macro quantitative manager, all based in London. Northill also made its first investment in Asia, recently agreeing to help launch fundamental Asian equity firm Ellis Munro Asset Management Pte Ltd. later this year.
Mr. Little's current job couldn't be more different from his days at BNY Mellon AM. On a recent business trip to New York — where he formerly would have been picked up from the airport by a private car and had access to office space in two different city locations along with shared assistants — Mr. Little now takes taxis and checks his BlackBerry from a coffee shop or a hotel lobby between meetings. But also gone are the numerous executive committee roles, leaving him more time to do what he loves — nurturing money management entrepreneurs.
What do you look for in an asset management business? If you look at Northill's business strategy, we're more defined by what we don't do. We don't have anything to do with scale businesses, such as money market funds, passive (exchange-traded funds). We don't think we can really add anything in that space. We don't back proprietary traders, star managers or proprietary traders spun out of investment banks, because we think in most cases, the “all-about-me” culture is not really for us. We don't back high-frequency trading, because we don't think it's a genuine investment discipline. We don't back (real estate) or fund-of-funds companies because the family already has exposure in both of those.
Are you focusing on the institutional market? We don't target this market or that market, but our focus on specialist asset management tends to lead us to institutional asset management. We like great businesses and strong investment teams that do what they do really well. We look at three things. We look at startups. We look at acceleration capital. (In other words, if it's a good little team and they're just not making enough headway fast enough, we'll come in and put in some equity capital so they don't have to worry about making money in the next year or two, and also maybe put in some seed capital.) Finally, we back transitions, such as when private equity has been involved and needs to exit. Alternatively, there could be two people in a great firm who are looking to retire in five years' time, and they want to see some equity passed down to the more junior guys in the firm. We're a perfect option for that.
How do the latest investments fit into that philosophy? The fact is we think it's a brilliant time to set up a European distressed and high-yield business. Banks have to rein in their balance sheets, and there have been lots of highly leveraged transactions done in the past three or four years that just aren't going to make it. They are going to go into distress. That combination is creating an interesting field of opportunities for distressed-debt investors. We felt there's room for a specialist. Already, lots of U.S. players are setting up London offices, but that's a different world from being up to your neck in European high-yield and distressed debt. There is no Chapter 11 in Europe, and bankruptcy is a complex, multilingual, multijurisdictional process. You have to commit to putting boots on the ground and really understand what's going on. This is why we decided Goldbridge is the right team and this is the right time. ... With Ellis Munro, portfolio manager (Andrew Lloyd) was successfully managing an Asian portfolio for a family, and the family wanted to wind down its internal investment operations. We found him, and have added some capital to his existing assets so that the company will start life with about $50 million in AUM. In Asia, it's hard to find fundamental, deep-value managers. They do exist, but they're usually bigger businesses that are too expensive. We think there's a real market for such players.
Is Northill more of a multiboutique fund manager or is it more of a private equity company investing in money managers? Our capital is long-term private capital; we call it patient capital. That is not to say that we'll never ever exit an investment, but unlike a private equity fund, we don't have a fixed exit in mind. Unless there's a reason to exit, we won't exit. So we could invest in a company for 20, 30 or 40 years. If we feel that the investment makes sense, we'll stay with it. If you put that against a private equity fund, the decisions being made in year four or year five are made through the lens of how they will look on the exit. We don't think that's healthy. The family backing us wants to make long-term investments that grow in value but also produce income. (Northill is backed by trusts associated with the Bertarelli family. Ernesto Bertarelli is a Swiss-Italian entrepreneur in the pharmaceuticals and biotechnology sector who also won the America's Cup yacht race twice.)
How did you decide to join Northill? There I was, running what was a very big asset management business. We had just bought Insight Investment, which has turned out to be one of the best home runs in the asset management business. But if you think about it, I was on dozens of boards ... your life becomes a series of duties and I had a strong desire to get back to the entrepreneurial side of the business. Around that time, I got a call from a headhunter who told me he had something genuinely different, something unique. So I came along and met the non-executives who work for the Bertarelli family, then Ernesto himself. I went from being skeptical, to being interested, to being completely sold in about three or four months. ... I was very attracted by the possibilities and found myself unable to come up with a good reason not to do it. Hence, here I am.
What is it about your background that drew you to the entrepreneurial side of the business? I was always attracted to investments. I used to look at share prices when I was a child, not age 6 but maybe age 12 or 13. I used to own a Philips (Electronics) tape recorder and I used to look at Philips shares. Although it's Dutch, it was quoted on the U.K. stock exchange for a while. ... I've always been interested in this business. It was always the thing that I thought I was going to end up in, because I've always been interested in companies, markets and what makes companies tick. It felt like a natural progression for me.
I think at one point, you also wanted to be musician. How did that go? I played the drums and the bass. If you heard me playing a piano or a guitar for one minute, you'd think that I was great, but then you'd realize that was the entire repertoire. I still own a music magazine and a running magazine and a publishing company as well called Standfirst Media. That's my link with journalism. ... I was in lots of different bands. As you go through different ages and stages, bands changed. I was in most types of bands, and they had increasingly gruesome names.