Founder & CEO Conor Smyth Eyes Asia’s UHNW Investors for TritonLake’s Private Assets Collection

Spanning offices in New York, Dallas, Toronto, Dublin and Luxembourg, TritonLake specialises in delivering access to differentiated and high-quality private market opportunities to private banks, wealth management institutions, advisors and investors worldwide through the online portal the firm has developed, with full support from their team of specialist advisors. Hubbis ‘met’ with Conor Smyth, the Founder & CEO of the firm, to learn more about the origins, the mission and the outlook for the future. A key mission in the short term is to expand into the Asia-Pacific region, getting the word out about TritonLake’s carefully selected opportunities to UHNW investors and those who represent them in the region, and building the recognition of the brand.

Smyth opens the conversation by explaining that the key mission for the firm is to evaluate hundreds of funds and direct investment opportunities across the globe every year in order to present screened and vetted ideas to their network of sophisticated investors.

“We sift perhaps 1500 opportunities down to maybe five or ten relevant to an investor each year, by carefully applying our expertise and experience,” he reports. “Our TritonLake Portal then enables investors to fine-tune their investment preferences and quickly find relevant and compelling opportunities, all in one secure and easy-to-use interface, with all the investments vetted by our team and presented in an easy-to-compare format, with all the key relevant information.”

Smyth founded TritonLake in 2015 with a vision for bringing together alternative investment opportunities and ultra-high-net-worth investors. Prior to founding TritonLake, from 1997, Conor was a partner at MoneyMate, a technology and services business delivering technology and managed services to global investment and wealth management firms. He was central to growing that business over almost two decades through partnerships with senior leaders on both sides of the Atlantic, culminating in the strategic sale of this business to US private equity-backed Compliance Solution Strategies.

Alternatives shine

He explains that the ‘low interest rate for longer environment’ has helped propel global institutional, HNW and UHNW interest in private assets and the shift to diversify from publicly traded investments appears to be here to stay. “The reliable returns even in the mid-single digits from the public arena are gone for the foreseeable future,” he reports. “Put simply, as rates have fallen and then fallen further, this has driven investors to look for other yielding alternatives.”

He remarks that in the US, the origin of the TritonLake operation, the endowment investors have already taken a much more progressive approach to the use of alternatives for many years, often with 20% to 30% of their portfolios in alternatives, much of which heads to private markets. “Of course, these types of investors do not have the types of liquidity constraints that many individual investors have,” he comments, “but it is an investor model that's starting to propagate globally now as well.”

A growing investor network

The TritonLake investor network today includes over 200 single and multi-family offices, outsourced chief investment officers (OCIOs), fund-of-funds, university endowments, and other sophisticated institutional allocators. They have combined assets under management in excess of USD4 trillion, and the average bite size for a primary fund commitment is in the USD10 to USD25 million range.

TritonLake’s focus is on clients in the UHNW segment, and naturally the single-family offices and MFOs which represent much of that wealth.

“UHNW investors are generally far less concentrated on the liquid public markets,” Smyth notes. “They have the holding power to retain such alternative assets for a number of years and to thereby seek returns that are both elevated and to a very large extent uncorrelated with the public markets.”

He explains that as these are private market opportunities accessed through experienced and reputable managers, there is transparent reporting to investors, resulting in a feeling of reassurance throughout these extended, multi-year investment horizons. “In short, we believe the returns on such investments can be more forecastable, repeatable, and believable. That is certainly the case, from our experience.”

Serious returns possible

Conor observes that if investors are locking up money with a buyout focused private equity fund for 10 years, they should realistically seek to generate a 20% net IRR, and therefore a doubling of their investment over that period.

“The appeals of these types of private assets include the ability to lock it up as a long-term investment, check on it regularly as it's progressing, and throughout, and unless the world is completely falling apart, feel pretty confident that the investment strategy will remain on track and deliver,” he says.

He notes that with public markets, investors are far more reliant on cycles and a host of other factors. “In my view, the huge bull market over the last decade or so has emerged in an environment where there really shouldn't have been a bull market, especially perhaps more recently since the pandemic hit, but it still continues,” he says.

“It is all rather irrational. That is why those who can, really should have part of their portfolio in assets not correlated to those markets. The old rule around 60% equities and 40% fixed income clearly no longer works today and is not likely to be valid again for the foreseeable future. In short, people need alternatives.”

Filtering and curating the right opportunities

Smyth explains that TritonLake on average evaluates some 1500 funds and direct investment opportunities across the globe every year and across all alternative asset classes. They include all types of traditional private equity, from deals focused on the larger more established companies that are predominantly already profitable or clearly moving forward in that direction, as well as earlier stage private equity around VC, growth situations, and later stage buyouts.

The opportunities also include different types of private debt and credit, some of which is more suitable for wealthy individuals and some of which is better suited to endowment funds or pension funds. And the firm also covers real assets such as farmland or infrastructure, where Conor reports there are plenty of interesting situations.

Conor clarifies that most of TritonLake’s efforts on recent years have centred on the private equity side, spanning very early-stage venture capital through to buyouts of more established businesses. And the focus is on the lower-middle market in the range of several hundred million dollars to roughly USD1 billion, as well as smaller situations that show great promise.

Through the eye of a needle

“We have been looking at 1500 opportunities a year on average in recent years,” he reports. “And from those, we narrow down first to approximately 500 deals, then narrow down to roughly 150 for due diligence, then to 50 for our really serious attention and finally to about five deals that we offer to clients.” For a typical fund, TritonLake look to raise USD50-100 million from their network in a given year.

