Wealth & Finance International | August 2015
IDS A Growing African International Fund Services Provider
Staying True to Their Private Banking DNA Our Hedge Fund Manager of the Month is Umberto Boccato, Head of Alternative Investments at Mirabaud Asset Management. He spoke to us about how, through aligning interest between investors, fund managers and their company, his firm can both deliver and exceed its clients’ expectations.
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Welcome to the August issue of Wealth & Finance. We kickstart this month with a closer look at the evolving role of the hedge fund administrator with Investment Data Services Group, an Africa-based international fund services provider. Rowan Dartington Signature’s Guy Stephens looks at the worries and opportunities that investors face with regards to the Chinese economy and low commodity prices. We hear from Sean Raftery who states that, if you haven’t already reviewed your ISA investments this year then you should think about doing so - and quickly. This month, Wealth & Finance has chosen Mirabaud Asset Management’s Umberto Boccato as our Hedge Fund Manager of the Month. The firm is an international asset management boutique, which offers investment expertise in hedge funds, equities, fixed income and balanced mandates. Neil Simpson, Partner at Haysmacintyre, talks us through making the decision between investing in a private limited company or a limited liability partnership.
Contents 4. News 10. Hedge Fund Manager of the Month 14. IDS - An Africa-based International Fund Services Provider 16. Coining It 18. Chinese Whispers 20. Commercial Property Investment 22. The Importance of Integrating Key Business Processes During M&A 24. ISAs 26. Structuring for Success: LLP or Ltd? 30. Socially Responsible Investing: The next Big Thing? 32. Rates, Risk and Return: What You Need to Know as We Edge Towards Raised Interest Rates 34. LSBF Great Minds Live 36. 60-Second Interview with Laureola Advisors Inc. Cover image courtesy of www.jfk-photography.com
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Wealth & Finance International | August 2015
News
Murray Aims for Investment Grand Slam Tennis champion and world number two, Andy Murray announced today that he has made multiple investments on Seedrs, the largest equity crowdfunding platform in Europe.
Murray was the first major public figure to team up with an equity crowdfunding platform in this way. The Seedrs strategic partnership adds to Murray’s off court interests, which also include his management company, 77, and luxury Scottish hotel, Cromlix.
Murray, who joined the Seedrs advisory board in June, identified three British businesses he wanted to back on the crowdfunding platform, and has invested an undisclosed amount into all three. Murray plans to make further investments as part of his strategic relationship with Seedrs.
Jeff Lynn, CEO and co-founder of Seedrs, said, “It’s great to see Andy already taking such an active interest in the businesses on Seedrs. The fact he has decided to make multiple investments in hungry entrepreneurs shows his commitment to building a dynamic portfolio of early-stage businesses. Andy has already brought a lot of value to the Seedrs Advisory Board over the past few months and we welcome his continued support.”
London-based, healthier eating chain Tossed has now exceeded its £750,000 target, as part of their Seedrs round, and is currently in overfunding. Tossed is on a mission to show that healthy eating isn’t boring with a range of fresh made-to-order salads, wraps, smoothies and hot food. Murray has also made investments in Trillenium, a leading builder of 3D virtual reality shops, which has been backed by UK success story ASOS and has raised over £225,000 on Seedrs so far; and the Fuel Ventures Fund, founded by award-winning entrepreneur Mark Pearson of myvouchercodes.co.uk which raised £549,900 on Seedrs as part of their overall £30million venture fund. Murray said about these investments, “I’m excited to be investing in these driven entrepreneurs and their businesses on Seedrs. It’s important to me that I back people who I believe have the same dedication, hunger and professional standards as myself and always strive to be their best.” “The three businesses I’ve chosen to kick off my crowdfunding investment portfolio are all in areas of industry I find interesting. Healthy eating is something I have to be passionate about as a sportsman, so Tossed was immediately one to consider, and the other two businesses are really pushing the boundaries of technology. I’m hoping that I can learn something from how they are edging ahead of the competition and take that vision onto the court with me. I’m looking forward to seeing what the future holds for these businesses and continuing to work closely with Seedrs.”
