The Brazilian market has long held great potential for Cayman’s funds industry. The right mix of innovative technology coupled with the tried and tested ethos of “customer first” has led to excellent results in a market that three years ago wasn’t even on his firm’s radar, Benjamin Reid of Maitland Group tells Cayman Funds.
A focus on high-quality customer service, high-end bespoke technology, investing in developing local relationships and an appreciation of cultural nuances are just some of the secrets of unlocking the potentially lucrative Brazilian market for the funds sector.
That is according to Benjamin Reid, senior business development and client manager (LatAm), Maitland Group, who heads the firm’s fund administration offering in the region.
Maitland is a global advisory, administration and family office firm providing legal, fiduciary, investment and fund administration services to private, corporate and institutional clients across multiple jurisdictions. It now has 17 offices in 12 jurisdictions, more than 1,100 employees and over $220 billion in assets under administration.
Its Cayman office was opened in 2009. The Latin American unit is the fastest-growing part of the firm’s Cayman portfolio and set for even greater success in 2019.
Reid, a fluent Portuguese speaker (having been schooled in Portugal and living in Brazil for a short term), has specialised in developing relationships in the region for much of his career. Now, he is matching the needs of the country’s institutions and wealthy individuals with Cayman’s deep offering and expertise in the funds sector.
“You need a very client-focused approach, where the client always comes first. This translates to not just being responsive, but proactively reaching out regularly and visiting them in Brazil on a very frequent basis.
“Finally, complement all this with great technology and the right products,” Reid says.
“That final part is key. Good technology can allow you to automate many functions, tailor to the client’s needs and offer more analysis, and also have more time to spend servicing the clients.”
A winding path
Reid started his career at BOA Merrill Lynch before working at RBC and HSBC. At both of the latter, using his language skills and growing network in the region, he built up substantial books of business in the Latin American region.
A chance encounter in 2013 took him to work for Maitland in South Africa where he was again tasked with building a business focused around Brazil.
At that point, the offering was aimed at the private client segment, doing funds and trusts for family offices and high net worth individuals in the region. That focus has since transitioned into working with increasingly large fund clients, expanding its team to better service clients.
In that time, Reid launched an office in Miami focused on a private client base before finally making the move to the Cayman Islands some eight months ago—the natural location given the practice’s growing focus on institutional funds.
“Cayman has all the key service providers we need to enhance our bench strength,” he says.
Since arriving in Cayman, he and his team have built a bespoke technology platform capable of offering better and faster analysis. His group is now responsible for approximately $3.5 billion of assets under administration.
“It has been a journey, but I have never doubted the potential of this market provided it is done the right way. Success has always been in providing clients with a high-touch, client-centric approach in the native language,” he says. This approach can only be achieved by investing substantial time upfront determining needs in order to customise the solutions.
“Business in Brazil works based on references. You will reap the rewards of that based on the amount and quality of attention you put forth with clients. I also believe strongly that people do business with people they like, and for this relationships built over time are key.”
Through his career, Reid has built up a deep understanding of the investment fund universe with a specific focus on the Bahamas, British Virgin Islands, Cayman and Luxembourg.
He now has a wealth of experience in offshore structuring, focusing on solutions for setting up transparent investment vehicles for ultra-high net worth private clients and investment fund managers.
A multi-pronged approach Reid explains that he has three main strands of service for clients in Brazil.
“The first ‘product’ is aimed at the private or ultra-high net worth Brazilian clients who already have money offshore structured through an investment fund. While this is sometimes perceived as a tax-driven structure, all the families and family offices that have fund structures with us have done so with sole aim of adding asset diversification to their portfolio and the offshore fund is normally run in parallel to a Brazilian local fund,” he explains.
While characteristically these structures are simpler from a delivery perspective, the nature of the client requires more hand-holding and attention—something that Reid and his colleague Pedro Olmo can offer from their combined 14 years servicing the private client segment.
The second product is for private equity firms based in Brazil that are looking to raise capital offshore, typically via a Cayman-based feeder fund.
“Given the environment in Brazil over the past two or three years, hedge fund managers have struggled to raise institutional money from abroad. PE/RE on the other hand has seen great opportunities and much capital has flowed into Brazil for these type of strategies. Again, it is knowing the legal particularities of this space that has led to us being successful in servicing our growing book of PE clients,” Reid says.
The third and newest product Maitland delivers is focused on Brazilian-based investment funds looking to overcome the local restrictions pertaining to offshore vanilla and exotic investments—again the solution typically housed through forming a Cayman-based offshore fund with the ability to invest globally with restriction.
“This is the solution for those wanting to invest globally and normally into the more complex, less liquid and over-the-counter instruments who cannot do that from an entity in Brazil.
“Due to the liquidity and high regulation bestowed on them in Brazil, this is a very sophisticated approach and requires daily reporting on a same-day basis. That is where our technology platform becomes invaluable,” Reid says.
He believes that a key reason the company has achieved its growth is because of the way and the extent to which it has invested in technology.
“We have the best systems in the industry and some of the best people to make it work,” he says. “Our team, led by Lenin Perumalsamy, has automated a high percentage of tasks allowing much quick and more accurate processing—instead of inputting data, we are constantly looking at ways we can better improve and provide more inventive solutions for our clients.
“That also frees up our time to speak to our clients more. The symbiotic relationship between great technology and the way we use it to create great customer service is the key to this.”
He notes that it has also been important to hire Brazilians from the region to work in the team. In eight months, the size of the team focused on the region has gone from four to 18 people and the team looks to potentially double again in the next 12 months.
Another component that has added to success based on tech is the way that the team was able to integrate with local and Cayman-based service providers or third-party choices of the client, in the region, such as front office and audit firms.
“This is critical as it demonstrated how well Maitland’s technology platform can integrate open-architecture software,” says Reid.
A personal touch
Even the best technology cannot rival the need for in-person interaction. “It’s a given that as part of our operating model we visit Brazil at least six times a year,” he says. “There is no substitute for this as it is a very high-touch region when it comes to business.”
Maitland’s growth in the region is also influenced by political changes in the country. New leadership that gained power last year has introduced a number of pension reforms that have the potential to boost the Brazilian economy by as much as $2 billion a year.
Reid believes the reforms could trigger an upgrade of the country’s credit ratings which would, in turn, lead to a flow of capital back into the region.
“That would trigger M&A activity and money moving into the economy again, all of which would also drive demand for what we offer from Cayman,” he explains.
Reid is keen to expand the understanding of just how much potential sits within Brazil. Maitland is working with the Cayman Alternative Investment Summit (CAIS)—a purveyor of content and events in the alternative investment industry—to deliver an event in Brazil towards the back end of 2019. He is also chair of the Latin America working group for Cayman Finance and sits on AIMA Cayman’s board.
“The potential in the market is huge if you approach it in the right way. I want to continue to extend relationships between Cayman and Brazil while continuing to take our offering from strength to strength,” he says.
Any opinions expressed herein are those of Benjamin Reid and do not necessarily reflect the views of Maitland.
Benjamin Reid is a senior business development and client manager (LatAm) at Maitland Group. He can be contacted at: email@example.com