(Bloomberg) — Australia’s Pinnacle Investment Management Group Ltd. is on the hunt for deals in the UK and Europe after the market correction made valuations more appealing for the financial group.
“We are always on the lookout for opportunities where we think we could add value, either through our capital or our backing with infrastructure or distribution,” Founder Ian Macoun said in an interview. “We’re looking in the UK and Europe.”
Sydney-based Pinnacle runs a “multi-affiliate” business model, owning minority stakes in more than a dozen firms that manage private equity, real estate, stocks, infrastructure and other assets. It recently expanded to Canada with a 32.5% interest in Toronto-based Langdon Equity Partners Ltd., a small-cap equity manager.
Financial stocks have tumbled this year alongside other risk assets due to the combination of soaring inflation, rising interest rates and concerns about a recession. Those worries are particularly acute in Europe because of skyrocketing natural gas prices and the prospect of energy shortages sparked by Russia’s war on Ukraine.
The Stoxx Europe 600 Financial Services Index has dropped 29% this year as of Monday’s close. “There is a lot of stress over there at the moment. Their industry in aggregate is in outflows and their currency has weakened a lot,” said Macoun. “We’d love to do some things over there, including retail distribution.”
Its affiliates include private equity firm Five V Capital Pty Ltd., boutique fund manager Plato Investment Management Ltd. and Riparian Capital Partners LLC, which focuses on investments in water, agriculture and food. Pinnacle affiliates’ funds under management stood at A$83.7 billion ($54 billion) as of June 30, but the firms have the capacity to grow much larger A$300, according to analysts.
“We’re very, very picky and we really go after the very best investment professionals in their field in a range of different asset classes and investment styles,” Macoun said.
Pinnacle’s entry into Canada through its backing of Langdon will eventually give the Toronto firm access to clients in the US, Europe and Asia. For now, Langdon is distributing its small-cap funds only in Canada and Australia. “Initially we will build out distribution within Langdon and we’ll add more and more resources over time,” Macoun said.
Pinnacle’s shares have fallen 45% in Australia this year, but they’re still up about 180% over five years.