He reports that the robust screening and diligence process the firm follows is driven by the quest for several key attributes. The opportunities must offer a differentiated and relevant investment thesis, a strong risk-return profile, a capable and appropriate management team to deliver on the investment thesis, and an on-mandate track record of performance to provide the evidence that they are indeed the right team.

Targeting lower middle-market deals

He comments that TritonLake is not a player in what can be termed the democratisation of alternatives, where different platforms work with big private equity providers, cut up the allocation into smaller slices, so that investors with anything from USD50,000 and up can participate.

“Those players all have a key role to play, with these platforms partnering with the global investment banks and slicing up deals for mass affluent and HNW investors,” he says. “At the other end are the giant deals that go to the major institutions, pension funds, sovereign wealth funds, with slices of USD100 million and of course far more. But our focus is between those two worlds on the UHNWIs, the family offices, and the foundations.”

Additionally, the firm works with outsourced CIOs who look after the portfolios of smaller endowments, foundations, family offices, as some of the private equity fund of funds, as well as some of the university endowments. Their typical bite size in the US tends to be in the USD10 to USD30 million range, which is ideal for anyone raising a fund of perhaps between USD100 and USD750 million. “And that is the type of network we have been building in Europe and Canada, and that we want to build as we further grow the business internationally,” he reports.

Technology to deliver the right deals

Smyth reports that aside from the team’s expertise in identifying, filtering and then communicating opportunities, the firm has invested significantly in technology. All of the investors the firm works with have access to the TritonLake portal, which, combined with the firm’s proprietary matching algorithms, prioritises investment opportunities to ensure that their interactions with TritonLake are as relevant, efficient and valuable as possible.

“Our online portal has technology that allows investors to securely access any of the opportunities that we offer,” he says. “And we have built our own matching algorithm that provides a ‘match’ rating with each individual investor we deal with, and even to different individuals within a single firm, depending on their preferences and profiles.”

“We can vet their preferences with the intelligence we pick up from their interactions with us and the portal and that helps direct us to aligning the right deals with the right people,” he elucidates.

“The key point is that the technology for us is an enabler, and certainly helps us boost our relationships as we are highly targeted and focus on relevance and suitability.”

The fortunate 500

He comments that TritonLake emphasises that it is a relationship business, first and foremost. “As I said, ours is not the democratisation model, and instead we are targeting perhaps 500 select, sophisticated investors globally, and we're bringing them carefully curated opportunities in a very targeted manner.”

He says that as these are all extremely busy people, they need to maximise the ‘slivers’ of attention they can obtain so that the investors are more likely to engage with the opportunities that are interesting to them. “The deals are curated to achieve a good fit for both the investors and the fund and for us,” he says. “We are matchmakers, bringing these two key interested parties together.”

Asia in the sights

Smyth explains that the firm has been highly US-centric to date and has been gradually building its network in Canada and Europe now that it is in a more global phase of expansion.

“It also makes great sense for us to expand into the UHNW market in Asia, which continues to grow faster than anywhere else in the world, and where their adoption of private markets is growing in line with that,” he reports. “So, we see this as a good time to start building conversations with people in the region, and then hopefully, before too long, we might be able to travel, and we also plan to have people on the ground.”

He comments that while UHNW investors in the Asia region might have seen the major global funds, such as the KKRs and the Carlyles or the Apollos that all have presence on the ground in the region, they might not be regularly seeing any of the differentiated and more niche opportunities that TritonLake sources.

Key Priorities

A core mission is to keep expanding the investor network globally. “We want to evolve from being a US focused investment advisory firm to becoming a global investment advisory firm by the end of 2022,” he reports. “Asia is of course central to that mission.”

His final comment is that from the sourcing perspective, another key priority is to continue to expand TritonLake’s reach to provide more globally differentiated opportunities. “Right now, we are roughly 80% North America and 20% Europe today, in terms of the managers we work with, but we are working hard to diversify globally and to offer a more balanced set of opportunities. We would like to see that by the end of this year, and we are on track to do so.”

Getting Personal

Smyth hails from Dublin, Ireland, and studied Electronic Engineering at the prestigious University College, Dublin. His first job was in banking and four years and two banks later, he then joined MoneyMate, then a small software firm that provided technology and services to global investment managers and wealth managers. MoneyMate grew robustly over the roughly 20 years he worked there before they sold to a private equity firm in New York named CIP Capital. At that time he was a partner in the business and the sale offered him the opportunity to then branch out and create TritonLake.

“It was during those years that I really built my knowledge base and expertise in terms of these types of private investments.,” Conor reports. “We had built a significant network on both sides of the Atlantic, and when we exited, I wanted to stay in investments and leverage my expertise, hence the idea of creating TritonLake, which first began centred on the multifamily office space across the US. The timing and the idea were right, and now we are on the global leg of the journey. It’s an exciting time to be involved.”

Smyth has two children aged 10 and (almost) eight, and he has a wide array of interests outside of investments, including TritonLake’s fairly recent sponsorship of the Irish Rugby Sevens team, and he even has an eye to the future in Asia, where the famous Hong Kong Sevens might eventually recommence. “My rugby playing days are over,” he reports, “but I keep very active in the gym, and play other sports when I can. Now I just hope we can get back on the road and meet more clients face-to-face across the world; that would be wonderful!