Vega Asset Management is to form a joint venture with BBVA, the Spanish banking group, to offer a full range of alternative asset management products to the market.
VegaPlus Capital Partners, a platform of several hedge funds that Vega developed and brought to the market, will be the basis of the venture. According to the terms of the transaction, BBVA will take an equity stake in the venture and will contribute US $1 billion of additional seed capital for a multi-year commitment.
The joint venture will initially follow the model originated by VegaPlus, focusing on seeding, developing and marketing single manager strategies. The firm will be managed independently from offices in Madrid, London and New York. All existing VegaPlus technology and infrastructure will be licensed to the joint venture. It will also benefit from additional systems and technology provided by BBVA. The joint venture plans to leverage resources of both BBVA and Vega to grow both the size of the alternative asset management business and the scope of its funds’ offerings.
The core Vega funds – Vega Global, Vega Select Opportunities, Vega Relative Value, and Vega Liquidity – will continue to be managed independently with Vega’s Spanish regulated entity being the main investment advisor.
Ravinder Mehra remains the Chairman and Chief Investment Officer of Vega but, following the establishment of the joint venture, Jon Berg, Chief
Executive Officer of Vega Asset Management (USA) LLC, will retire. He will be replaced by Michael Mann, currently Global Head of Marketing for
Vega, who will assume the additional duties of CEO of Vega’s North American operations.
The strategic alliance between BBVA and Vega will take the form of Prxima Alfa Investments, a global alternative investment company in which BBVA will holds 51% and Vega 49%. Vega brings its VegaPlus business line – a hedge fund incubator with 10 funds and $2 billion in assets – while BBVA will invest $1 billion, bringing total assets under management to $3 billion. Prxima will also make use technology and risk control systems from both parties.
Through Prxima, BBVA and Vega will offer alternative investments in all the world’s markets. The new company will be registered in Spain and have offices in London and New York. It is, says BBVA, one of the most substantial partnerships ever between a banking group and an independent alternative investment manager.
“Alternative management has become an indispensable asset management tool. BBVA is once again ahead of the market with this ambitious partnership. We can now offer our domestic and international customers access to all markets through the most sophisticated and innovative investment solutions,” says Jos Barreiro, head of BBVA’s Global Markets and Corporate and Investment Banking. “This alliance will strengthen BBVA’s presence in an industry with substantial added value. We now cover the entire alternative-management value chain in terms of product range and international distribution. And we have the best possible partner, Vega.”
Carlos Garca de Juana, general manager of Vega Fund Holdings AV in Spain, says alternative investing is fast-growing but highly competitive business. “Investors want high-quality products with a difference, with access to top experts in a safe environment and the best control systems,” he says. “The Vega-BBVA joint venture is an ideal solution. For us, the alliance combines the stability and resources of an international financial group with a proven and successful business model. Both partners share the ambition to be among the best in the world in this industry.”
Barreiro will be the chairman of Prxima, which is being launched with $3 billion in total assets under management, 10 hedge funds and a team of more than 30 professionals.
In accordance with alternative investment legislation in Spain, the new company will be subject to recently approved regulations. It will have its own strict code of operations, meeting the highest levels of transparency and corporate governance.
One aspect of its business model is the emphasis on control of operational risk and market risk, using the experience and technology developed by both partners.