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Wealth & Finance International | August 2015
Global Inves to Avoid a ‘ Preppe
Financial markets will be volatile until the en a ‘doomsday prepper’ mindset, warns the chi indep
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News
These commets, from deVere CEO Nigel Green, come as share and oil prices around the world slide against a backdrop of global economic woes.
stors Urged ‘Doomsday er’ Mindset
Mr Green affirms: “There are many, and legitimate, contributing factors to the global economic slowdown narrative. These include China-related issues, such as the recent devaluation of its currency, the stock market’s boom and bust in recent months, and slower GDP growth. Elsewhere, weaker commodity prices (reflecting weaker than expected demand from China), is causing problems for commodity-exporting emerging markets. The growing anticipation of rising UK and U.S. interest rates adds to investor uncertainty, particularly given high valuations on many of the major stock and bond markets.
“Investors are spooked and stock markets are tumbling in response.”
nd of the year, but investors should avoid ief executive of one of the world’s largest pendent financial advisory organisations.
He continues: “I believe that this volatility is likely to remain with us, at least until the end of the year. By then we will have a clearer view as to the risk of a China economic ‘hard landing’, and the degree to which capital markets are prepared to absorb higher U.S. interest rates. “But for most long term investors, fears of a near-term financial apocalypse are overdone. They should concentrate instead on investing for the longer-term and ensuring that their portfolios are well diversified –geographically and by different asset classes. This of course includes maintaining a healthy exposure towards equities, which financial history shows easily outperform bonds and cash over the type of long investment periods that are typical of our clients. “Failure to diversify a portfolio is widely regarded as one of the most common investment pitfalls – and history teaches us that diversification in these times of rising market volatility is even more essential.” Mr Green adds: ‘Besides, China may yet be a positive theme for investors next year. “China’s devaluation will make their exports cheaper and this will help its fragile economy recover. Also, as I have seen on recent trips to China, consumption in China’s powerhouse cities is buoyant, which is good news for global businesses wanting to take advantage. “Other causes for optimism include that the Euro is undervalued and this will help boost a Eurozone recovery; I believe any U.S. rate rise will be later than most expect and smaller; and oil prices are very low and, again, this will contribute to more global growth. “But until this good news starts to challenge the current market nervousness, investors are advised to sit still and ensure their portfolios are well-diversified.”
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Wealth & Finance International | August 2015
News
New Capital Hires Specialist UK Equity Fund Manager New Capital appoints specialist UK equity fund manager, John Leahy to strengthen its pan European and global equity franchise.
New Capital, a subsidiary of EFG Asset Management – an international provider of actively-managed investment solutions – has recruited specialist UK equity fund manager John Leahy. Based in London, John will be responsible for UK equities and will manage a dedicated UK equity fund to complement the New Capital fund range. Prior to joining New Capital, John was at Hermes Investment Management where he ran UK smaller company strategies for 14 years, including the Hermes UK Small and Mid Cap UCITS fund. He joined the firm as an analyst in 1998, having previously worked at London-based group G. Ullman Fund Management as a US equity portfolio manager. John has over 20 years of investment experience and holds a BSc and MA in Economics from Warwick University. New Capital is a specialist investment house, with high-conviction strategies designed to produce long-term outperformance for clients. The firm recently launched the New Capital Global Equity Conviction Fund in May 2015, which marks the tenth UCITS fund in the New Capital range. New Capital’s AUM currently stands at $2.5bn as at end June 2015. - Moz Afzal, CIO, EFG Asset Management: “We are very pleased to have an experienced portfolio manager of John’s calibre and proven track record join New Capital. His appointment will be instrumental in helping us further develop our pan European and global equity franchise.” - On his new role, John Leahy: “Launching a focused UK equity fund for the New Capital fund family is an excellent opportunity for me to leverage my expertise to benefit New Capital’s clients seeking specialist investment opportunities in the UK. I am delighted to be part of the team.”
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News
Mortgage Pricing: Time to Take Action? Since mid-2007 the bank base rate (BBR) has only been lowered and for the past 77 months there has been no adjustment at all, as the BoE keep interest rates at record low 0.5%.
As the lending boom this summer is continued and re-mortgaging is the evident leader, now might be a good time to review pricing strategy.
