(Bloomberg) -- St. James's Place Plc, which oversees about $100 billion, is in talks with several investment firms about starting a fund that would see it allocate money to private credit, specialty real estate and infrastructure.
The U.K. wealth manager, which invests some 1 billion pounds ($1.3 billion) of new money each month, would launch the fund in 2018 and also buy into private equity, Chief Investment Officer Chris Ralph said in an interview at his London office. He declined to identify the firms he might pick to run the fund.
“It's a really interesting opportunity” to diversify our investments, Ralph said. “The mandate is likely to start with seed capital, but if you look at our inflows” it could grow very quickly.
Demand for private credit, private equity and the like has been spurred by institutional investors hungry for alternative sources of yield at a time of record-low interest rates. The market for private credit alone has grown fourfold in the past decade to more than $595 billion as of the middle of last year and could swell to $2.5 trillion by 2026, according to data provider Preqin Ltd.
St. James's is yet to make a final decision about whether to go ahead with a private-assets fund, Ralph said. Most of the Cirencester, England-based company's client money is currently invested in public-market assets, across 36 separate investment strategies that are run by a group of third-party fund managers.
The bulk of its customers are individuals with average savings of 100,000 pounds to 250,000 pounds, according to Ralph. St. James's reported a 46 percent increase in net inflows in the first quarter, sending group funds under management to a record 80 billion pounds.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
To contact the editors responsible for this story: Neil Callanan at ncallanan@bloomberg.net, Paul Armstrong, Jon Menon
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