passionate advocate of post-crisis era EP

While the financial crisis was a disaster for the markets in unquoted shares, it was equally uncomfortable for the private markets like private equity and infrastructure. As liquidity is now the desired properties of financial markets illiquid assets such prisons were painful for many investors that they are forced to crystallize large losses. Alan MacKay, a veteran of the private equity world, he was both familiar and exciting challenge. His first day in the industry was Monday, October 19, 1987, known as Black Monday, when stock markets by more than one-fifth fell within a few days. "I thought kind, it is normal," he said. After such a beginning, it is perhaps not surprising, as he optimistic about the market turmoil of recent years. "It was a great challenge to see for myself what the involvement of [the financial crisis of 2008] for the private markets." He apologized for "a passion for the window in which we live, which comes only once in a lifetime, if there is a chance to change the structure" of the business model in the industry. In 2008, he said it was clear that the private equity "structural defects in the process break down were" and the whole system would be reset. In 2010, Hermes Fund Managers Gartmore Investment Management and joined a private equity fund of funds business to create an independent authority responsible private markets, Hermes GPE. They brought Mr. MacKay of 3i, where he was for over 20 years been at the helm of the company. His first priority was to restructure the company to succeed in the environment has changed after the financial crisis. That meant starting with fee structures. "Pools of private equity capital was lazy -. You pay 2 and 20 [2 percent annual management fee and 20 percent of the statements] for all sizing is not there," he said. Hermes GPE has halved their fees imposed on the assets allocated to private equity funds at 1 and 10, and developed a model of co-investment to reduce its customers pay off your total bill them. This model assumes some of the clients' money goes into other funds managed by private equity managers, but the rest are located in the same project funds in. In the first two years of its existence, Hermes GPE has not advertise for new business - he has accepted more money from existing customers, as they adopted the new model, but not the collection of assets is a priority. "We see ourselves as investors in most asset managers," says MacKay. Another feature of the company's private equity boom time was that the annual management fee on all invested capital has been calculated, even before it was invested. Mr. Mackay says it is an outdated practice that customers do not like growing leaves. Although Hermes GPE is a leader in cutting their costs, according to Mr. MacKay, it is not the only one. "It's interesting to see how fast has at least half of the market realized that they have to do." When it started, was 85 percent of the combined assets under management of Hermes and Gartmore Private Equity, 10 percent in infrastructure and 5 percent of private credit. He now has just over 60 percent in private equity, 30 percent in infrastructure and nearly 10 percent of private credit. Another change is likely, as Mr. MacKay said that the "natural split" for a company like this, it is 40:40:20, although this is a likely outcome rather than a goal, he adds. Although private equity has declined as a share of £ 6.2 billion in assets Hermes GPE, it remained largely stable in absolute terms. Mr. MacKay is positive on the asset class in general, however, say the lower levels of leverage means fewer but higher quality products are ready and that "we see great improvement in profits in the pool of private equity world". Private equity can be used for GPE Hermes treading water, but with the new fee structure and the mandates of the infrastructure, Mr. MacKay said he "nearly trampled in the rush" to invest with Hermes GPE. Almost all of the growth of almost 50 percent of assets under management over the last two years has been in terms of additional infrastructure for existing customers and the company opened offices in Boston and Singapore to the size of its investment base mirror. "The appetite of pension funds for the infrastructure is incredibly powerful," he says, but warns that only will do "the right kind of infrastructure." He speaks of the developed infrastructure assets that are already built and generating a revenue stream for greenfield projects, the risks of the construction is involved, rejects what is to win the vital government investment. In Britain, the government is working hard to facilitate the investment of pension funds in infrastructure, but this discrepancy, it is a complicated matter. Mr. McKay suggested that if the government takes the time segment of society, he should simply be the target of pension funds that reach £ 2000000000-4000000000 investments in infrastructure. "The appetite for infrastructure in the UK is many times greater than the flow of assets," he said, as the pension funds for the projected returns that meet the search for their commitments. GPE Hermes understands resist as a role in assisting customers to the temptation to dive when prices are high, but also attention once the capital is committed. An investment of close to his heart is the notion of responsibility. This was an easy sell in the private equity industry, where it is pretty well established that in order to avoid environmental damage is, for example, is good for business and reputation. The impetus comes mainly from the general partners, professional investors, rather than the sponsors (LPS), owner of the assets for which money is invested, said MacKay. "To date, records were a bit lazy. Ask all [the responsible investment], but no one insist on this point. It did not exist five years ago as a problem, but now it is really important." The infrastructure is lagging in this area, but Mr. MacKay is determined to bring his ideas and beliefs in the face of private equity.