Perennial intensifies microcap focus via Balmoral stake

In yet another strategic transaction in the investment management space, Perennial Partners has taken a 50% stake in microcaps specialist Balmoral Investors.

The two firms announced the deal on Monday stating that they had entered into binding agreements to appoint Balmoral as the manager of the Perennial Microcap Strategy which was launch in 2017 as a carve-out of Perennial’s Smaller Companies strategy.

The announcement noted that the Balmoral team has decades of experience investing in microcaps and has generated net returns in excess of 12% per annum over the past 15 years.

It said portfolio managers Wik Farwerck and Tim Canham will now manage the combined microcaps funds of Balmoral and Perennial, totalling more than $150 million in assets under management.

“As such, this will enable a dedicated team totally focused on microcaps to both manage the portfolio and market the strategy to new investors,” the announcement said.

Commenting on the transaction, Perennial Partners executive director, Anthony Patterson said he wanted to reinforce to investors that all necessary resources would be continue to be committed by Perennial to the management of Fund to ensure investment opportunities are continued to be captured.

Commenting on the changing dynamics at the small and microcap end of the market, Andrew Smith, Head of Smaller Companies and Active Engagement at Perennial said: “The small cap and microcap end of the market has evolved considerably since 2017.The average company market cap size in the small cap index has risen significantly since then and there is an increased focus on the impact from index inclusion given the rise of passive money – hence the investment universe for both products is now very different.

“As such we believe that this dedicated microcap arrangement will deliver the best results for our clients in this market.”

The Balmoral team brings a successful growth focus to its investment strategy which better suits the current structure of the microcap market.

Balmoral’s Tim Canham pointed to the familiarity with Perennial stating that he had known both Andrew Smith and John Murray at Perennial for over 20 years and held them in high regard.

The announcement said that as part of this new arrangement, Andrew Smith will now be solely focused on Perennial’s small caps and the active engagement strategy which has combined funds under management of about $1 billion.

It said Smith will be available to Farwerck and Canham for any assistance on the existing portfolio during the transition which is already well progressed. Sam Berridge will continue to manage the microcap resources component for Balmoral.