Jonathan Little is used to building businesses up and closing deals, but doing it in the middle of a pandemic is a totally different thing.
While he's known in money management as something of a deal-maker for the mergers and acquisitions he has led over the years — in particular during his time as head of the Bank of New York Mellon's international asset management business — Mr. Little did think twice about launching his latest business, Alderwood Capital LLP, which takes minority stakes in boutique firms. And that was without the added stress of COVID-19.
"I thought about not doing it again, but I just felt there was so much opportunity for us," he said, speaking over video call from Alderwood's offices in Covent Garden, London. "It was really tricky setting up this business in COVID — not being able to travel is a real issue."
But it hasn't slowed him down in his quest to get the necessary infrastructure and systems in place for Alderwood, which aims to raise $2 billion from institutional investors in a single fund to take minority stakes in single-strategy boutique firms. He also has fund documentation and Financial Conduct Authority approval in place.
There are three strands to the opportunity set for Alderwood. The first is succession capital opportunities. "If someone wants to retire or an early backer wants to sell … but they don't want someone to upset the apple cart, we're someone who can add something," Mr. Little said. "The world is full of asset managers set up 15, 20, 25 years ago where one of the founders wants to retire — we're an obvious choice to buy in there."
The second type of firm that Alderwood is looking for is one that has "acceleration opportunities — 3- to 5-year-old firms, where managers are in a steady state but need capital to either buy out an early backer or to provide for the next stage," he said.
And the final opportunity — the one where Mr. Little believes Alderwood "can add even more value (is) liberation opportunities. There's a lot of ill-fated megamergers that have happened in the last few years," he said. Within those firms, some units or teams will be "trapped" and looking for a way out, or market stress may push teams to be separated out from parent companies.