Tom Kennedy has led Canadian alternative assets manager and advisor Kensington Capital Partners for nearly two decades based on a key principle: always put your own money up.
Kensington was founded in 1996, at a time when Canada had relatively few private equity firms. It initially focused on direct investing, deploying the firm’s own capital to partnerships with private company owners.
Kennedy told peHUB Canada this early history greatly influenced Kensington’s subsequent market activity.
In the early 2000s, Kensington entered the fund of funds industry with a focus on the mid-market and global collaborations with groups like Harbourvest and Nordea. It also assisted Canada Pension Plan Investment Board in getting its Private Investments group up and running and gaining exposure to private equity markets.
Kensington found success in this role, but recognized that institutional investors were becoming increasingly disillusioned with traditional fund models, Kennedy said.
In time, the firm forged a new path, opting for smaller-scale operations and an emphasis on close working partnerships with clients and greater use of direct strategies.
Today, Kensington offers clients a range of opportunities for accessing private equity, hedge funds, venture capital and infrastructure. Fund vehicles, targeted to institutional, high net-worth and retail investors, commit capital to fund partners and undertake direct deals and co-investments in which the firm usually has a stake.
Kensington also provides advisory services to clients, many of them small and mid-sized pension funds and endowments. It advises on multiple issues, but is especially active in one-off transactions, such as executing and managing direct investments or selling secondary interests. Here again, it has skin in the game.
For Kennedy, Kensington’s combination of customized fund and advisory services suits the differentiated needs of investors. It also satisfies their desire for alignment.
“Private equity is based on relationships and relationship value—it is local,” he said. “We try to be selective, doing business with people with whom we can form reciprocal relationships. That means always putting up your own money.”
At present, Kensington manages close to $700 million in its alternative investment programs and typically completes transactions valued at between $200 million and $300 million annually.
Kennedy said the firm’s “outstanding returns” in the early days of direct investing has been sustained in performance over 19 years: “We’ve made over 100 investments and lost money on four of them.”
Kensington recently increased its activity in the venture space. In November, it launched Kensington Venture Fund, which invests in Canadian funds and tech startups. It has so far raised $193 million from a mix of limited partners, including Richardson GMP, OpenText, RBC, BMO Financial Group, CIBC, TD Bank Group, Scotiabank and Torstar.
Kennedy is not only Kensington’s founder and chairman. He is by all accounts a really nice guy.
Last month, Kennedy was the recipient of the Canadian Venture Capital & Private Equity Association’s 2015 Ted Anderson Community Leader Award.
Kennedy took the award for his work in local nonprofit organizations and causes, including his support of Regent Park School of Music, a music education program for disadvantaged kids in Toronto. Launched in a church basement in 1999, the school’s enrolment of young students has grown steadily, with more than 10,000 graduates to date.
Kensington is Toronto-based and maintains an office in Calgary, too. The firm’s other senior investment professionals include Managing Directors Rick Nathan, Eamonn McConnell, John Walker and Managing Director and CFO Suganya Tharmalingam.
Photo of Tom Kennedy courtesy of Kensington Capital Partners