L1 Treasury manages the liquidity and financial investments of L1 Investment Holdings. Its primary role is to ensure that adequate funds are available for L1’s strategic investments. When divestments are executed or dividends received, L1 Treasury manages the funds.
“We aim to generate shareholder value through a portfolio of financial investments, while ensuring adequate funds are available for L1 strategic investments.”
Chief Investment Officer
L1 Treasury’s mandate is to maximise returns on its financial investments within agreed constraints of liquidity and volatility, tailored to L1’s capital allocation. To meet its competing objectives of liquidity, returns and volatility, L1 Treasury invests across a wide range of instruments and strategies.
L1 Treasury combines a portfolio of liquid fixed income securities with higher yielding investments such as direct loans, and real estate, and with investments in the financial markets, both direct and via hedge fund investments.
L1 Treasury also has the ability to enter into financing arrangements to further enhance its liquidity or returns.
Given that L1 as a whole is relatively young, significant financial assets are still managed by L1 Treasury. At the end of 2015, it held US$10.7 billion assets under management.
Despite the volatility in the global economy, L1 Treasury enjoyed good returns in 2015, producing 2.62% on its assets under management with a Sharpe ratio of 1.67%.
A global, highly experienced team
The L1 Treasury team is international, with employees from 12 different countries. In the course of its activities, L1 Treasury deals with 20 of the largest international banks.
The team is highly experienced and contains all the specialisms that would be found within an institutional asset management company, from risk management and investment professionals to technology and infrastructure experts.
L1 Treasury is responsible for implementing the investment strategy, within the risk limits and parameters set by its Investment and Risk Committee. The committee is chaired by Ed Eisler, formerly global Co-Head of the Securities Division of Goldman Sachs, and has experts in the fields of finance and investment.
The investment strategy
In order to meet both objectives – having adequate funds available at relatively short notice and seeing above-average returns on investments – L1 Treasury selects a broad mix of investments.
The majority of assets are invested in low-risk, highly liquid assets, so that funds can be released quickly and provided to the rest of L1 as required. A smaller proportion of the investments is in high-yielding, less-liquid assets that help to achieve the returns shareholders expect.
L1 Treasury’s hedge fund portfolio is well-diversified, focused on funds with a strong track record and managed with the help of external advisors.
In direct loans, L1 Treasury restricts itself to secured loans only – including property development loans – where the security is either financial assets or real estate.
In its real estate investments, L1 Treasury focuses on student accommodation in the UK, where it believes demand for high-quality accommodation will continue to outstrip supply and yields are attractive. Furthermore, returns are inflation-protected, which makes it an attractive long-term investment.
Over the course of 2015, L1 Treasury acquired 11 buildings across the UK, in London, Bath, Edinburgh, York and Brighton, amounting to around 3,800 beds in total. The portfolio is prime property: the majority of the buildings are new, with a high concentration in London.
L1 Treasury is one of the top 10 investors in student accommodation in the UK by market value.
L1 Treasury assets
as at 31 December 2015