Plenum Investments looks to Australia for new ILS investors

by Artemis on October 11, 2013

Switzerland based insurance-linked securities (ILS) investment manager Plenum Investments has expanded its capital raising efforts internationally and is actively looking for new investors for its ILS funds in Australia through a recently launched local unit, Plenum Investments Australia.

The Australian investor market has been targeted by other ILS investment managers in the past, with a number of investment advisors teaming up with existing ILS managers to target the space. Now Plenum is seeking to take advantage of the Australian opportunity itself, by establishing a local unit to target new investment capital from down under.

Plenum Investments Australia was launched in late summer of 2013 and gives the investment manager a local representation which will allow it to get closer to the Australian institutional investor base. Daniel Nikles, an experienced re/insurance professional who previously worked for XL Winterthur, has been hired to manage the Australian venture for Plenum and is based in Sydney.

Dr. Rainer Grünig, CEO of Plenum Investments, told Artemis; “We are absolutely convinced that the institutional market in Australia, especially their superannuations, offer lots of opportunities for the Plenum specific management approach. First talks have been very promising. We are very proud that we were able to get with Daniel Nikles a proven expert on board. While the track record of our UCITS IV cat bond fund underpins Plenum’s management capabilities our offering includes mandates investing in the non-securitised part of the market. We are looking forward to developing the market together with Daniel.”

Australia has a mature investment market, with some very large pension funds and other investors, some of which are already involved in ILS investing. However, Australian investors have been a little slow to pick up ILS and reinsurance-linked investments, according to an article in the Financial Standard, but interest is growing and hence Plenum becoming the latest ILS manager to look to Australia.

The Financial Standard article said that Plenum Investments is seeking to build interest and eventually capital commitments from Australian fund managers and institutions that have researched the ILS space and have an appetite to invest in through a dedicated ILS manager.

“We are a team of seasoned battle horses who have been involved since the earliest days of insurance-linked securities,” Daniel Nikles,  managing director of Plenum Australia, told the Financial Standard.

Plenum Investments is one of the smaller ILS investment managers, but has a three plus year track record in ILS and catastrophe bond investing, its cat bond fund having launched in 2010. The smaller nature of the firm offers investors advantages over selecting an ILS manager with billions of dollars under management, according to Nikles.

“Larger players are limited in what they can buy because the supply isn’t available to take meaningful positions. Smaller managers like us can pick and choose the securities we buy and can therefore offer greater diversification,” he explained.

Plenum Investments has identified Australia as a location with a large number of institutional investors, who are growing in sophistication and have a growing capital base. With ILS still a relatively new asset class, despite having been around for 16 plus years the sector has only really become known more broadly to investors as an alternative asset class in the last two years, markets like Australia will provide new opportunities to raise capital and access new investors for ILS managers.

“Our message is that we’re in business, we’re ready to develop partnerships, we’re flexible and we have a finished product that can be translated to the Australian market. We want to speak to investment banks that are thinking about adding to their alternatives exposure,” Nikles told the Financial Standard.

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