Preqin - Building On A Database
The previous and following articles in this series cover lead generator companies in the hedge fund business who make great efforts to explain that they are not database companies. Preqin is a database company that is trying to add some value beyond that restrictive label, so is coming from a different direction from the other two series subjects, Murano Systems and Brighton House Associates.
Preqin provides data and information on the private equity, real
estate, hedge funds and infrastructure sectors. The company started in
London in 2002 by making efforts to track
private
equity
information
(hence the name) – deal flow, terms, funds, and investor activity. The
market intelligence gathered was turned into publications and a
database. It was the investor activity that led to Preqin collecting
hedge fund related information – there was a lot of overlap among the
investors in private equity and hedge funds.
Preqin collated the information the investors (investing
institutions, endowments and family offices) gave them into their core
hedge fund product, which is a database they call Hedge Fund Investor
Profiles. Most alternative investment databases that are sold to
marketers are lists of potential targets for the marketer’s product.
And the usual database/list/directory does not make much effort go
beyond being a database of contacts.
A contact database typically would have a cursory company profile on a
list of targets i.e. North American Family offices. This data can be
found in the public domain from phone directories to websites, and the
value of a contact database is that a company or person has taken the
time to gather up the data and break it into specific lists or
categories. The value is in the aggregating of the data. The company
profile might have a company name, address, phone number, general area
of interest, perhaps some historical information, and the name of the
acknowledged head of the organisation.
A Refreshed Contact Database
The Preqin hedge fund database is different from the typical
directory-like contact database because it is refreshed on an on-going
basis, and carries time-sensitive information. A directory of investor
names you can buy relatively cheaply on the internet is an accumulation
of all the information gathered to that point – it is a snapshot of
standing data and information. Some of the information will be fresh,
some will be quite ancient.
Preqin have a dedicated team of analysts proactively contacting
industry professionals, monitoring regulatory filings, making FOIA
requests and tracking news sources to make the their data and
information on all firms, investors and service providers up to date.
The analysts speak to investors at least twice a year, and try to make
contact with the larger investors four times a year.
The analysts ask investors in hedge funds what their investment plans
are for the next twelve months. There are two levels of interest
captured on the database - actively looking now and tracking a strategy.
The information held on the Preqin database is always first-hand, and
because of the contact frequency, unlikely to be more than six months
old. This is important in a couple of regards – the investment
strategies sought and followed will change over time, and the staff
doing the seeking and following will change. Each month around 400
database entries are updated.
Then there is the breadth. Because of the resources applied – 25 to
30 analysts in total – and the period over which data has been gathered,
Preqin has a database of investors in hedge funds which is as extensive
as any. A directory or list of investor names by category might run to a
few hundred fund of hedge funds or pension plans. The Preqin database
has 3300 investing institutions, and the firm is currently adding 500
new names a year. For example, at the moment the firm is engaged in a
project to identify and contact Foundations, in the process 70-80 names
are being added each month.
Of the three providers covered in this series of articles Preqin has
the most finely tiered offering by price. At the top of the
range is the Premium version of Preqin’s Hedge Fund Investor Profiles.
This gives complete access to all data held for $4,250 p.a. and lists
the name, type of investor, background, location, assets under
management, current and target allocation to hedge funds, current areas
of interest by location and strategy, description of investment plans
and key contacts of the investing institutions.
Only the Premium product is downloadable to Excel or the in-house CRM
of the client, and can be accessed by 5 users. The Premium product
contains consultant information – who works for whom. This is considered
essential information in the current hedge fund marketplace as a large
part of the industry’s flows are now either mediated by a consultant or
advised by consultants. So hedge fund managers looking for the bigger
tickets will buy the Premium version of the Preqin Investor Profiles. As
it is, about 70% of Preqin’s clients for hedge fund products take the
Premium product.
