Business

Profile: North-East Family Office looks to fund the family’s descendants for 200 years

Jan-Ole Hansen, chief investment officer at Denmark’s North-East Family Office, knows the importance of resilience. The single-family office portfolio, worth $2.5 billion, has been funded by the creation, and sale of Pandora, one of the largest jewellery makers in the world. 

According to Hansen: “We are planning for seven, eight generations by achieving absolute returns and targeting global inflation plus two percent.”  

His task, agreed with the founders of Pandora, is to fund their descendants and their philanthropy, for no less than 200 years.

We’ve seen the evolution of microprocessors. We’ve seen software and biotech. And now, everything is blending together. When you visit Silicon Valley these days, it’s like you’re walking into a lab

He has no plans to use indexation, saying this can end up producing an exposure to corporate dinosaurs during a period of intense disruption. Instead, North-East takes an active approach to investment by investing in quality growth stocks, along with semi-liquid positions in promising emerging markets. Bond exposure, where it happens, takes the form of credit.

Hansen is disinterested in hedge funds, saying he can deploy his risk budget more effectively elsewhere.

But he seeks to hedge out market risk during periods of exuberance. North-East was fully hedged well before the recent market collapse because Hansen’s team believed market prices were stretched. 

After the recovery, North-East reduced its hedge, while staying alert to further setbacks. If you want to compound gains over 200 years, the loss of a chunk of capital early in the journey is distinctly unhelpful.

Hansen was chief investment officer at Danish insurer Industriens Pension between 1993 and 2007. He has adapted his style to suit his circumstances. Rather than traditional asset allocation he wants to seek returns from the tech-driven mega themes which are driving the market.

This means innovators with a competitive edge can be in a better position to achieve growth, even if they are small, than conglomerates with a hefty cost base. 

But it only invests in businesses if they meet North-East’s high ethical standards on transparency, and governance. Those who fail the test are automatically screened out.

Thanks to big data and machine learning, information on opportunities is not only available but readily analysed: “Information is no longer a valuable element in itself and the challenges of today are to distil and deduce knowledge, and put it into context.” 

Jan-Ole Hansen, chief investment officer at Denmark’s North-East Family Office

To get to grips with the details, Hansen and his team uses a network of strategic partners who add to their understanding of technological, social and behavioural changes. 

In the US, North-East has teamed up with Glynn Capital where it stays in touch with founder John Glynn, a VC pioneer and his son David. The use of fund-of-fund specialist Spur Capital Partners led Hansen to its key player, such as leading Harvard academic Paul Gompers. 

Hansen also has a strong relationship with Globis Capital, a VC pioneer in Japan: “When we visited, they had a fund they were closing. They could only offer us access to $500,000. We said that was too small. We were going down in the elevator when we realised that was the wrong decision. We went back and took the $500,000. And that has become a big relationship.”

North-East also backs UK-based Goodhart Partners, a backer of funds which invest in Japanese stocks and private equity through Volunteer Park Capital.“We are always trying to find the right pieces in the puzzle,” says Hansen, who is interested in similar deals. 

Hansen wants to forge club deals with family offices who share North-East’s philosophy.

As regards specific opportunities, Hansen says: “We are very focused on biotech. We are also very focused on sustainability and how we can pull all this together.” 

North-East also networks with a range of funding institutions such as Denmark’s Lundbeck Foundation.

Hansen also believes technology can offer the best solutions to the climate crisis which needs a solution over the next fifty years. 

North-East will expect an appropriate return on climate capital, except when it travels the philanthropic route. 

Hansen regrets that clean energy projects in Europe only offer a 6% return, which he views insufficient, given that capital is corporate, leveraged and locked up for 25 years.

The family office currently invests in a range of lifestyle VC opportunities in consumer durables, virtual reality and fintech, drawing on a network of Danish entrepreneurs.

Hansen is fascinated by companies which apply molecular science to develop businesses. “We’ve seen the evolution of microprocessors. We’ve seen software and biotech. And now, everything is blending together. When you visit Silicon Valley these days, it’s like you’re walking into a lab.”

North-East has backed a company which rejigs molecules to create wine. It has used the same approach with other alcoholic drinks, such as whisky.

It backs a venture which turns the root structures of mushrooms into leather. Hansen says: “It is a great substitute for animal skin. The world’s population is continuing to grow and we need this kind of approach.”

North-East also backs Snipr Biome of Denmark, developing a successor to penicillin. 

Asia is important to North-East just as a manufacturing base in Thailand was integral to Pandora’s global development.

Hansen likes Asian private equity because it is cheaper than European and US private equity and uses less leverage. It also benefits from strong local economies.

To develop its Asian private equity business North-East employs Sam Robinson, a long-standing associate, based in Singapore. 

It mainly invests in funds, but can also invest directly in companies.  North-East typically invests $10 million in Asian private equity and venture funds.

North-East has been backing small and middle-sized companies in Japan who need to develop an outward-facing mentality, like Japan’s biggest companies, as its population falls. Hansen says: “We want to help them export their credentials in sectors like technology.” 

Again, it boils down to seeking the right strategic partnership in line with a trend and getting the details right.

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