After 14 years at Nordea, Richard Wanamo joined Evli in November 2019 to lead their new global infrastructure fund. His mandate is to help institutional investors, family offices and HNWI (High-Net-Worth Individuals) customers lower their risk by diversifying their investment portfolios. He sat down for an interview to tell us more about his plans.
You came on board in November last year. What drew you to Evli? How have things been panning out in the last few months?
I was with my previous employer for more than 14 years, having joined them after graduation, and I was happy there. However, when the job at Evli came my way, I saw it as a great opportunity to start something new that’s built on a strong platform.
We have a four-person team, with another portfolio manager, on the fund. The whole thing is a team effort, we always have more than just one person involved in the investment selection process. We support each other on each deal to make sure that we don't leave any stone unturned.
It's been less than a year, but as a team, we've achieved a lot. We’ve had the first two closings of our fund last spring, exceeding my expectations on the fundraising side, and we’ll have additional closings this fall. Right from the start, we've also been actively building the investment pipeline and engaging in due diligence on investment opportunities, alongside the fundraising work. We did our first three investment commitments before summer with top-notch European and global managers, and have good funds lined up for investments for the remainder of 2020 and well into 2021. So, we're up and running and firing on all cylinders.
Tell us a little about this new infrastructure fund that Evli is launching. Why is 2020 the right time for it?
Well if we take a few steps back, infrastructure has been an asset class for large institutions for many years now. But really in the last 10 years, it's taken-off with more expansive growth and the total assets under management of infra funds has grown fourfold. At the same time, there hasn't been a lot of good ways to access the asset class for Finnish investors.
Even here at Evli, we saw that a lot of clients were discussing their strategies and how to get into infrastructure as a part of a diversified portfolio with their investment committees. So, we saw that there was a clear need and the timing was just right. To equip ourselves to fulfil this need, we are investing a lot in growing our capabilities in alternative investments. We have a ‘fund-of-funds strategy’, selecting the best funds globally within the infrastructure space. We've grown the team and also made an acquisition in 2019 to grow the private equity platform. And this is a very natural and synergistic mix within that platform too. It’ll also have a fund dedicated to infrastructure investments. So, this new fund is both demand-driven from the market and something that we ourselves concluded needed to be done now.
Of course, when we started our planning we didn’t know that the world economy would plunge into a pandemic-driven crisis in 2020. But the crisis hasn’t changed our investment strategy or our conviction around the asset class. In fact, private infrastructure investments are, as a whole, some of the least affected assets in this environment – thanks to their very defensive characteristics. Market timing is always tricky with long-term illiquid assets, but we are certainly in a very good position right now since our fund’s portfolio assets will be acquired “post-Corona” rather than before the crisis.
What's involved in actually setting up this type of fund?
The market is not transparent, so it’s very important to have a good team. Our fund managers need to be connected to the network, have investment experience and a good overall view of the market. We obviously need a very strong client base, with very knowledgeable and professional investors who know what they want and are looking for good alternatives. You need a good backbone, a good back-office system to manage it all. Very importantly, of course, you need the backing of a trusted and well-established name like Evli, a very long-term kind of institution with a blue-chip customer base. Even with people we want to invest in, we become a very relevant speaking party.
Evli has long been a Nordic stalwart in terms of asset management. Why will this new fund focus on global infrastructure rather than regional?
Well, it comes partly from the needs of our clients, as well as a prudent risk diversification perspective. We want to offer a broadly diversified portfolio of assets that’s not overexposed to any single country or sector. We want to build a balanced portfolio. Although the investments are going to be predominantly in Europe, because Europe actually has the best-evolved markets within infrastructure and there’s less currency risk as well, we do want to get exposure to other developed markets like the US and OECD. So, we’re lowering the overall risk of the portfolio by diversifying outside of Europe and Eurozone countries. Under-developed markets still have very high risk within the infrastructure space, so we prefer to stay in developed markets.
The word Nordic is almost a byword for trustworthiness, for innovation. What advantage does having Nordic pedigree bring to your business when you go further afield into the global market?
Well, it's proven that a lot of fund managers, from infrastructure and private equity and other alternative assets, really like having Nordic investors. We’re seen in the market as being trustworthy. We typically say what we think. We have very low corruption. There's a lot of long-term capital in our markets, so that attracts funds that are raising money. It also helps having the likes of Varma, Ilmarinen and Keva, which are large pension funds actively investing across alternative asset classes. Helsinki has also become a regular stop on the fundraising trail for bigger firms in the space, and all this adds to the confidence and trust that the market has in Evli.
What role has ESG (Environment, Society and Governance factors) played in the conception and launch of the new fund?
ESG is very much top-of-mind at Evli. It's one of our strategic focus areas and it’s a part of the infrastructure strategy. And since we have primarily a fund manager selection strategy, we're using tools from the UNPRI (United Nations Principles for Responsible Investment), which Evli signed 10 years ago. And we're also using our own rating system for the managers we invest with.
We want to ensure that ESG factors are always taken into account, both in the investment phase and the ownership phase, as well as in the reporting. We want fund managers to proactively report on their ESG initiatives and incidents. We want to be proactive and actually engage with the managers and push them to do the right thing. If we find any areas of weakness, we can push them to improve.
Evli is a seasoned player and has been in the market for almost 20 years. What are the main drivers that keep the company at the top of the field?
The key is that we’re really mindful of the client's needs and requirements when thinking of how to bring on new strategies and new products. We’re realistic in what we think we can achieve. We invest properly in the whole platform. We don't take on assignments and investment strategies that we don't know how to handle, so there's a kind of conservativeness as well. Ultimately, we’ve earned the confidence and trust of our clients by being their long-term partners and looking out for their interests.
WHO?
Richard Wanamo
- Investment Director, Private Assets at Evli Fund Management
- Has during his career invested more than €4 billion in illiquid alternative investments (lead/co-lead)
- Married, two children
- Bass singer in the award winning chamber choir Spira Ensemble. Also enjoys other kinds of music and reading good books.
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The benefit of infrastructure in investors’ portfolios
NB! Evli Infrastructure Fund is intended for professional investors and a limited number of non-professional clients who make an investment of at least EUR 100,000 and who are considered to have an adequate understanding of the fund and its investment activities.
