Emergence, the first seed capital fund introduced in France with support from Paris Europlace, has selected Societe Generale Securities Services (SGSS) to provide valuation and trustee services to NewAlpha Asset Management, the fund’s financial manager and selector of small asset managers that will form the fund.
Emergence was created on January 19 as an initiative of the global competitiveness cluster Finance Innovation and with the support of the French Asset Management Association AFG and Paris Europlace. Its aim is to provide seed capital to help young asset managers with innovative ideas, but little exposure to institutional investors, grow quickly and reach critical mass.
The fund was created as a multi-compartment UCITS fund and will implement various investment themes with appropriate delegate managers. The first theme, absolute performance, has raised €120 million from institutional investors with the help of NewAlpha Asset Management, which was selected by the Emergence board of directors as the representative of financial management for the absolute performance part of the fund.
SGSS was selected to support NewAlpha following a request for proposals issued to a number of custodian banks and fund administrators. The securities services house will provide the reporting necessary to highlight the capabilities of the asset management companies within Emergence to institutional investors. The information provided must meet the Solvency II directive, which requires increased information and reporting to be produced for institutional investors, a requirement that SGSS is meeting through the development of a reporting service that provides accurate assessment of the investment profile of a portfolio and its associated risk criteria.
Laurence Fhima, a product manager at SGSS, explains: “Small and start-up asset managers find it difficult to get the attention of institutional investors. They need more than just a track record to inform investors of everything they need to know. NewAlpha’s mission is to select young asset management companies and help them reach critical mass by acquiring institutional references that will facilitate their development.
“SGSS will provide fund administration services to NewAlpha including look-through valuations for institutional investors who need more transparency and have to understand the value of all the lines in a portfolio and the risk for each line.”
Even though the specifications of Solvency II are not yet completely established, Fhima says that because of its capacity to adapt to regulatory developments concerning securities, SGSS has the experience and regulatory understanding to provide all necessary valuations to meet investor-reporting requirements. “This is not new for us, but we need to provide additional information to institutional investors and will continue to do so in order to meet the rules laid down by regulators,” she concludes.
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