L1 Treasury manages the liquidity and financial investments of L1 Investment Holdings. When the group makes strategic investments, L1 Treasury provides the necessary funds, and when investments are sold or dividends received, L1 Treasury manages the available funds through a portfolio of financial investments in public and private equity, fixed income, real estate and direct lending markets, and investments in special situations and private equity funds.
L1 Treasury’s mandate includes both liquidity and return objectives. Therefore, in its portfolio construction, L1 Treasury pursues a “barbell” strategy whereby a portfolio of cash and liquid securities is complemented by less liquid higher-yielding investments, such as direct loans, funds and real estate.
Our loan book is a combination of large loans directly provided by L1 Treasury to borrowers and usually secured by real assets or financial assets and smaller loans, usually provided through lending platforms. These are normally independent speciality lending businesses to whom we are the sole or at least largest funder and in which we may have an equity interest. We are partners with several such platforms.
Our fund investments are generally in third-party hedge funds, which we mostly access through Fund-of-Funds providers. We aim to have a well-diversified portfolio of funds and strategies.
L1 Treasury’s portfolio performed well again in 2021, producing a return of 4.50%. Remarkably, the portfolio showed positive performance every single month. In fact, we recorded 22 consecutive months of positive returns, going back to April 2020. This is evidence of a very benign environment for equity and credit markets driven by the extensive quantitative easing of central banks. However, it is also a testimony of the diversification embedded in our portfolio.
As always, we produce our returns against a backdrop of significant capital flows in and out of our portfolio. In 2021, we recorded $7,204mn of inflows and $2,071mn of outflows. These net capital inflows, together with the portfolio performance, resulted in L1 Treasury’s assets under management growing from $4,256mn to $9,561mn.
L1 Treasury’s highly experienced global team
The L1 Treasury team is international, with employees from 12 different nationalities. The team is highly experienced and contains all the specialities that would be found in an institutional asset management company, from risk management and investment professionals to technology and infrastructure experts.
The CIO of L1 Treasury is responsible for implementing the investment strategy within the risk limits and parameters set by its Investment and Risk Committee. The Committee consists of executives of the L1 Group as well as non-executives.