Petiole Asset Management observes that even among institutional clients, access to private markets and quality co-investments remains a challenge. In a recent article published on AGEFI, Petiole board member Pierre André Genillard answers a few questions about his professional experience in alternative investments in Switzerland and overseas, and his long-standing relationship with the company’s roots.
Pierre André, what did you like about Petiole Asset Management, and what pushed you to get involved as a board member?
Building on the great success of its sister company, The Family Office Co. (TFO) based in Bahrain, in the Middle East, my participation on the board of directors of Petiole Asset Management AG came naturally as it was clear that my expertise in the domestic market in Switzerland would be beneficial to the company. I was already familiar with the group, having served as a board member of TFO since its foundation in 2004.
My career of nearly 25 years in alternative investments started in New York, which continued in London, Switzerland, and more recently for 10 years now in Asia. Through this exposure, I have acquired a global vision and deeper understanding of this asset class, and my experience enables me to bring a differentiating insight and industry expertise for Petiole to develop optimally in the Swiss market.
Why did Petiole decide to establish its headquarters in Switzerland?
To be a solid and competitive provider of private market investments in Switzerland, an asset manager clearly requires presence in the field and deep knowledge of the local business culture. Moreover, a good understanding of the language and the Swiss legal system is essential.
Petiole's desire to offer excellence to its customers derive from the economic and political stability, the know-how, and the avant-gardism that Switzerland bestows. The persistent environment of low, at times even negative, interest rates in certain countries, particularly Switzerland, has led Petiole to suggest its investors to consider allocating part of their assets to private markets where its expertise and added value are concentrated.
The participation and allocation of Swiss institutional clients in private markets remain marginal compared to certain markets such as the US, for example. The allocation within US pension funds in this asset class is now very well established and has been able to prove its benefits, thanks to its good performance and low correlation with conventional markets.
How does Petiole plan to serve Swiss institutional clients?
Petiole's private market investment solutions are not only aimed at large-scale institutional clients but also at independent managers and qualified investors. Following the analysis of their needs and the definition of their strategy, Petiole gives them access to investment portfolios that are focused on direct and co-investment transactions and diversified through the three proposed approaches:
"Capital Yield" gives access to a portfolio of private investments generating a steady income.
"Capital Growth" provides access to a portfolio of private assets designed to deliver long-term capital appreciation.
“Thematic” takes advantage of dislocations and unique themes that the team has identified; for example, current opportunities in the aeronautics industry both in credit and equity, as well as in US financial services, particularly with small and medium-sized banks.
Petiole emphasizes diversification across multiple asset classes, sponsors, strategies, and geographies.
Can you tell us about Petiole's expertise in private markets?
Petiole has navigated through several economic cycles over the past 17 years and successfully managed a dynamic allocation in private markets. Following the 2007-2008 financial crisis, Petiole formed a team in New York to capitalize on the dislocations in the US residential real estate market. As the economic landscape changed, the strategy shifted from multi-family homes to offices in real estate and later, to real estate credit. Currently, the team is also exploiting dislocations in private debt and corporate buyouts in the US.
Petiole’s first investments in Asia dates back in 2005, and the company has since remained a strong believer in the emergence of this market, not just China. It continues to be very active in this region for private equity, real estate, private credit, and venture capital transactions, with the notable launch of its 5G and AI fund in China in 2019 and co-investments in exceptional companies such as Coupang in South Korea and Allegro Microsystems in Japan. Petiole was also able to participate in the regulatory arbitrage of the Australian non-bank loan market.
In Europe, Petiole has had significant success in private equity transactions and is actively seeking to increase its allocation to private markets in this part of the globe. The team is agile and proactive in detecting market dislocations while maintaining rigorous standards of due diligence. The execution of investment ideas is carried out in partnership with some of the largest players in the private markets such as KKR, Blackrock, Baring Private Equity Asia, and Partners Group, allowing investors to access transactions often reserved to large investors.
Petiole continues to diversify its portfolios with investments in the technology sector, especially as the Covid-19 pandemic accelerated digital transformation initiatives across industries. This includes software and digital marketing in the U.S., and online education and healthcare in China and Australia. The management team has also identified opportunities for mortgage loans in Europe and liquid loans in the U.S.
In your view, what sets Petiole apart from the others?
Petiole collaborates closely with its clients to drive its innovative corporate culture, which is an essential factor in identifying, executing, monitoring, and managing risk for its clients. With $2 billion in assets under management and growing local teams in Zurich, New York, and Hong Kong, the organization can quickly identify and act upon opportunities arising from market dislocations.
Petiole also stands out through its digital platform, The Petiole App, which offers the expertise, diversification, and transparency required to invest with confidence in several private market asset classes. Once investment opportunities are identified, Petiole makes them easy for clients to access exclusively through its app, which also provides market insights and direct links to its team of experts for inquiries.
The company’s board of directors is comprised of seasoned Swiss financial experts who are actively engaged in achieving crucial milestones for Petiole, such as achieving the FINMA license, becoming a signatory of the Principles for Responsible Investment (PRI), and carrying out all phases of digital transformation within the group.