Although the Bank of England Monetary Policy Committee August vote suppressed hawkish dissent, the quarterly inflation report showed a rising confidence amongst businesses and consumers. Wage growth is picking up; private domestic demand is growing and is deemed to remain robust. All of these set exceptions for the economy to expand this year, making 2016 the likely year for an interest rate rise. The outlook of higher rates is making both mortgage lenders and mortgage-holders nervous. According to figures from the British Banker’s Association homeowner remortgage activity in July rebounded strongly showing lending was up 29% year-on-year. As lenders update their remortgage interest rates and fixed rate loans remain cheap, homeowners are rushing to secure new mortgage deals. Recent evidence is showing that although the BBR is flat, the fixed rates were starting to increase with both the average two-year fixed rate and five-year fixed rate going up by 60 BPS and 50 BPS respectively (source: Moneyfacts). Due to rising acquisition costs, customer retention and associated pricing are imperative for mortgage lenders to achieve their business objectives. For those lenders that intend to capitalise on current market conditions, offset higher costs for their own funding and be well positioned for the demand surge, now is the best time to prepare for pricing and retention challenges. As the competition intensifies, lenders ought to have a well-defined portfolio optimisation strategy. A strategy, which will provide them with an array of tools and insights allowing: · To build an in-depth understanding of unique borrower types based on market and lender’s data. · To improve product pricing and channel strategies by understandings multiple intricacies of customer segments. · To take a definitive and timely action when the market conditions change, leading to time and cost saving.
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Wealth & Finance International | August 2015
Umberto Bocatto, CIO, Alternative Investments at Mirabaud Asset Management
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Hedge Fund Manager of the Month Mirabaud Asset Management is an international asset management boutique, which offers investment expertise in hedge funds, equities, fixed income and balanced mandates. We focus on high conviction active management and offer a full alignment of interest between our investors, fund managers and ourselves, thereby remaining true to our private banking DNA. We are the asset management arm of the Mirabaud Group, which was founded in 1819, and we have been active in alternative investments since the early 1970s, when we were one of the first hedge fund investors. Since then, we have been developing our offering in hedge funds, equities, fixed income and balanced mandates. Our offering has grown significantly in the last few years through a number of high profile hires to manage our equity and fixed income funds.
and their own research to offer a more efficient vehicle for investing in global equities. Where clients have more specific needs, we do offer bespoke and semi bespoke solutions. Our clients tell us that this is one of the reasons they are confident with Mirabaud Asset Management. We keep our word, we don’t over promise and we will help our clients find the most appropriate investment solutions. Our investment philosophy, which permeates into the management of Haussmann is very simple. We believe that global equity markets will offer significant growth in the future, despite moments of turbulence, such as the one we witnessed these last days of August. We believe that by allocating assets to a portfolio of highly talented managers, both hedge fund and long only, who have a proven track record and a significant part of their own wealth invested, we should be able to produce better returns than equity markets with far less volatility and drawdown. Finally, we believe that money managers should keep their promises, not only in terms of style and strategy, but also in terms of liquidity. We have never had to gate or side pocket our investors thanks to our liquidity management. This liquidity constraint means we focus on liquid managers with understandable strategies; our investors have found this a key reason to invest in the past and we do not imagine this will change in the future.
At the end of 2014 our AUM was USD 9 billion and we employed 100 professionals between London, Geneva, Zurich, Paris, Madrid, Barcelona and Dubai. I am the Head of Alternative Investments at Mirabaud Asset Management and I manage the team of 8 portfolio managers / analysts who focus specifically on hedge funds. As part of my responsibilities, I represent Mirabaud Asset Management in the Investment Committee of Haussmann. This committee includes representatives of all three sponsors, my colleagues in this committee are Hilmi Unver, of Notz Stucki, and Federico Foglia, of Banca del Ceresio. Within Mirabaud Asset Management, we manage a number of funds of hedge funds. Haussmann, which is our global equity proxy fund of funds was launched in 1973 and focusses on Long Short Equity and Global Macro managers. Mirabaud Opportunities Activist Strategies is our most recent launch and invests with the best activist fund managers. Mirabaud Opportunities Emerging Markets is a fund investing both in alternative managers and long only managers. We also offer MirAlt Diversified, a defensive, multi strategy absolute return fund of funds which has been run for nearly 10 years. Our two last products are MirAlt Europe and MirAlt North America, two regional equity proxy funds.
Our investors tell us that they feel we offer them the best of both worlds: “private banking level” services in terms of performance, client relationships, reporting, and access to information with the highest standards of institutional asset management (risk management, operations, ethics). We continue to offer these services to all our investors, institutions and private investors and treat them with superior services. This is, for instance, translated in our approach to AUM and performance. While AUM does generate our fees, our investors trust us to focus on generating performance. As such, our goal is to grow and maintain trust, not gather AUM. As history has shown, assets can flow out and flow back in, but that requires trust. Unlike assets, once trust is gone, it does not return easily, if at all. Our clients’ trust is our most valuable asset and this is the vision of the partners of Mirabaud and the entire firm.
