(Pictured: Damien Frawley)
In an intriguing deal, QIC has spun off its small-cap Australian equities team into the boutique incubator Channel Capital, which was itself spun-off by Solaris Investment Management, which is itself incubated by Pinnacle Investment Management. Confused?
QIC, the big increasingly global manager owned by the Queensland Government, announced last week that the small-cap team, under Stuart Jordan, would form a new boutique called Discovery Asset Management and come under the Channel Capital umbrella from May 1.
Damien Frawley, QIC’s chief executive, said: “QIC’s strategy of building a global diversified alternatives business requires us to maintain a sharp focus on core investment capabilities… As a result, we worked with Stuart Jordan… to explore the possibility of transitioning our small-caps capability into other suitable businesses.
“Channel Capital is a great cultural fit with the small-caps team. Operating in both Brisbane and Sydney, their focus is on developing boutique capabilities across a range of asset classes, and they are committed to the ongoing growth and success of the small caps investment team. This commitment represents the best outcome for our clients.”
Channel Capital was started last year by Solaris Investment Management as a spin-off of the Solaris backoffice team. Solaris, which has offices in Sydney and Brisbane, was formed in 2008 by the former Suncorp equities team led by Will Earnshaw, who is managing director, and Sean Martin, who is CIO. The multi-affiliate manager Pinnacle Investment Management is the 40 per cent anchor investor in Solaris.
The aim of the Channel Capital spinoff was, at least in part, to allow the Solaris team to concentrate more on their investment strategies and process, while also providing for continued diversification in a business sense.
It is understood Channel Capital is offering its backoffice services to small and niche-strategy boutiques which struggle to get the attention of the larger incubator firms in return for equity in their businesses.
Apart from Solaris, a traditional active Aussie equities manager, other clients include Resource Real Estate, AIDC passive agriculture, GWA global equities smart beta and the environmentally friendly EcoAg Group, which is active in agriculture.
Glen Holding, Channel Capital’s managing director, said the latest deal was a significant and timely addition to the firm’s fund manager line-up.
“The QIC small caps team has been on our radar with good reason,” he said. “Exceptional investment managers with great performance records are rare and we are delighted to partner with Discovery.”
