Alvarez & Marsal has launched an Investment Management arm to its wider services offering, putting the experience gained managing assets during the Lehman Brothers restructuring into use for its new clients. The new offering will be in certificates of deposit, with a payment structure that avoids the traditional fees and commissions construction tied to retail investments.
Alvarez & Marsal (A&M) was called in to restructure Lehman Brothers after the bankruptcy of September 2008, serving as one of the main advisors, work which has seen it busy over the past years. The work has earned the firm tidy consultancy fees (more than €500 million), yet as with most high-level work, getting paid comes with additional valuable work experience, experience that can later be deployed in, for instance, the starting of a new business or business arm.
In a recent interview with The Wall Street Journal (WSJ), Alvarez & Marsal unveils how the experience it gained in managing the assets of the collapsed Lehman Brothers have prompted it to launch an investment arm of its own. According to Bill Post, A&M’s managing director, the new arm, A&M Investment Management, is set to be the first of A&M’s practices to actively manage money.
The firm is registered as an investment adviser with the Securities and Exchange Commission. Its advisors are set to manage treasury and cash assets for companies, endowments and local and state government entities – closely aligned to how it managed the assets at Lehman Brothers. The new arm is set to manage investors’ money over a horizon of one to four years.
According to Post, the firm, in its core a management consultancy and financial advisory player, will put clients’ money into certificates of deposit, but without charging fees and commissions usually tied to retail CD investments. A strategy that stood it in good stead at Lehman Brothers, where A&M’s investment strategy consistently outperformed equivalent investments in Treasury bills. “We’re going to do something that we can do correctly and do well, and this is it,” says Post and adds that he is “pleasantly surprised” by the interest so far received from potential clients.
The certificates of deposit products are insured by the Federal Deposit Insurance Corporation, with A&M’s offering to investors provided considerable safety. Post remarking that “There aren’t any options today to increase yield without taking extra risk.”
This is the second launch of a major new arm to A&M – just last year it announced that it hired Todd Slotkin as Managing Director and Global Head of Alvarez & Marsal Asset Management Services. The arm manages, preserves, enhances and markets private equity in the form of loan portfolios, real estate and investments. The Asset Management unit by and large invests in middle-market companies.