We make sure that our clients can be confident that we are able to best serve their unique needs by talking with them frequently and sharing what we hear and see between the sponsors. Ultimately, Haussmann was created because some needs are common and the core function that this fund plays in most clients’ portfolios demonstrates that investors are generally interested in having liquid exposure to global equities with a form of downside protection through a diversified portfolio of highly talented money managers. This common need is what subsequently led the three institutions to pool together their clients’ assets
Another distinctive part of our DNA is that we do not so much push products on our clients as suggest solutions that we are convinced are interesting. Though this is the only way we can imagine doing business,
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Wealth & Finance International | August 2015
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we are told that our focus on trust and on the relationships which we build and maintain over time is, specifically, one of the reasons our clients use our services, funds and even recommend us to others. Finally, we strive to innovate, such as by including long only funds in our alternative portfolios: sometimes a Long Short manager will offer a long only version of his fund that is more interesting than the original. Other times, we simply find very talented Long Only managers that complement our portfolios. In the most extreme case, we offer an Emerging Markets fund of funds where half the portfolio is comprised of Hedge Fund managers and the other half of Long Only managers. We have the freedom to avoid being dogmatic intellectually and move closer to our clients’ needs. This down to earth approach is another element our clients highlight. It is exciting to be working in this industry post 2008. This crisis has been far more disruptive than previous ones. Government interventions have disrupted all markets, 2008 showed unprecedented correlations between asset classes and many sophisticated models failed. The CEO of a luxury hospitality company recently stated that clients are looking for authenticity in their experiences. He was mainly referring to hospitality experiences, yet I would be so bold as to say this extends into their financial investments. Our investors like understanding who we are investing with and how they approach their investments. These real world stories of successfully identifying strong or weak businesses and putting money where one’s mouth is are fascinating. I am convinced that the rise of activist managers, which led to us creating a fund of activist funds, is linked to this search for authentic active portfolio managers. Furthermore, I see that the success of Mirabaud Asset Management’s recent hires of Long Only managers, all of which are high conviction active managers, further confirms this intuition. We have also witnessed a significant amount of consolidation within the industry; in this situation, being independent and offering both alternative and Long Only funds means that we have a more holistic view of our business. This allows us to offer our clients high conviction products which are relevant to most portfolios. Undoubtedly our biggest achievement over the past year was the launch of our fund of activist funds which has already reached USD 250 million of assets. As mentioned before, AUM is not our prime focus, yet we are truly proud that investors have demonstrated such significant trust in our abilities. The next 12 months will be very exciting as a significant number of our long only products will hit the three year mark and a number of investors have been waiting for this to allocate. We are also in the process of launching a Long Only European Small and Mid-Cap fund which will complement our existing fund offering. Overall, one of the key benefits to being a privately owned company is that we can view the future serenely and focus on solid, sustainable and meaningful growth. The diversification in our revenue stream also enables us to focus on producing returns for investors and to work more closely with them in the management of their assets. We will also continue to expand our operations in Europe and the Middle East, Our experience has shown us that our honest and trustworthy approach to business, combined with the quality of our service and the performance which results from our down to earth approach to investing, are well received wherever we go. Company: Mirabaud Asset Management Name: Umberto Boccato Email: umberto.boccato@mirabaud.com Web Address: www.mirabaud-am.com
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Wealth & Finance International | August 2015
IDS - A Growing African International Fund Services Provider IDS was started in 2002 to serve the nascent South African hedge fund market and also to provide international fund servicing. Assets under administration now exceed $10bn and include Private Equity and South African Long only funds. IDS Malta is the international arm for servicing European, Cayman, BVI and other internationally domiciled funds. IDS Mauritius serves as an entry point into the rest of Africa. Why choose South Africa as the service hub versus India and other foreign countries? 1. Excellent availability of qualified staff sourced from the South African financial services industry, the largest in Africa. 2. A good domestic market to serve in addition to the international market. 3. English speaking generally with other language skills. 4. Same time zone as Europe and able to service the Far East market before closing and the American market on opening. At the outset IDS adopted global best practice in fund accounting and servicing. Staff retention and continuity is excellent. Client relationships are maintained for long periods and the company has always had a policy of helping smaller fund managers get established, creating a partnership founded on trust and loyalty. Capacity is always an issue. IDS ensures that it is constantly recruiting and training to ensure that the company has adequate resources to meet the constantly growing global client base. IDS does not take on new business unless it feels that it is adequately resourced and qualified to take on further business. This has ensured that service levels are maintained while the company continues to grow and expand internationally. Fund Administration is a commodity. Excellent administration is invisible. Bad administration is visible and noticeable. Our clients value our emphasis on good service and ability to anticipate market requirements in this fast changing regulatory world. They know they can turn to IDS for ongoing advice. This makes IDS the choice of many fund managers who consider IDS the best of breed in this invisible commodity market.
