A hedge fund supervisor’s radical imaginative and prescient for a distant Scottish island | USAEMALL.com

In today’s newsletter:

• Hedge fund manager Ian Wace’s accidental adventure

• BlackRock’s plan to take on private capital giants

• Private market funds lag US stocks over short and long term

The tale of Tanera Mòr

Ian Wace first saw the advertisement for the remote island of Tanera Mòr in 2013. “It basically said, ‘idiot required,’” the co-founder of hedge fund manager Marshall Wace recalls. But when he set foot on the island in north-west Scotland, overgrown with bracken, moss and brambles, with no proper roads, an abandoned herring station, and views out on to the immense ocean, “I just thought this was an extraordinary place”. 

At around 800 acres and only a mile or so from the mainland, Tanera is the largest of the Summer Isles archipelago. Traditionally, local crofters used the islands for summer grazing of their livestock, giving the enclave its name. The word Tanera is derived from a Norse word meaning haven; indeed the island was used as a safe anchorage by the Vikings as far back as the 11th century. But its fortunes have ebbed and flowed since then, a microcosm of the plight of other rural communities in Scotland and beyond, suffering from urbanisation, population decline and limited job opportunities. 

In 2017, Wace bought Tanera for £1.7mn. Last month I visited the island to see how, over the past eight years, he has galvanised the local community and poured capital investment of around £100mn into a project that has evolved around three pillars of charitable purpose: rural and community regeneration; environmental restoration and protection; and targeted support for those in public service. 

The guiding principles in the restoration were commitment to hand building and repurposing, using both local materials and those from further afield that might otherwise have been consigned to a skip.

There are several rather colourful reclamations. A large slab of white marble that is now a dining table top in the smokery came from the men’s toilets at The Savoy hotel in London. 

An Avro Lancaster hangar, originally built in 1924, whose previous home was the Woodford Aerodrome in Cheshire was snapped up by Wace on eBay. And inside, the wooden floorboards were salvaged from Winston Churchill’s Old War Office on Whitehall, after they were ripped out during the construction of the new Raffles hotel.

The Tanera project confounds traditional mindsets of building, philanthropy and community. Read the full story here of how it is quietly raising the bar for new models of regeneration. And in case you missed it, here’s the tale of how Wace and his co-founder, Paul Marshall, built Marshall Wace into one of the world’s most successful hedge funds.

BlackRock’s plan to take on private capital giants

BlackRock last week laid out its ambitions to take on the giants of the private capital world, writes Eric Platt in New York. 

The world’s largest asset manager told investors it planned to crank up the fundraising machine, setting a $400bn target in the coming years for its private markets businesses. 

The target, which works out at north of $65bn a year until 2030, would put it alongside the giants of the alternatives industry, including Ares Management, KKR and Apollo Global Management. But it will require a deft integration of its two recent mega-acquisitions: Global Infrastructure Partners and HPS Investment Partners. And it comes as many investors are tapped out and slowing their allocations to new funds.

The fortunes of these two investment managers are key to BlackRock hitting its five-year targets. At the company’s investor day last week, its executives repeatedly made the case that the higher fees earned on those private funds would bolster the company’s multiple, and in turn its stock price and valuation.

Martin Small, BlackRock’s chief financial officer, said just a small shift of client assets from public to private investment strategies could generate $1bn of fees. The company calculates that total revenues, helped by those fees, could eclipse $35bn by 2030 — up from $20bn last year.

BlackRock chief executive Larry Fink acknowledged that the firm “probably did not use M&A enough in the years” after its 2009 landmark deal to buy Barclays Global Investors, which gave the group a dominant position in passive investing through the iShares exchange-traded fund platform.

Meanwhile, as BlackRock looks to 2030, investors had another question on their minds: who will eventually run the company? 

Fink, 72, said one of his top priorities was working with BlackRock co-founder Rob Kapito and the group’s board to develop its leadership team. In recent years the company has suffered the departure of several top executives who were seen as potential leaders, notably Mark Wiedman, who has joined US bank PNC as president; and Salim Ramji, who is now running BlackRock’s rival Vanguard.

But Fink made it clear he is standing firm: “I’m not planning to leave BlackRock any time soon.”

Chart of the week

Private market funds have underperformed large-cap US stocks over commonly measured time horizons for the first time in nearly a quarter of a century, writes Alexandra Heal in London, as a slowdown in private equity dealmaking activity hampers the sector’s returns. 

State Street’s private equity index — which tracks returns from private equity, private debt and venture capital funds — delivered a 7.08 per cent return last year, compared with a 25.02 per cent total return for Wall Street’s blue-chip S&P 500 index. 

The data shows that the S&P 500 outshone private markets funds for the last three months of 2024, as well as on a one, three, five and 10-year basis. That marks the first calendar year that private markets funds have underperformed the stocks index across all measured time horizons since 2000. 

The gap in performance last year between the two indices was also one of the largest on record. 

The underperformance comes after investors globally have poured trillions of dollars into private markets, betting that they can provide higher and less volatile returns and access to more companies than equity markets. 

“The average private equity manager has clearly been impacted over the past five years as the benefits from leverage and multiple expansion have faded,” said Arjun Raghavan, chief executive of Partners Capital, which invests in public and private markets on behalf of clients. 

The data, which measures private funds based on actual cash flows and does not depend on voluntary reporting, comes after a number of years in which the global buyout industry has struggled to purchase and sell companies.

Rapid interest rate rises in 2022 to combat inflation led to a gap between the prices buyers were willing to pay for assets, given the sharply increased cost of borrowing, and those at which sellers were hoping to sell. The subsequent lack of exits left the buyout sector struggling to distribute cash to its backers.

Five unmissable stories this week

Don Wilson, the founder of DRW Investments, invested $100mn in the Trump family’s flagship bitcoin project just nine weeks after a probe into his crypto business was dropped by the Trump administration.

Blackstone Group is planning to invest “at least $500bn” in Europe in the coming decade, according to its co-founder Stephen Schwarzman, as the private capital group bets economic reforms will revive growth.

Aware Super, one of Australia’s largest pension funds, is ahead of schedule with its plans to invest billions in the UK and Europe, citing attractive investment opportunities and a more uncertain outlook in the US.

High-frequency trading firm Tower Research Capital is planning to launch a fund for external investors as it looks to shift beyond the ultrafast strategies that have made it a big player in global stock markets.

British pension policy is finally stepping in the right direction, writes the FT’s chief economics commentator Martin Wolf. Consolidation of funds makes evident sense, bringing economies of scale and scope.

And finally

Last month, Daniel Graham and Adam Carruthers were found guilty of chopping down the Sycamore Gap tree in Northumberland’s national park, which had been growing alongside Hadrian’s Wall for over 150 years. They had no apparent motive save wanton destruction. The Sycamore Gap is one of 20 trees that feature in a new exhibition by Nancy Cadogan at the Garden Museum in London. Lost Trees features 20 large-scale paintings of both well-known trees and unnamed ones that have triggered a more personal sense of loss; together they are “a memorial”, says Cadogan.

https://gardenmuseum.org.uk
10 June — 20 July, 2025