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BetaShares eyes offshore growth with new partner

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BetaShares has taken on a new cornerstone investor, TA Associates, as it enters its second decade in business, with founding partner Mirae Asset Management cashing in its chips. TA is arguably the largest growth-orientated global private equity firm with a specialty in financial services.

  • TA, which has backed managers such as PIMCO and Invesco early in their lives and, more recently, bought into the non-index business of Russell Investments for its relaunch, is also a significant shareholder in Melbourne-based Yarra Capital and New Zealand-based Fisher Funds. Elsewhere in financial services, TA has a cornerstone holding in Australian insurance broker Honan Insurance.

    Importantly, perhaps, as BetaShares considers its next ten years and the possibility of international expansion itself, TA does not have a significant stake in any other ETF provider at present.

    Alex Vynokur, BetaShares founder and chief executive, announced the new arrangement yesterday (March 8), expressing his and management’s enthusiasm for the next phase of the company’s development. He and other key executives are understood to have retained their holdings, while TA bought Mirae’s plus “several other minority interests” for its stake.

    Vynokur said: “Over the past ten years, BetaShares has developed a market-leading position in the Australian ETF industry, helping democratise investing by expanding choice, lowering costs and making quality investments more accessible than ever before.

    “Looking at the decade ahead, we have a vision for the company to continue developing into a leading, independent Australian financial services business, offering a wide range of quality solutions to help our clients reach their financial goals.”

    BetaShares manages about 60 ETFs listed on the ASX, with total assets of about $16 billion. They cover a full range of investment styles and strategies from plain-vanilla domestic and international indices to actively managed funds and alternatives. The product suite includes both BetaShares-instigated ETFs and those managed in partnership with other managers. These include four active ETFs with Legg Mason, a part of Franklin Templeton, and previously some active ETFs with AMP Capital. BetaShares has about 60 staff.

    “International expansion is well and truly on our radar,” Vynokur said. “But we want to be thoughtful and measured about it. We are not planning world domination and I’m not making any big bold predictions.”

    However, he said: “There are some markets which look very attractive. There are some markets which haven’t seen the same growth that we’ve seen in Australia or the US and Canada. We’ll be selective. It is likely to be a mix of build-it-from-scratch and acquisitions.”

    There were also other opportunities in Australia, he said. “We are focusing on organic growth in Australia, but we also think there are opportunities to provide a broader range of solutions and products… For example, the banks are stepping back [from funds management] and their need for value-for-money unbundled product is greater than ever before.”

    TA would have one representative on the BetaShares board, and the company would soon announce the appointment of a well-known global executive as an independent director, Vynokur said. The other directors are management representatives.

    Edward Sippel, head of TA Associates Asia Pacific, based in Hong Kong, said in a statement: “We look forward to partnering with BetaShares’ management team to help further accelerate the company’s growth by leveraging its existing, highly regarded offering, expanding its product depth, and enhancing its geographic footprint through acquisitions and strategic investments.”




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