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Wealth & Finance International | August 2015
Coining It Clem Chambers is CEO of ADVFN. ADVFN (www.advfn.com) is a global stocks and shares information website providing market-leading financial tools and data to private investors around the world.
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High portability Unlike dollar bills, little dogs aren’t trained to sniff out collectable coins. You can put a multimillion dollar collection in your pocket and go. This is not an exultation to be a fugitive without a warrant, it is merely pointing out a value add, because portability is a kind of liquidity and one often undervalued until it is too late. As they say in India: “it is not true wealth unless you can carry it.”
Diversification is reviled by many but nonetheless is a core investment principle. The old saw that there are old pilots and bold pilots, but no old bold pilots can be applied to traders. The horizon of Gambler’s Ruin through over-betting and being undiversified has been the undoing of many. So when we want to look away from stocks where should we look? Bonds, commodities, cash? These instruments don’t seem very appetizing at the moment.
Some people think bullets are a great alternative investment and you can see their argument. Personally I prefer to avoid the shootout and have a plane ticket and a 1933 Double Eagle, although on reflection seeing how the Secret Service hunted that coin down for about 70 years, perhaps a few rapidly appreciating ‘Una and the Lion’ gold patterns might be a better idea.
How about alternative investments? Alternative investments can be the best and worst of investments.
A global market with auctions Alternative investments tend to be illiquid. Coins tend to be illiquid too. However unlike cellars of wine, or Argentinean prairie land, not only is the asset easily transported but there are auctions around the world providing valuation, pricing time series and transparency for the buyer and seller. In a pinch you can sell quickly to a dealer, but the bid/offer on that isn’t great. However coins are for the patient investor and an auction is a solid venue for them.
Alternative investment is a zone where an offer of a piece of Brazilian jungle, carbon credits or funky real estate can lead investors astray. However real and low market-correlated alternative assets are out there. This is a good place for disclosure. I am a numismatic advisor and collector. The latter activity led to the former role. I advise a London-based, listed coin fund called Avarae. It’s the only listed coin fund in existence as far as I know. So you can imagine I like collectible coins a lot.
Coins have a history as valuable assets going back to the Age of Rome I have a nice Denarius of Augustus Caesar. It is actually not terribly valuable, worth little more than a few hundred dollars. Augustus was a coin collector himself, which is kind of Meta. As such, unlike a fistful of carbon credits or a funky derivative from your favourite vampire squid, coins have a track record of being desirable assets.
Numismatic coins is an alternative investment asset and in my opinion the best of class. Coins have the following benefits: Low correlation to other assets Depending on whose numbers you use, numismatics has kept up a 7% annual compound rate of growth for as long as you care to look back. A coin that might have been $100 in the depression is now $20,000.
Known as the hobby of kings, coins have been collected by popes and emperors, and have been a pastime of the rich for centuries. I’m all for emulating the rich, it’s a good bet they were on to something and they provide good demand in the resale market.
No asset can be completely free of correlation but the main correlation for numismatics is general “money supply,” with an underlying link with fear.
An invisible dividend of the pleasure of ownership Most of us want money to buy stuff, to avoid pain and purchase pleasure. It’s a fine epicurean basis for endeavour.
When the balloon went up in the credit crunch and people were pulling their cash from British banks, coin dealers were as busy as the vendors of safes.
It is hard to get any direct pleasure from a stock certificate, especially now they don’t print so many, and the ones they do print aren’t the fine artistic creations of the 19th century. To get pleasure from a stock or a bond, at least one that isn’t appreciating rapidly, you have to sell them, take the cash and buy whatever is tickling your fancy. The same is not true for collectibles like numismatics. There is a dividend in the pleasure of ownership.
