Channel Capital, a Melbourne-based incubator and platform provider for startup money management firms, is teaming up with former Mellon Investments Chairman and CEO Desmond "Des" Mac Intyre to launch Eolas Capital, a New York-based investment manager incubator.
The move effectively means that Channel Capital — which works with eight money management "partners" in Australia with combined assets of A$16 billion ($12.6 billion) — "is going global," said Mr. Mac Intyre, who stepped down from Mellon in February.
In a market with a lot of providers of patient capital, Eolas will look to differentiate itself by offering a full suite of business partnership services, including strategy, finance, operations, technology and front-to-back office marketing and sales, Mr. Mac Intyre said.
Other firms, like Victory Capital, offer a suite of services to somewhat more established firms but "we're looking for the smaller jewel ... more of an incubation phase, a team liftout, a management buyout," he said.
In separate interviews, Mr. Mac Intyre and Glen Holding, managing director of Channel Capital, pushed back on the notion that pandemic-related hurdles to performing due diligence could make the current moment a difficult one to launch a business focused on setting up new investment management boutiques and helping them win institutional clients.
"We actually think it's a pretty good time to launch a business like this," said Mr. Holding, noting that "disruptive situations can create opportunity."
Mr. Mac Intyre concurred. Teams working remotely have effectively become disconnected from their companies and as a result "more open to liftouts or going and fulfilling their own ambitions," he said.
Mr. Holding likewise cited the breadth and depth of Mr. Mac Intyre's industry ties as a mitigating factor in a pandemic-constrained environment. "Having someone with Des' network and experience in the most fertile boutique incubation space in the world" is a plus, he said.
Eolas, like Channel, will forge revenue sharing agreements with the boutiques they partner with, as opposed to taking equity stakes.
Mr. Mac Intyre, while declining to give exact numbers for his and Channel's respective stakes in Eolas, said the equity breakdown is "pretty much even but the majority is with Channel" with another portion reserved for Eolas staff.
Mr. Mac Intyre said by and large Eolas will look to partner with startups offering "specialist, differentiated" capabilities in segments of the market such as alternatives, credit, private equity, microcap or emerging markets equities — "something that a manager or an investment consultant or a client will say, well, they can fit into my portfolio, they add something different, they're a diversifier."