MJ Hudson: the next 10 years…
Today, at MJ Hudson, we mark our 10-year anniversary and the halfway point of our 20-year plan to become a world-beating support platform for asset management and alternatives.
Back in 2010, during the last major crisis, when I started this company, it echoed somewhat in the empty room, when I spoke of building a squeaking brand new, fit for modern purpose, global support platform. But it worked back then, helping many energetic and gifted spin-out and start-up teams, taking advantage of the reset and opportunities afforded by the GFC.
And it works now, too, for some of the largest asset managers and asset owners in Northern Europe and North America, which we are equally proud to call our clients.
Ten years ago, the business was formed around certain long-term structural themes, coming out of the credit crisis:
- alternatives would grow AuM faster than mainstream asset classes;
- private equity would re-finance–and get aggressive on downside opportunities;
- teams would spin out from banks–and these spin outs would need an entire infrastructure;
- regulation and compliance would become more important;
- key issues would advance, such as transparency, reporting, substance, sustainability and ESG;
- there would be an increased need for outsourcing, to create pockets of outsourced excellence, as well as a desire to turn a fixed cost to a variable one–and one that operates 24/365.
In essence, the aim was to replicate the mid and back office of the larger, asset-hungry multi-asset managers, or former bulge-bracket banks, so that young and ambitious managers and owners could benefit from the same quality of infrastructure, through our platform. Together, we would help democratise skills across the industry.
Our aim was to achieve this not by specialising in one particular discipline (although we started with private equity funds law as the spin-outs needed that first) but, rather, to build an infrastructure that could provide everything an owner or manager needed to:
- design a long-term portfolio;
- create and launch fund managers–and then their funds;
- support the on-going operations of a portfolio or a fund;
- make and then exit investments;
- review and report on activity, to regulators, investors, and other stakeholders; and
- to be ready to do the whole thing again, armed with a larger volume of past data, for the next portfolio, fund, service, or brand extension.
So, after 10 years of hard work, triumphs and challenges, we now employ 180 staff, advising and servicing more than 1,000 clients out of 9 offices in Europe & North America, including our new-but-old London HQ at 1 Frederick’s Place, which is our seventh London office in 10 years. In that time, we have developed new services, made 9 strategic investments or acquisitions, on both sides of the Atlantic, and managed to list on the London AIM market on the day of the 2019 general election. You may, of course, know us as a client of MJ Hudson Allenbridge, MJ Hudson Amaces, MJ Hudson Spring or MJ Hudson Meyler, and we are all part of the MJ Hudson family.
I would like to take this opportunity to firstly thank all of our client and investors, who have not only supported us, but challenged us to continually adapt our services. I would also like to thank our exceptionally talented team at MJ Hudson–our “Hudsonauts”–as well as our suppliers and service providers, who we value immensely.
So, what of the next 10 years? Again, we are building out of a time of uncertainty, during a public health crisis that has become an economic one. When we look to the trends for the next 10 years, as we enter a new era of asset management, we see some now familiar trends extending their influence and some new ones, too.
In my view, allocations to alternatives will continue to rise, and this will see more mainstream fund managers moving to create private fund platforms and inhabit the alternatives space (the higher fees and more obviously “active” nature are also attractive, of course). Larger passive managers will also be tempted by more active strategies in alternatives, as they contend with the difficulty of managing issues like lack of control and ESG.
As alternatives become more mainstream, we are seeing more demand from wealthy retail investors, increasing pressure on regulators and adding additional pressures on the cost base, including smaller bite sizes (more clients to service) and greater expectations on reporting, as well as issues beyond traditional performance, from trading of fund units, to the sustainability of the portfolio.
The efficiency gains in the secondaries world are bringing new levels of liquidity to alternatives; although there is some way to go before we can consider private funds “liquid”.
MJ Hudson are building an increasingly (accelerated by the need to work at home) digitalised support platform, for a surprisingly analogue industry; also in preparation for the inevitable next crisis for asset management, that will be the challenge of the Internet giants, using their brands and user base to march into financial services.
So, how do we, as a business, face the next ten years? We believe a vertically integrated model is the best approach. And whilst we build out new services in their respective siloes (we’ve found this the best way to reliably leverage best practice and capture all the nuances of each specialism) we do not get too hung up about the old ways of doing things in single-discipline companies: our integrated services are designed to be near-seamless, from one team, during the whole many-year life cycle of a portfolio, fund or investment.
As such, we are creating a “plug and play” services and support platform, where our clients can engage with us across multiple disciplines, as easily as they can engage with us for a single service. Our end-to-end approach, and thinking alongside our clients, means that the job is not done, until the fund is raised, the money invested, and then exited at a profit, and the next fund is raised. At the same time, we help to make sure that investors are happy and fully informed, and that everything is aligned not only with our clients’ returns, but also with their governance and values. We want to support–and help share responsibility for–the entire journey.
We also believe that building a 100% specialised operation, creates both a library of data-rich content and market knowledge, as well as a network effect for the industry.
But this way of working does not only benefit our clients. It is a robust model for our own corporate development and so is important for our staff and for our investors, too.
Again, I would like to thank all our clients, investors and supporters for the first (sometimes crazy) 10 years, and hope you will join us, whether as client, investor, team member or supplier, on the journey for the next 10 years.
Matthew Hudson | CEO