Alpha Strategic has made a minority revenue share investment in U.S. alternative money management firm Premium Point Investments, said Alistair McKay, CEO of Alpha Strategic.
Alpha Strategic, which is an affiliate of money manager Northill Capital, provides minority capital investment in money managers in either revenue share or structured equity form. Mr. McKay said in a telephone interview that this ensures the firms it with which it works maintain operational autonomy and an independent culture.
Premium Point is a $1.7 billion manager that specializes in residential mortgage markets.
“Residential mortgage in the U.S. has gone through various stages,” Mr. McKay said. “The return of the securitization market, with very much more stringent underwriting criteria and the ability to disintermediate the banks and the agencies with shrinking balance sheets in this area, means there is an opportunity for private capital.”
While the terms of the deal were not disclosed, Mr. McKay said Alpha Strategic executives look at the operating margin of a firm, and calculate its minority investment from there. “We typically look at a revenue share percentage of between 10% and 20%,” he said. Alpha Strategic is looking to complete “five or six or seven — but not too many — (deals) over time, and build out a portfolio.”
The partnership has “helped accelerate our growth and enhances our real estate investment management platform,” said Anilesh Ahuja, CEO and chief investment officer at Premium Point, in a news release from Northill.
