by Michael Maduell
In my frequent and vast interactions with chief executives of small-to-large asset management firms, I’ve witnessed a number of traits that successful CEOs – meaning growing and retaining assets under management plus getting real respect in the industry – possess.
1. Abundant Charisma from Founders
What is memorable and what will stick in one’s mind? A handful of asset managers possess truly charismatic chief executives. BlackRock’s Larry Fink, DoubleLine’s Gundlach and Rajiv Jain of GQG Partners are some prime examples that come to mind. DoubleLine is a relatively new player compared to BlackRock and has already amassed over US$ 100 billion in assets. Being a founder of the fund management company also helps, as CEO hires may tend to look for greener pastures unless generously compensated.
Having an effective cheerleader CEO is essential in nurturing and growing a sustainable franchise in a monochromatic industry of imitators. Too often, CEOs of certain asset management firms are pure “salespeople” – too pushy or fake, or a highly-bright number-cruncher with low or nil emotional intelligence.
2. Not Drinking Too Much of One’s Own Kool-Aid
“We are a data-driven, technology, ESG-focused, smart-beta, solutions-led provider of services.” Hey, 2018 did I get that right?
Yes, your stuff does not stink. Like a broken clock, many CEOs rely on the flavor of the year or grappling a playbook, beating the idea over the heads of pensions and sovereign fund clients and prospects. In the long-run, it’s better to be more objective when discussing potential strategies. Being overly-transparent or even talking yourself out of the strategy is not what I am directly advocating. I’m talking about a healthy dose of informative marketing. It is important to be realistic about the strategy or thematic idea, as the attractiveness of these concepts shift over time.
3. Stirring up Controversy – Strategically
Shaking the tree and stirring the pot – this trait can surely backfire if not properly executed. Being the brightest crayon in the box can work. Even virtue signaling – latching onto a social current – can work in some instances, but CEOs that can deliver impactful counter-culture statements that shock the conscience tend to draw attention – and capital. This might not be the best example; however, upon the ascendancy of Abraaj Group, the firm’s founder, Arif Naqvi, often commented to not describe countries like China, India, etc. as emerging markets but as global growth markets – then creating a comparison to Wall Street and its risks. Abraaj was able to raise a ton of capital, before its ultimate downfall stemming from early 2018.
Boards need to diligently examine the CEOs they select. Does the firm want to grow or hold the line for the planned dividend? My belief is that if you are not growing, you are decaying, as the world moves faster and faster.
The views in this article are expressed by Michael Maduell.
Michael Maduell is President of SWFI.
The British Columbian (B.C.) government and indigenous groups publicly oppose the Trans Mountain Pipeline project over a number of issues, which include environmental concerns (potential pipeline spills) and land protections. The threat of project derailment sent jitters to Houston-based Kinder Morgan, Inc., requiring the company to halt non-essential spending on Trans Mountain Pipeline L.P. Calgary-based Kinder Morgan Canada Limited, which owns the pipeline, is a listed company that is 70% owned by Kinder Morgan and 30% owned by stock market investors (float). Kinder Morgan Canada hired TD Securities to explore options regarding the future of the pipeline.
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Goldman Sachs is poised to name David M. Solomon, the firm’s president, as its new CEO, replacing Lloyd C. Blankfein. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]
Larger alternative investment houses and banks are taking ownership stakes in specialist private equity firms. On July 13, 2018, Blackstone Group’s Strategic Capital Group and Goldman Sachs Asset Management’s Petershill program acquired a minority stake in San Francisco-based Francisco Partners. Francisco Partners is a private equity firm focused on tech-related companies, competing against Thoma Bravo, BC Partners, Vista Equity Partners, Bain Capital and other specialists.
Dipanjan (DJ) Deb is the Co-Founder and CEO of Francisco Partners. Before forming the company in 1999, he was a Principal at Texas Pacific Group (TPG).
Francisco Partners was advised by Evercore and Kirkland & Ellis LLP. Simpson Thacher served as legal counsel to Blackstone and Fried Frank served as legal counsel to Goldman Sachs.
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