Inflation hedge Coins beat inflation, or at least the stated inflation. A Triple Unite from 1646 was worth about $10,000 to its original owner, it is now worth anywhere between $80,000 and $150,000. That’s about 3% compound above the rate of inflation over 368 years. That’s a solid record. Meanwhile inflation is an increasingly mysterious number.
How much? Well that’s going to be personal question, a coin collection could feel as good as a Harley to some or a crate of beer to another, but that is still value. For me it’s a small but real percentage. Pleasure costs money, sometimes a ton of it.
How are you squaring the price of Starbucks rocketing while the CPI stays so low? Do your grocery bills, and their constant rise in price, match the stated inflation numbers?
To conclude Numismatics are not the only collectible with good investment and diversification attributes. There are stamps, banknotes and many more obscure and/or fascinating genres like film posters, toys, china and other art virtue.
Most say, “no.” This is because hard assets are rocketing in price. This is counterbalanced by a mixture of “soft assets” deflation (through developing world manufacturing and technology), questionable statistics and agricultural subsidies. Look at basic things like food, energy and the price of education and it’s a different picture.
The reason to collect however is still the same. If you put all your financial eggs in one investment basket your probability of catastrophic loss is concentrated. Collecting is a fine way to spread your investment risk.
Meanwhile they are not making any more 1849 gold $20 pieces, so their price goes up with the “hard asset” inflation you see in things like real estate, haircuts, hotels and coffee.
So why not have some nice gold coins to cuddle; it is an investment that even Roman emperors with all their wealth and pleasures thought worthy of their time?
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Wealth & Finance International | August 2015
Chinese Whispers Rowan Dartington Signature’s Guy Stephens looks at key worries and opportunities for investors with regard to the Chinese economy and low commodity prices. The managed devaluation of the Chinese Yuan last week has been the biggest story to occupy the markets since the Greek hiatus and is, arguably, now the new worry for us to contend with.
directly connected to the China story, the shrinking oil price and the strong US Dollar, whilst the latter are a function of consumer spending, boosted by lower fuel prices, a booming housing market and a buoyant commercial property market.
We are all aware of the challenges Chinese domestic investors have faced in the last few months as their equity market has gyrated around and the central authorities have attempted to control the volatility. Devaluing the currency is supportive of that goal and sure enough the Chinese market did benefit. However, the bigger external worry is what it says about the state of the Chinese economy as devaluing is a significant action to take and is likely to be driven by a need to stabilise the equity market.
In a broader context, the FTSE 350 as a whole, is up 4% year to date whereas the FTSE 100 is up by just 2.6%. The greater weighting of mining and oil businesses in the FTSE 100 and the greater weighting of consumer and property businesses in the FTSE 250 is influencing these trends. So far, 2015 has been a year for the active managers who have been able to play these sectoral disparities to the advantage of their investors. In addition, this has suited our collective fund selections, which are always overweight to the FTSE 250 where the excess returns lie, meaning that there have been plenty of attractive returns to be had, despite the perception that the equity market has gone nowhere this year. In fact, all of our collective models have beaten the FTSE 100 so far this year, even the most defensive, showing just how poor the FTSE 100 has been as an investment universe.
The official Chinese GDP numbers always come in as forecast (currently 7%), they also are always released within two weeks of the quarter end and are never subject to revision. The Chinese statisticians are clearly considerably more gifted than most as they manage to get it right every time, in a fraction of the time it takes elsewhere, in an economy that is bigger than all but the US and significantly more difficult to measure due to technological inferiority. In the democratic economies elsewhere, we have three attempts at measuring GDP and it takes a whole quarter before the final number is signed off. Even then, as occurred in the credit crunch, we sometimes get humble-pie announcements several years later, hence where further adjustments are made, in this case revealing that the true extent of the hit to UK GDP from the bursting of the credit bubble was not as severe as first thought.
There is a similar story to be told in terms of performance in the US and indeed, the rest of the world. Year to date, the S&P 500, in Sterling terms, has risen by 2.4% and the rest or the world, excluding the UK has risen by 2.6%, all very pedestrian. However, the FTSE 250 index has risen by 11.4% and the Small Caps are up by 9.5%, both of which are dominated by domestic businesses. Similarly, in overseas markets, domestic businesses are doing considerably better than their larger, more global, brethren. This is probably not surprising as the key worries this year are of global proportions where the linkage between issues such as Greece/EU and China/Global GDP are clear for all to see.
