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THE ANATOMY OF AN ALLOCATION

THE ANATOMY OF AN ALLOCATION. Raising Institutional Capital in 2018 CapitalCon June 22, 2018. Castle Hill: The Art & Science of Capital Raising. Institutional capital raising and strategic marketing firm 100% partner-owned 22 registered representatives – Castle Hill / 4 Affiliates

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THE ANATOMY OF AN ALLOCATION

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  1. THE ANATOMY OF AN ALLOCATION Raising Institutional Capital in 2018 CapitalCon June 22, 2018

  2. Castle Hill: The Art & Science of Capital Raising • Institutional capital raising and strategic marketing firm • 100% partner-owned • 22 registered representatives – Castle Hill / 4 Affiliates • Active across major investor channels that invest specifically in alternatives PLATFORM PRIVATE WEALTH ENDOWMENTS & FOUNDATIONS INDEPENDENT RIAs INSURANCE COMPANIES SWF/ PUBLIC PENSIONS CORPORATE PENSIONS

  3. Castle Hill: Four Main Verticals LIQUID STRATEGIES ILLIQUID STRATEGIES PRIVATE PLACEMENTS LIQUIDITY SOLUTIONS • Hedge Funds • CTA’s • Private Equity • Real Estate • Venture Capital • Private companies • Real Estate Partnerships • Pre-IPO shares • Hedge Fund & Private Equity Secondaries

  4. Anatomy of an Allocation: How the Process Worked CLIENT • Esoteric, niche, secondary investment strategy • Raising Fund V • Defied easy “bucketing” • Nationwide effort! • Over 100+ introductions • 45 meetings • 4 allocations – SFO/E&F INVESTOR • Prestigious NY-based university endowment • $1+ billion • Used OCIO firm for research support • Rebuilding private equity portfolio • Active board involvement • Highly skeptical

  5. Investment Targeting: What I Looked For? Are they actively allocating to the asset class? Is there capital at play? Are they open to a new strategy? When they say that they want niche, how serious are they? Does the timing work? If they’re interested, can they act?

  6. RELATIONSHIP + PROCESS = SUCCESS

  7. YEAR 1: Introduction Relationship + Process = Success • 3 Follow-up emails to schedule coffee • CHCP did not have right product set • Did not actively engage 8/1/16 1.1 1.2 1.3 1 1 1 Met CIO at E&F workshop and exchanged cards

  8. YEAR 2: Engagement! Relationship + Process = Success 9/6/17 8/6/17 10/25/17 4 3 2 4 4 3 3 Phone call Caught up at a second conference and agreed to meet in the future Set 1st follow-up meeting @ CIO offices *RESPONSE • CHCP/CIO • 2 Action Items • Sent follow-up email with marketing documents Suggested 11/7 for an in-office meeting with client 3 emails 8

  9. YEAR 2: Face-Off! Relationship + Process = Success 11/8/17 10/26/17 11/7/17 7 6 5 7 4 6 5 3 Investor signs NDA with comments to gain access to the data room Thank you notes and follow-up questions: Meeting #1 • CIO visits team at client offices • CHCP Attends • Basic Introductory Questions • “Pro forma – Best/Worst case scenarios” • “Review all deals” • “Portfolio outcomes” 5 emails

  10. YEAR 2 Q4: Digging Into the Details Relationship + Process = Success 12/19/17 11/13/17 11/22/17 10 8 9 4 10 9 8 3 Meeting #2 CHCP Follow-Up email: Follow-Up email: • Concern that there won’t be enough time for ODD / legal • Next meeting • Follow-up more info • Meeting with client CEO in client office • Multiple emails exchanged • OCIO representative attends RESPONSE “When is final close?” 5 emails 10 emails

  11. YEAR 3: Gaining Momentum Relationship + Process = Success 1/9/18 1/5/18 1/8/18 13 12 11 9 8 4 10 3 Meeting #4 Meeting #3 RESPONSE OCIO sends note requesting full day ODD team visit Follow-up meeting with the CIO & OCIO Representative Takes place at the OCIO firm’s offices • ODD onsite for 4 hours • Completely independent of research function/Chinese Wall • Veto Power • “When is final close?” 10 emails 8

  12. YEAR 3: Getting Into the Weeds Relationship + Process = Success 3/23/18 1/23/18 1/10/18 16 15 9 14 3 4 10 8 Meeting #5 Emails and phone calls discussing share class elections Detailed list of follow-up questions: Meeting on-site at client to meet all the team members • Side letter • Fees/expenses • Duration • Fee schedule • CFO • CCO • Every analyst • Even the interns 8 emails 10 emails 8 8 • Focus on culture!

  13. YEAR 3: Life Intervenes Relationship + Process = Success May ‘18 April ‘18 17 18 9 3 4 10 • Multiple drafts of side letter exchanges • Pushed final close from 3/31, which was necessary for governance purposes • Passover!! • Received final confirmation • $15 million allocation – May 1 DONE

  14. Driving the Process and Lessons Learned August 2016 → May 2018 • 5 Meetings • ~10 Phone Calls • ~100+ Emails LESSONS • Polite persistence with both client and investor • Facilitate communication with both parties • Manage expectations on both sides • Attentive, not annoying

  15. Andrew Saunders, CAIACo-Founder, Senior Managing Director asaunders@castlehillcap.com (212) 764 - 9320 216 E 45th Street New York, NY 10017

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