Aussie California

Macquarie is building a US fund of funds business with the help of three former Pacific Corporate Group pros.

The global ambitions of Macquarie, the largest investment bank in Australia, have reached the US private equity market. Over the summer, the firm hired Peter Martenson, Eric Becker and Rick Fratus to open Macquarie Funds Management Group’s office in Carlsbad, California.

Despite now working for an operation headquartered on the other side of the world, the trio’s career change required only a short trip up the coast from La Jolla, California, where their former employer, private equity consultant Pacific Corporate Group, is based. 

Macquarie Funds Management has roughly $42 billion (€35 million) in funds under management, of which roughly $1.7 billion is invested in third-party private equity funds, fund secondaries and co-investments. Macquarie would like to see that number grow. Most of the firm’s current private equity capital comes in the form of discretionary assignments from Australian public pension funds. In order to grow a global fund of funds platform, Macquarie couldn’t avoid the United States.

Martenson, the California division director, says his team, along with the team of five private equity professionals in Sydney, will make “concentrated, optimised investments” in funds and direct co-investments. The firm will likely make six to eight commitments per year around the world. “Maybe 10 in a heavy year,” said Martenson.

Martenson predicts that in addition to the skills and access he and his Carlsbad team can provide, investors will be attracted to the Asian expertise that Macquarie has developed due to its antipodal vantage point. Australia in particular has driven many of the returns in what is loosely labeled Asian private equity, said Martenson.

Macquarie’s ambitions in the world of FoFs follow its expanding direct private equity business. In October, the firm took public an A$1 billion ($705 million; €589 million) vehicle that will invest in global media assets. The firm already has a dominant global infrastructure investment programme. Last year, for example, the firm closed on roughly $2.5 billion for a European infrastructure fund.

Martenson declined to comment on fundraising plans for his group. However, the Australian press recently reported on a $150 million Macquarie “clean energy” fund of funds that will target mostly US private equity funds that seek to build such companies. Expect fund managers across the US to become more familiar with Carlsbad, California.