Founded in 2019--just before the covid lockdowns started--Titanbay aims to help investors access top-tier private market funds. How exactly did things get started?
“It comes from the realisation, or the insight, that private markets--in particular, private equity--are not very accessible to a broad range of investors,” said Thomas Eskebaek, CEO of Titanbay. “And we felt that the asset class was getting to a point of maturity, and the investor base was getting to a point of maturity, where it makes sense to start connecting the two.” The company, therefore, was founded in order to allow a broader audience to access private markets, and, in particular, private equity.
“New class of investor”
“What we do is that we create feeder funds to some of the best-in-class private market funds across the world, and give access to those feeder funds to small investors, which means that you have a new class of investor who can invest smaller ticket sizes, and still get access to some of the best funds in the world,” explained Eskebaek.
Fundamentally, we believe that private markets and private equity is a very, very interesting asset class
“Fundamentally, we believe that private markets and private equity is a very, very interesting asset class,” said Eskebaek, “and that you have to approach it with a thoughtful and strategic approach, so that you build a portfolio and think of it as long-term investment.”
With its platform and the funds that it makes available, as well as the tools, information and guidance that it provides, Titanbay helps investors to invest in private markets and private equity with the same level of knowledge, access and sophistication as larger allocators to the asset class, he stated.
Opening up private markets
“Ticket size is a major challenge for small investors,” said Eskebaek. “Typically, to get access to some of the best funds in the world, you need $20m, $25m tickets. And if you then combine that with the idea of building a portfolio--a diversified portfolio--you’ll easily get to the point where you have 10, 15, 20 investments. So you’re talking all of a sudden $200m, $250m total allocations just to private markets. So you’re talking, basically, investors with more than a billion to invest, if you want to have 20% in private markets.”
“What we’re doing is, we’re taking that same model, but we’re scaling that down. So you can make investments, let’s say, $125k or $150k per investment. So you can still build the diversified portfolio, and you can still get access to these best-in-class funds, but with a smaller total commitment.”
Read also
Operating on the belief that private markets should be considered as part of a wider portfolio and investment objective, Titanbay primarily works with wealth managers and private banks to provide them with the tools, solutions and capabilities to facilitate their clients’ access to private markets. Besides the investment opportunities, Titanbay’s solution also covers things like reporting or compliance tools. “It’s an end-to-end solution that covers all of the things you need in order to provide private markets opportunities to your end clients in a sophisticated manner.”
But democratisation of private assets “bit of a misnomer”
Everybody in the financial industry seems to be talking about the democratisation of private assets, such as with the entry into force of the revised Eltif 2.0 regulation. Is this truly an opportunity, I asked Eskebaek.
Read also
It’s a question that he gets a lot, replied Eskebaek, especially around the word democratisation. “I personally, and we as a company, feel that it is slightly a misnomer, because this is not about making it available to everyone.”
“At the end of the day, private equity is not right for all investors. It’s illiquid, it’s large capital requirements and it’s long term. So it’s not just for anyone coming in off the street--and that is what democratisation implies. So therefore, we think it’s a bit of a misnomer.”
We, as the industry, have a responsibility towards the end investors to make sure that this is done in a thoughtful and responsible manner
“We believe that private markets and private equity is a very, very attractive asset class for the right investors, who can approach it with a thoughtful and long-term view. And for those investors, it makes a lot of sense to have private equity and private markets as part of their overall portfolio. But it’s not for everyone. And therefore, you have to take the right approach.”
There’s a lot coming for private markets, including Eltif, but the industry has to be thoughtful about it, said Eskebaek. “We, as the industry, have a responsibility towards the end investors to make sure that this is done in a thoughtful and responsible manner, and that it is appropriate for the end investors to invest in this asset class, and that they fully understand what they’re investing in.”
For Eskebaek, it’s important not to think about private markets as a free-for-all. “It’s more about being holistic and thoughtful and constructive.”
“Very excited about the next 12 months”
The company has three locations--London, Dublin and Luxembourg, which is where their general partner (GP) is located. Luxembourg is an interesting market space thanks to structures like special limited partnerships (SCSp) or reserved alternative investment funds (Raif), noted Eskebaek, in addition to its well-established regulatory environment and ecosystem.
Titanbay in May announced a partnership with Evooq, a Swiss wealth management software services company, to support private banks and wealth managers with providing their clients access to private markets. Are there any other partnerships in the pipeline, I ask.
“Nothing we can share today,” Eskebaek replied. “But definitely, we’ll be sharing more news on both partnerships and other things that we’re developing. There’s a very exciting period coming soon; we’re very excited about the next 12 months.”
This article was published for the Delano Finance newsletter, the weekly source for financial news in Luxembourg. .