How a Co-Investment Firm Is Emboldening Its Investors to Do Great Things
Astarte Capital Partners occupies a unique position in the private equity space: It is a changemaker. The co-investment firm, which specializes in real assets making profound impacts on society, challenges hierarchal industry norms and creates equal alignment and improved transparency between managers and investors. It's an innovative framework that helps investors make more out of their capital—more than they've historically been able to make through traditional GP-LP relationships, says Astarte co-founding partner, Teresa Farmaki.
Astarte is the innovation of Farmaki and Dr. Stavros Siokos. Veterans in the investment world—Farmaki in the creation, execution, and management of private equity investing; and Dr. Siokos in the building and management of businesses in asset management, capital markets, and alternative investments—they were compelled to bring a new dynamic to the space. "The fundamental conviction was that we both felt that there must be a way to do things better," says Farmaki.
One way Astarte is doing this is by leveling the industry field, making it so the firms don't always control the information but rather the investors themselves get an equal part in the play. The firm is also taking hold of the massive opportunity in the broader value-add asset space, so much of which is overlooked. Astarte focuses on the elements, which include team building and alignment, that will create positive impact. "It's about making a mark in helping to move things in a direction that feels right," says Farmaki.
A Q&A with Teresa Farmaki
Astarte approaches the relationship between managers and investors in an innovative way. What does this look like and how is this beneficial?
This is not just as a structural framework, which is unique, but also as a philosophy. We make everyone a partner of the same equation. We're trying to break the pillared relationship. We make everyone an operating partner under the same umbrella, which helps to benefit everyone. We have put in place a framework that helps and encourages direct relationships between partners rather than us being the control point. That is a very important point to make because, historically, you see more managers and institutions trying to be the control points; trying to hold the cards as a means of keeping the control and maxing the economics for themselves. We feel that if you help everyone increase the pie there will be a bigger serving for you—without having to control relationships and without having to control information flow and communication.
We don't keep our investors behind our back. We bring our investors in front of us, helping them develop their own language and relationships going forward. They don't just see flow coming out of an Astarte black box. They get to develop relationships directly with players in the impact investing space, in aviation, in infrastructure, in real estate, wherever we make investments. That makes them smarter, gives them more access to information and the opportunity to do more things.
What asset opportunities does Astarte target?
We focus almost exclusively on real assets but in the broader definition: natural resources, infrastructure, transportation, and real estate. We are focused on finding opportunities that are part of the big macro trends that are playing out, specifically themes that have a significant socially responsible nature. In healthcare, we're looking into infrastructure in the supply chain. In transportation, we're looking at aviation and shipping. In infrastructure and natural resources, we're looking into developing new forestry plantations. We follow these trends and we look into areas that are really supporting continued growth in that direction.
We don't position ourselves as an impact investor or as an environmental investor, but in selecting opportunities that are socially responsible, we feel it is central to our philosophy.
You have the Astarte Special Opportunities Platform (ASOP), which is a platform that places distinct emphasis on co-investing. How is this platform unique?
That platform is a discretionary long-term vehicle that we're managing and investing into different areas of the real assets I described: developing new forestry plantations; energy transition assets; thematic real estate. Every investment we make, we make in partnership with an operating expert—meaning with an operating industry player or a specialist manager that has an expertise in that special asset class. We're making a dedicated joint venture partnership for that space, and we acquire, manage, and deploy capital together in that area.
You recently closed your fundraise for ASOP and contributed a percentage of this to the impact investing fund, Beyond Capital. What attracted Astarte to Beyond Capital?
Beyond Capital is a firm that we have come to understand very well and become very supportive of their work. We share the same values in making investments that are sustainable in their own nature and are making a big impact on society. Beyond Capital focuses on a different area to us because we focus on real assets and they are mostly on the impact investing side. At the same time, it's an organization in which we share the same values and we want to support them in their growth so they can have an even bigger impact.
Beyond Capital is the first one for us to commit part of our profitability, the performance and returns we generate from our investment activity. The philosophy behind this is that, as Astarte, we want to constantly be able to create a network of firms and people that we believe in, and support them. It's about how we can support impact investment, non-profit, or for-profit organizations through aligning interest in profit sharing.
What changes do you see happening in the investment space that are interesting to Astarte?
We've been seeing a lot of changing brewing in the last few years. The world is really changing. There are so many dynamics playing out, a lot around the fact that LPs and their growth of capital and role in our society is being more defined and becoming more sophisticated. You have much more precise asset allocation investment strategies and requirements. Regulations are going in that direction. From the investor side, we're seeing much more activity in how they want to invest their capital and what they expect from their partners.
Equally, the whole world is changing now, so much faster than before. It's a huge generalization, but it's true. We cannot rely on regulations or governments. We all need to be much more agile and flexible. As an investment firm in private markets that are around the center of the change—around infrastructure, networks, communities—we see phenomenal change happening around frameworks and relationships. We see that as a big part of how things will change.
For us, as an investor, we see a lot of change in how the industry works, how private markets work, and how investors and managers interact in that process. We are proud to play a bigger role in that as we grow as a firm.
How is making a positive impact a driver in this?
That is cultural. It's not a goal you can specify, but it's what we'd like to embrace. We make it a big point internally to all the people we hire and we work with. We want them to have the genuine passion to make a positive impact because at the end of the day, that's the main thing for us: That we drive change in the right direction.
We do our best to work in a way that has a positive influence. It could be selecting to work with the right people who have the right incentives, choosing the right structures, or making sure we promote the right type of dialogue and values. I think the appetite for impact is the biggest differentiator—and the biggest driver.
What keeps you inspired to do this work?
To know that I have played a role in helping a good team of people get their work done, increase their activity, or establish themselves to have their own positive impact. That has always been in my DNA, from growth capital to real assets today.
That's what our strategy at Astarte is, in its essence. We are a platform where hopefully we help specialist players in each area we invest in to grow and establish themselves.
To learn more about Astarte Capital, visit: www.astartecp.com.
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