Whilst the opaqueness of the Chinese GDP numbers is well known, it doesn’t help when the currency is devalued. Indeed, this is surely a step that no Government would choose to make when they are trying to rebalance the economy in favour of domestic consumption as it makes the purchasing power of the Chinese consumer weaker. It also sends a message to the west that all may not be well under the bonnet despite all the polishing that goes on. This is why commodities took a further lurch down and other exporting nations such as Brazil, India and Asia-Pacific nations saw their stock markets affected as Chinese exports have just become around 5% cheaper to the developed economies.
As for China, cheaper exports means less inflation in the west and therefore a reduced possibility that interest rates will rise, which is a good thing. Commodity prices and oil prices look like they will be staying very subdued until well into next year which is always positive in terms of business costs. The consumer is experiencing some wage growth as well as lower fuel costs along with a buoyant property market at rock bottom interest rates, which are unlikely to rise by much even when interest rates start moving up. So the domestic sectors look set fair.
The UK equity market is influenced in quite a significant way due to the weighting of energy and commodity stocks. Year to date, the FTSE 350 Industrial Metals and FTSE 350 Mining sectors are both down by -37.6% and -21 9% respectively whilst the FTSE 350 Household Goods, FTSE 350 Construction & Materials and FTSE 350 Real Estate sectors are up by 28.3%, 27.5% and 26% respectively, measured on a total return basis in Sterling. This makes sense as the former are
It used to be said that when America sneezes the rest of the world catches a cold. With China adjusting its currency, for whatever reason, all eyes will be on future economic data releases to see whether there is a dose of Asian Flu ahead.
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Wealth & Finance International | August 2015
Commercial Property Investment As the UK economy continues to recover investors, particularly those hungry for yield, are being attracted to the UK commercial property market. In order to gain exposure to the asset class however investors do not have to go out and buy their own building. There is a wide range of Commercial property funds available to investors.
One disadvantage of property funds can be liquidity. Because it can take time to sell a building, particularly if all are selling, an investor wishing to take money out of a fund may have to wait for their money. However lessons have been learned from 2007 – 2009 and many property funds deal on a daily basis and are easy to get in and out of.
Valuations of UK commercial real estate were decimated during the financial crisis,, which saw an average decline in value of some 44 per cent in an eighteen month period ending in March 2009. Fast forward to 2015 and the commercial property sector is well on the road to recovery benefiting from economic recovery but also from demand exceeding supply as very little new commercial property has been built in the intervening years. The asset class returned around 19 per cent in 2014, the highest annual return for 16 years, according to the Investment Property Databank (IPD).
All that said, things are certainly looking positive for the UK commercial property sector in the immediate future. Paul adds: “While it’s unlikely that 2014’s percentage returns will be bettered in 2015, continued economic growth coupled with a shortage of supply of property, will sustain an ongoing recovery of the market.
“Crucially, that recovery is no longer limited to London. Cities in the Midlands and North of England, such as Birmingham and Manchester are reporting strong performances, particularly from offices and modern distribution centres.”
According to Paul Merchant, Equity Research Analyst at Quilter Cheviot, investors are allocating capital to commercial property funds once more because attractive yields are on offer at a time when there is a shortage of suitable property and the strengthening economy is beginning to see rental growth once more. Commercial property funds offer a cost effective way of investing in commercial property together with the advantages of professional management and diversification. He says: “Funds invest in a portfolio of properties with geographical and sectoral spread let to a wide range of commercial tenants. By investing in a commercial property fund, an individual gains access to a share of the portfolio’s rental income and any capital appreciation that can result from rental growth.”
For those with the bank balances to support it, buying a commercial building outright is always an option, of course. In this case again, it is advisable to seek professional advice in order to secure the most appropriate asset. If that level of commitment is not for you but you still want to invest in the commercial property sector, speaking to an adviser about the various funds available is a very good place to start.
Paul, who has more than 40 years’ experience in the fund management industry, is clear that a well-diversified portfolio reduces investment risk without significantly reducing investment return: “Some funds may specialise in a particular geographic area or focus on a particular sector, such as offices, or industrial, but most funds’ portfolios are spread across the spectrum (and all hold several assets). This means that if rental rates in London start to slow, for example, the fund manager can look to where the economy is at a different and more advantageous point in the cycle.”
Investors should remember that the value of investments and the income from them can go down as well as up.
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The Importance of Integrating Key Business Processes During M&A Author: Robert Gothan, CEO and founder of Accountagility – the leading business process management specialist.
