Mark Kleinman: Light finally shines on Schroders’ M&G ambitions
Sky News’ Mark Kleinman is the man the City reads – and in his fortnightly column for Morning Wire, he shares his insight and analysis.
Schroders is solved
The mystery is finally solved. For months, fund management executives have puzzled over two aspects of Schroders’ aborted ambitions to take over M&G Investments and create a $1 trillion institutional investment powerhouse. Who was Schroders working with? And why did the deal collapse?
Bloomberg News reported earlier this year that Peter Harrison, Schroders’ outspoken chief executive, had been intent on combining the two businesses. He subsequently told The Times that he had ditched the bid in order to avoid damaging his own company’s culture – an inflammatory pronouncement which prompted an angry complaint from M&G, I’m told.
Now, I can reveal that Schroders was working on its interest in M&G with Rothesay Life, the privately held insurance company, and Paul Thompson, the insurance entrepreneur behind Utmost Group, the specialist insurance and savings solutions provider.
One industry executive tells me that the bidding triumvirate had reached broad agreement on the outline of the deal, but that there were difficulties finalising their respective financial commitments and ownership stakes.
It had been an opportune time for the consortium to strike, with M&G hit by the untimely departure of chairman Mike Evans for health reasons and rumours swirling that, had it not been for Evans’ exit, Spencer Stuart would have been instructed to find a successor for John Foley, chief executive, instead. Moreover, there has been growing discontent among M&G’s institutional shareholder base about the company’s performance and strategic direction since its demerger from Prudential.
Peter Clarke, the former Man Group chief executive, has been identified as a potential permanent successor to Evans, but, as yet, there’s no official word. The vacuum has drawn the attention of a number of prominent activist investors, according to market sources, although none have so far revealed a disclosable interest in the £4.9bn company.
I suspect that if that leadership vacuum persists for much longer, M&G will become an irresistible target for someone.
Up for sale? Artemis Funds’ move a mystery
As one fund management mystery is solved, another emerges. This one relates to Artemis Funds, the asset manager 60pc-owned by New York-listed Affiliated Managers Group (AMG): word reaches me that Fenchurch Advisory Partners, the wildly successful financial services corporate finance boutique founded by Conservative Party treasurer Malik Karim, has been taken on to advise on future strategic options.
The logical assumption is that either AMG or the 26 partners who own the remaining 40pc of Artemis, have become willing sellers? Not according to the firm response I received from AMG’s corporate communications team in New York.
In a joint statement, the two firms said: “Artemis and AMG categorically deny any intention by either party to change the relationship between our firms, whether through sale or otherwise.
Artemis confirms that it has engaged Fenchurch Advisory to provide normal-course strategic consulting services in support of Artemis’ growth opportunities and initiatives.”
The plot thickens: “normal-course strategic consulting services” aren’t exactly what Karim and co are best-known for. One mischief-maker suggests that Artemis, which had nearly £30bn under management at the end of October, had failed to notify AMG of Fenchurch’s role prior to my call, triggering panic internally about how the move might be explained.
Either way, at least one potential bidder for Artemis thinks it could fetch in the region of £1bn – but only if it’s up for sale, of course.
City’s lobby group set to appoint first female chair
Stuart Popham, Gerry Grimstone, John McFarlane, Mark Tucker, and Anne Richards: a grand list of heavyweight City names of the last decade, and all of whom can now add heading one of its most important trade bodies to their CV.
That’s because I understand that TheCityUK will today name Richards, chief executive of Fidelity International, as its next chairman.
Without remotely fitting the box-ticking stereotype of a fund management executive, Richards nevertheless ticks all the right boxes: she will be the first woman to occupy the role, she has ample experience of the UK’s financial services industry beyond London, she is highly regarded in Whitehall, and she runs a major international financial services firm outside the banking or insurance sectors.
That will all play well for TheCityUK’s efforts to recruit a wider financial and professional services membership during a period when many industry trade associations have found their own finances strained by the pandemic.
Richards will replace Tucker, the HSBC Holdings chairman, who has been in the post at TheCityUK since 2019.
Anyone who had predicted at the time of his appointment that Tucker’s successor would still be having to guide the trade body’s members through the complexities of the post-Brexit world would have been labelled a remainer, but that’s the reality that will be confronting Richards when she takes up the role next year.
Still, after having to spend much of this week listening to Tim Martin, the JD Wetherspoon boss, berating Fidelity for its corporate governance criticisms of the pubs operator, Richards will probably consider it a welcome distraction.