The Standard Access to Preqin’s Hedge Fund Investor Profiles costs
$2,150 p.a. and it enables users to search for investors by location
(e.g. list all endowments and foundations in Toronto, Canada), and
find investors with specific investment plans (for example, ask who is interested in investing with hedge fund of funds)
. Another feature is that users can view investors by firm:
that is, view which Investors have previously invested with particular
hedge fund managers. This can help indicate the biases and investment
style of potential clients. So a pitch can be tuned to the sort of thing
that the potential investor is known to like, and the fund can be
differentiated from unsuccessful investments in the past in the same
investment style.
The Standard Access comes with a couple of compromises compared with
the Premium Access service of Preqin. The database can be interrogated
but not downloaded or linked to a CRM system, and only one user can
access the database at a time. The top-tier of investors on the
database can be separately purchased in the form of the Preqin Hedge
Fund Investor Review, which is an annual product. The 2012 edition
features profiles and analysis for the 1,000 most important investors in
hedge funds worldwide, and is keenly-priced at $795. The Review
contains listings of investors with a preference for the 10 most
important fund strategies.
Entry Level Products
Preqin offer a couple of entry level products: the Emerging Manager
Download and the Fund of Funds download, both priced at a great value
$1000 one-off cost.
The Emerging Manager Download contains contact details for over 890
institutions that have expressed an interest in investing in emerging
managers, making the Emerging Manager Download an excellent way of
targeting the high potential investors for a smaller fund. Investors
include the full array of hedge fund of funds, public pensions,
endowments and family offices and foundations. This Excel download
contains details on nearly 3,000 specific contacts at investing
institutions including name, position, e-mail and telephone number –
sufficient to ensure a new hedge fund manager can contact at least a
colleague of the relevant person.
Historically funds of funds have been the biggest allocators to hedge
funds and are a necessary investor base for hedge fund managers to hit
to raise capital. With the Preqin Fund of Funds download of over 600
allocators the marketer or PM of a hedge fund can searched by strategy,
location and typical investment size to pinpoint the firms who may be
interested in their vehicle. The Fund of Hedge Funds Excel download
contains contact details, including direct phone number and email
address, for more than 2,300 individuals at the 600-odd multi-managers
from around the world. As the firms listed range in size from $10
million to $60 billion they will vary from the nimble to the lumbering,
but filtering of the list by individual strategy, region and typical
investment preferences tags should throw up a very workable long-list of
potential investors.
Preqin has also recognised the increasing influence of consultants to
flows in the hedge fund industry in its product range. The Premium
version of Hedge Fund Investor Profiles contains consultant information,
and in addition there is a dedicated product – the Preqin Alternatives
Investment Consultant Review ($695). The 2012 edition contains profiles
for over 350 different investment consultancy firms.
Consultant profiles within the Review contain information on the
types of services offered, asset classes covered, key financial
information, direct contact information for relevant contacts and
details showing which consultants are being retained by 1,560
institutional investors from around the world. The review identifies key
trends in the consultant universe plus information on the market’s
make-up. Of particular relevance for owners or marketers of single
manager hedge fund businesses the Review shows which firms operate a
buy-list, which firms consider first-time managers, and what they look
for when considering new opportunities. The Review is also relevant to
investing institutions looking to benchmark their current consultants or
to investors considering the services of consultants.
The other directory-like product from Preqin is the Sovereign Wealth
Fund Review, which costs $595 and provides a detailed analysis of
sovereign wealth funds and their activity in all different asset
classes. The Review contains useful analysis plus full profiles for over
60 sovereign wealth funds worldwide. Of all investors in hedge funds
SWFs are perhaps seen as the most desirable – they have stable long-term
capital, are professionally managed or advised, and can write very
large tickets.
The first article in this series covered lead generator Murano
Systems and the next article will feature Brighton House Associates. The
final part will also draw some distinctions between the three and how
they are positioning themselves, and so will come back to how Preqin is
trying to compete more directly with the pure lead generators.
