Manhattan West poaches Reggie Tucker as a “turning point” when the Los Angeles VC’s “deal flow” reaches critical mass and hires the RIA startup like crazy in 2016 to seize a once-in-a-lifetime opportunity
The 46-year-old venture capital insider from Los Angeles joins CEO Lorenzo Esparza’s startup specializing in media and entertainment.
Lorenzo Esparza is better hiring to get a lot bigger and now has his 47th employee, Reggie Tucker, on board to prove it. His ADV only counted 13 employees in April.
The 47-year-old CEO of Manhattan West Asset Management grabbed the 46-year-old executive director of the $ 18 billion Orange County Employees Retirement System (OCERS).
He hopes to carry Tucker’s deep private equity roots into the clay of his 2016 startup. See; Lorenzo Esparza leaves JP Morgan in LA to start Manhattan West under the guidance of Schwab
“An investor of Reggie’s caliber and background joining Manhattan West is a real turning point for the company,” Esparza said in a press release.
The turning point lies in the major leagues of investing. The Manhattan West RIA unabashedly sees itself primarily as a cold-blooded thoroughbred investor in the hottest deals.
“We are not the RIA that sells to another RIA,” says Esparza. “We want to be the next TPG or Apollo.”
TPG manages more than $ 100 billion in private equity out of San Francisco and Apollo manages more than $ 400 billion in private equity out of New York City.
Right now, Manhattan West is a small RIA shop with about $ 300 million in assets under management, but with its additional $ 500 million in venture and real estate funds, it has what it takes to be a young unicorn too, the company says.
Managing these assets requires the type of premium fees – from 300 basis points to 500 basis points – required to pay top talented investors. Manhattan West offers additional tax services and CFO services that generate professional fees.
Esparza is hiring dozens of people in the near future, with the talent preying of a prospector who sees nuggets glimmering in the shallow depths for miles and miles of a pristine creek.
He offers employees, including Tucker, the opportunity to acquire equity in the company as an incentive to get on board, work hard, and stay. But Tucker’s stature marks a threshold.
“[Tucker] wanted to prove that he can [succeed in venture capital] as a lead manager, “he says in an interview – something he expects.
âThere’s an ‘it’ factor,â he adds. âHe’s an incredibly talented, well-trained, dearest guy, very intellectual, thoughtful and a unique character. That fits. We only got extremely good feedback. “
Offers for the middle market
What Esparza sees is a rapidly emerging market in Los Angeles with startups that are hungry and worthy – VC or private equity support with no company left in control of the market.
“The deal flow is real,” says Tucker of the market opportunity. “After spending a lot of time in New York … it’s a different ecosystem … a lot of the flow comes right here in LA.”
Not only does Esparza claim to have a local advantage in store placement, but many of the hot companies seeking capital come from Hollywood’s media and entertainment culture.
Esparza is a former Paramount manager with entertainment fanatics.
He also knows medium-sized businesses. His last stop before breaking down to start his own RIA was JPMorgan Securities, the renamed remnants of the old, high-performing Bear Stearns franchise.
Esparza has already acquired 13,000 square feet of Class A plus office space in Century City near its old JPMorgan office.
His first office is in more modest premises in Manhattan Beach, California. See: Some RIAs are preparing to reopen in bigger, better offices – some at “Covid” prices – to meet customers with a big one-on-one Warning: Vaccinations Mandatory
Although some of his Alts funds draw capital from his own RIA investors, he gets even more from outsiders, particularly single family offices.
When asked about the potential conflicts in placing Manhattan West client assets into proprietary Manhattan West funds, Esparza says he’s largely opposed to the notion that open architecture is inherently better.
“I like the idea of ââleaning against it [as a wealth manager] in your own [investment management] Strategies, âhe says.
He adds, “JPMorgan got into trouble because it sold equity funds – we’re disclosing everything … we don’t see it as bad, we see it as good.”
What he believes is insincere is the notion that consultants invest assets with the “best managers” because managers are only seen as the best in hindsight when they have a track record of five years or more.
Though Manhattan West is still modest in terms of assets under management, Tucker says it has a bigger fate firmly under control near the street.
âThe chances of getting up are much higher and the downsides are very small,â he says.
“Lorenzo has built something phenomenal over the years. If there is someone who can do a major upgrade … joining Lorenzo is about as risk-free as it gets.”
Write a small check
However, Tucker points out that in return for a job at Esparza, he risks a fairly safe promotion to chief investment officer. He became interested in his old job internally and externally after having played in the major leagues for decades.
He spent the last two years at OCERS after migrating west from the $ 200 billion New York State Common Retirement Fund (NYCRF) and the $ 50 billion State of Connecticut Retirement Plans and Trust Funds (CRPTF).
Tucker explains that his large wealth pools could be an albatross to his investment endeavors.
“The small investments off the radar were usually oversubscribed,” he says. “You need direct access. It’s a big part of what I’ve done.”
Esparza agrees. âA $ 300 million fund is too small to be on JP Morgan’s platform.
âWe have a niche for doing high quality business that JP Morgan can’t even look at because it’s too small. They manage billions of dollars, they can’t write such a small check, âhe says.
Esparza has recruited Tucker as his 10th dedicated venture capitalist with a narrow goal of investing in his new Opportunity and Growth fund with the broader goal of attracting all of the key talent and connections in a small market that should get bigger.
Manhattan West manages lower-end mid-market private equity, venture capital (i.e., growth companies), multi-family and industrial real estate investments, and private debt. See: JP Morgan Breakaway RIA Manhattan West takes unusual hires with an ambitious plan to give money to people who tend to avoid banks
âAUM is something that would be important to a ‘traditional’ RIA,â explains Esparza. âNot Manhattan West. We look at other KPIs [key performance indicators] which ultimately increase our sales. “
Manhattan West declined to disclose further KPIs.
The Manhattan West SEC’s ADV, filed April 27, announces that it has 13 employees and manages $ 204 million.
âTo be honest, we never liked being called the RIA. In all honesty, we feel like it is pigeonholed and just one element of what we build, âhe wrote in a recent column.
“That doesn’t quite do us justice.”