AI Magazine Issue 2 2017

Acquisition International - February 2017 9 The winner of the Leading Hedge Fund Manager 2017 for Luxembourg award, The Prudent Group, offers international investors the possibility of meaningful investment returns in our Brazilian short term corporate credit business. They run regulated funds in both Luxembourg and in São Paulo, Brazil to achieve this end as the firm’s Jon Malmsäter explains in this exclusive article. rudent focuses on short term corporate lending in Brazil. We finance a broad range of businesses mainly in non- cyclical areas of the economy. Our aim is to create long-term mutually beneficial relationships with our borrowers and we, furthermore, strive to protect the investments with credit insurance when feasible. Given my background, it is natural for me in the Prudent Partnership to be specialising in the utilisation of trading technology, the foreign exchange aspects of the business and to be speaking to a select group of investors. The main challenges that I face are created by the bizarre red-tape stifling innovation and sound business development. Given the massive credit squeeze in Brazil, the opportunities for us to deploy capital soundly are almost endless. I try to stay focused on opportunities where we can create significant barriers to entry through the use of technology and superior control of the business flows. Leading Hedge Fund Manager 2017 - Luxembourg Within the Prudent Family, we humbly accept this award as a token of recognition of all the hard work since inception to create a ground-breaking vehicle for international investors into the highly lucrative Brazilian Capital Markets. Personally, I hope that the award will be recognised by potential investors considering to commit some Prudent investment capital. Money management and advisory services In money management and advisory services, ‘numbers do not cry’. The money management business has unfortunately lately taken a most bizarre tack towards the mere size of assets, compared to excellent risk adjusted returns and processes. We are confident that pure skill and excellence will be en vogue soon again. The wider hedge funds industry Prudent is not really a hedge fund in the traditional sense as we solely invest in self-generated short term corporate receivables. Prudent is an operational business active in the Brazilian credit market seeking highly scalable and repeatable transactions. Furthermore, our fees are much lower and our liquidity better than any hedge fund I have seen. Hence, we are a business dressed in the clothes of a hedge fund. Celebrating success One of my proudest achievements in 2016 is that Prudent have managed to enter into the extremely profitable Brazilian credit card receivables arena. Company: The Prudent Group Name: Jon Malmsäter Email: [email protected] Web Address: www.prudentgroup.us Address: 2, Boulevard de la Foire L-1528 Luxembourg Phone: +55 11 921 240 006 Numbers Do Not Cry P 1702AI13 Numbers Do Not Cry We did in less than six months create our own echo-system of card terminals, processing and receivables discounting. In this business segment we are creating the possibility for Merchants to get rid of their banks. The business is spun off in a separate regulated so-called FIDC named SCF, in which the Luxembourg SICAV SIF, the Prudent Investment Fund, is the sole investor. On the subject of success, it goes without saying that the staff here are key to our success. Lending is a tricky business and we have had the good fortune to be able to utilise the massive Brazilian economic slump to lure over highly seasoned professionals when building up the Prudent business. Most of our many senior associates have more than 30 years of industry experience and bring a wealth of industry knowledge, large contact networks and good eyes for sensible transactions. Customer feedback If the ‘customer’ is the borrower in Brazil, then they are extremely pleased with our speedy and efficient credit decisions. They appreciate the long-term approach we take in our relationships. Indeed, many of our borrowers have formed business alliances with our staff members, dating back some 10-20 years which makes Prudent ‘their first call’. If the ‘customer’ is our investors, then they are pleased because we have delivered on our promises - the returns are outstanding - we offer weekly liquidity and our fees are extremely low. Future challenges The regulatory straight-jacket is increasingly stifling and costly. Furthermore, the flight to the largest money managers is creating a highly strange competitive landscape in the business. As said above, I am hoping and praying that investment excellence will determine allocations and not the sheer size of the AuM. In my highly personal view, the world is as dangerous now as it was in the 1930’s. There is a China-bashing, Russia-friendly, nationalistic ex- reality TV star in the White House, the Brexiting UK is ruled by Theresa Maybe, the Philippines is governed by a self-confessed murderer and there are severe conflicts in Ukraine, Iraq, Syria and in Libya. Given this sordid back-drop, I am quite happy to have a major portion of my own investments in Brazil, where the political landscape is marginally better and the physical location is far away from any potential battle-zones. I hope that more investors will share this view in 2017, when what the de- globalisation demagogues have been shouting about becomes a reality.