The group of six who defected from Hamilton Lane Advisors in April to launch advisory firm Franklin Park Associates describe themselves as PHDs. No, they’re not trying to pass themselves as academics, but as Poor, Hungry and Driven professionals. The Philadephia-based firm’s founding partner and CEO, Brad Atkins, is hoping that these qualities will set the new firm apart from its competition.
“We are all striving to do more and do it better. Funds want to see your hunger,” says Atkins. “And we have it. We will never be satisfied. We are really passionate about this.”
The firm has already won two clients. It most recently snagged the Overseas Private Investment Corp. (OPIC), an international financial institution that provides leverage to funds.. OPIC is looking to get involved in about six funds in emerging economies, based on Franklin’s recommendation. “They will put between $50 million and $100 million in each fund on a one-to-one or two-to-one basis. The amount will really depend on what the manager can raise,” says Atkins. “We are retained to look for funds in Mexico, Latin America and the Middle East.”
Landing OPIC was a score, but Franklin’s first advisory retainer came from City of Philadelphia Board of Pension & Retirement at Hamilton Lane’s expense. The pension and retirement fund earlier this year hired Cooper Consulting to run an RFP process for a new private equity portfolio advisor. Philadelphia previously had used Hamilton Lane, but changed course by signing Franklin Park to a four-year contract.
“The fact that we won this retainer is a testament. There were a number of applicants, and there was an interview process with the board,” says Atkins. “We are ahead of plan in terms of bringing in clients and revenue. We are crossing our fingers on swinging a couple more clients this year.”
A New Start, A Different
Atkins, along with Karl Hartmann, Michael Biancine, Jim McGovern, Neil Mowery and Ryan Chowdhury all left Hamilton Lane with this vision.
“When we first started, we took the risk of starting with no clients. It was very scary, but we had passion for what we were trying to do. Winning Philadelphia was big for us,” says Atkins. “Philadelphia likes our customized and client-focused approach. We have no allocation conflicts.”
While Atkins assured that there is no hard feelings between Franklin Park and Hamilton Lane, it’s clear that the Franklin group does not want to be involved with a fund-of-funds practice like that of Hamiton Lane’s.
“Every thing is fine between us and Hamilton Lane. We have respect for them. They are responsible for where we are today. Leaving wasn’t easy, but we are now taking a very different approach than them.”
Indeed, Franklin Park is only looking to advise funds on where to put their money, not to launch a fund-of-funds practice. “We don’t want to be compensated on investments,” Atkins says. “A fund-of-fund comes with a management fee and a profit sharing interest. The investor is being penalized for using the vehicle. The advisory side allows for more involvement, while a fund can make a decision on what firms to invest with based on their needs.”
There certainly seems to be opportunity in helping LPs select funds. According to Alt Assets’ most recent LP survey, 90% of LPs in North America use advisors help them select funds and advise them on investment strategy, while only 60% of LPs depend on advisors for access to funds.
Addtionally, because Franklin is, and plans on remaining, small it can devlote time to its clients. “Lots of other firms are very large and have too many assets under management,” Atkins says.
To be sure, Franklin Park has a modest growth strategy. The firm’s vision is to bring on around five clients in the next two years. Long-term, the firm plans to maintain about eight clients with 10 to 12 employees. “We don’t believe that the business can be scaled to a large extent. You need to limit the number of clients you have to really provide advisory services or you wind up giving clients a cookie-cutter approach,” Atkins says. “Each prospective client has a different objective and different risk/return, and risk/restraints. You have to add value, and to do that you need a customized approach.”
-Additional reporting by Dan Primack