COO Profile: Pemberton’s Thomas Lack
Having joined European direct lender Pemberton in March 2017 from Brewin Dolphin where he was also COO, The Drawdown speaks to Thomas Lack to find out how he plans to tackle this new challenge.
The Drawdown (TDD): How did the COO role at Pemberton come about and what were your reasons for joining?
Thomas Lack (TL): I started speaking to Pemberton’s managing partner Symon Drake-Brockman in September last year. During those initial conversations, the assets under management increased from €800m to €1.2bn, which made me realise that joining wasn’t a gamble.
To have surpassed the €1bn mark shows real critical mass; that Pemberton is part of the landscape. To join the organisation at this point felt as though I would be joining something established but still early enough in the journey to put my stamp on it.
TDD: Given you were previously COO at Brewin Dolphin, how will the role be different at Pemberton?
TL: Pemberton is a more complex organisation. It spans four regulatory regimes for instance, and has many more constituent parts. At the same time though, it is a lot smaller with fewer stakeholders. That makes seeing the whole organisation much easier.
Then there’s the investor base. At Pemberton it is entirely institutional, and their needs are more precise and exacting. Their own decision making processes are more objectively based too.
TDD: What are the main challenges of your new COO role?
TL: My role is part of Pemberton’s plans to be largescale in the next five to seven years, so there’s a need for a scalable solution.
What we do is very complex in terms of structures, drawdowns and reporting, meaning there’s lots of activity. We’re not an equity fund that distributes infrequently, instead we have a rolling distribution, so we need a scalable platform. Especially as we’re growing our funds and assets under management, we need to keep finding new efficiencies.
Private equity raises funds every four to five years and typically does drawdowns every six months. For us, in the future we’ll be managing five to 10 funds and there’s lots of complexity; we have lots of LPs with different stakes and different interests. Operationally we need to run a sophisticated platform for investors. It can be demanding in terms of reporting and we need the necessary team for that.
TDD: Given the demanding nature of your reporting, how will you interact with the investor relations team?
TL: Despite having only just started we’re already often in the same meetings. And I have lots of engagement with the portfolio management and origination teams.
As we grow there will be lots more to work on with the investor relations team over the next 12 months. We will have to make sure the teams are working continuously. And as we bring on more LPs there will be even more interaction.
TDD: Pemberton’s funds are domiciled in Luxembourg – why is this the most suitable jurisdiction?
TL: It is a well established country for private debt funds, and it has been for the last 15-20 years. The options for us were either Dublin or Luxembourg but as we also have an AIFM in Luxembourg, so it made sense to have the funds there as well.
Furthermore, in the wake of Brexit, it’s good to be able to emphasise just how much of a pan-European manager we are. Global investors are used to Luxembourg so it doesn’t cause us any issues.
Dublin is more for liquid strategies such as ETFs but for private debt, Luxembourg in my opinion is number one.
The Channel Islands don’t work for debt funds as they are income generating so it’s less attractive. For private equity it makes more sense as the capital gains tax is more preferable. But Jersey and Guernsey are offshore and we wanted to be onshore.
TDD: As COO you’re tasked with overseeing compliance, what regulations are top of mind for you at the moment?
TL: There’s nothing that is concerning or worrying me, the simple fact is we have to comply. But, there is lots to think about, for example, the Luxembourg regulator wants to ensure it is seen as onshore; that it is a high quality place to do business and because of that it’s being more proactive and more demanding.
The term ‘shadow banking’ has died down, direct lenders are being recognised as providing long term capital so that regulatory concern has moved away. Regulators know that we’re supportive structures for growth, especially given the institutional nature of our capital.
BEPS is on our radar and we will moderate what we do in accordance. We will deal with it as it comes through and in the meantime we’re speaking regularly with our tax advisers.
For GDPR, most of our activity is done through large outsourcers so they are making sure the requirements are dealt with. Lastly, the Senior Managers Regime in the UK will have implications and we need to be ready for those.
TDD: What’s your current strategy when it comes to technology?
TL: The majority of our deals and funds are managed by a supply chain so we don’t have a bulk of systems to oversee. We do have a portal, which is for marketing and fund materials for investors. We are concerned about privacy and data protection. We ensure our providers adhere to the highest standards, and we check our internal systems.
In terms of upgrading our systems, we’re speaking to a provider now – particularly with regards to the origination side of the businesses in order to manage and track origination across the European offices to make the process more robust, and to grow with the origination function.
At the moment it’s fine but we want a better system.
We use a supplier to access their credit analytic processing power – we licence a rating model and share that output with our investors, which they can share with their regulators, to understand credit quality.
And on the marketing side, we have a database of LPs to send out marketing materials. The challenge is using that more effectively – in terms of mapping out investor communications, and making the process more targeted.