Step by step The first step in any integration project is to thoroughly review the core business areas for both firms, including any critical processes, user spreadsheets, documentation, and the amount of time currently spent running each database. Manual processes are often time-consuming and error prone, so where possible they should be automated for a more effective and streamlined process.
The integration of different business systems can be an extremely complex process, especially when two different companies merge into one. To avoid the need to untangle errors and amend systems further down the line, organisations entering into M&A activity must therefore take steps to understand how to integrate key processes early on. When businesses merge, data from different systems and spreadsheets is often patched together, with personnel aiming to match up pieces that do not fit. It is often assumed that systems are similar and can be easily assimilated, or that diverse systems can be bodged together and expected to work efficiently. Unfortunately this is not the case, and companies often find themselves with complex systems that lack transparency, which causes reporting and procedural headaches in future.
In addition, where processes have previously been completed manually, a review of due diligence will be in order, with auditing and testing of systems taking place to detect any past errors before they are merged with new systems or automated. Risk levels are likely to have been considered in the initial stages of any M&A activity, but there must be a further review of risk at the point of system integration. Firms will then be able to understand exactly what process risks they are taking on, as well as which can be avoided and which can be automated.
Process integration Whilst it is tempting to make process integration as quick as possible when acquiring or merging with another firm, this is actually a vital task that needs to be dealt with methodically and with great care. Before any M&A activity begins, organisations should take the time to analyse how well individual systems are working – and check for any hiccups – since this is an ideal opportunity to examine these systems and reflect on how current process can be bettered.
This is the stage in which firms can begin to dig deeper into their reporting processes. Spreadsheet mapping should also be carefully reviewed, as it will provide key insights into how each business operates, and how end results are being calculated. Organisations should also consider how their data is being gathered, from which systems, and whether the same data is being used in different ways to compile a report. Armed with this information, firms will be able to decide how their data needs to be stored, aggregated and presented moving forward, based on insights gained from the review process.
This approach also gives both sides the opportunity to compare their systems to those of the other company, so that they can identify where the challenges are for each, and detect which systems are experiencing any issues most efficiently. As part of this process, the teams managing integration must ask themselves if any of the common problems they encounter are solved by either organisation, and then carefully select the best of both systems. This evaluation phase also provides the chance for firms to tighten up on regulatory and compliance issues by recognising different levels of risk and deciding what procedures need to be implemented to fill any gaps.
Unlocking value System integration should be seen as an opportunity to unlock value and adopt best practice during M&A activity. If handled intelligently, mergers and takeovers can allow firms to review their existing processes and those of the other party, signalling areas for improvement and automation. Not only will this approach help to increase efficiency, but it will also minimise risk points for the resulting entity.
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ISAs If you haven’t already reviewed your ISA investments this year, now is the time to do so according to Sean Raftery, Head of the Birmingham office of Quilter Cheviot Investment Management. In light of changes to dividend tax rates coming out of the Summer Budget, ISAs now offer a more tax efficient means of investing than ever, and an easing of ISA rules has led to positive changes around savings inheritance. Sean Raftery explains: “The appeal of the ISA is stronger than ever and yet a lot of people still aren’t making the most of their ISA allowances. “George Osbourne’s Summer Budget introduced a 7.5 per cent tax increase on dividend income received above £5,000 a year for basic rate tax-payers. Higher rate tax payers will pay proportionately more so being able to shelter your taxable investments in an ISA becomes all-important. Dividends that are withdrawn from an ISA are tax free and you can place up to £15,240 of existing investments into an ISA during this tax year. By taking full advantage of your ISA allowance you can build up a highly tax-efficient pot in a short space of time.” ISAs, says Sean, offer benefits to all savers and can provide people with the chance to create a significant investment portfolio in a simple and easy to manage way. He urges families to maximise their investment opportunities by making use of each family member’s ISA allowance; “If you take a family of four, for instance, each adult can access an ISA allowance of £15,240 and junior ISAs can be taken out on behalf of each child. The yearly allowance for a junior ISA is currently £4,080. When you combine all of the various ISA allowances, the family has access to a tax free savings allowance of £38,640 overall.” Sean also advises married couples to maximise their ISA investments in view of recent changes surrounding inheritable savings. As of April 2015 husbands and wives can now inherit their spouse’s ISA allowance. Should one or other partner pass away, an additional ISA allowance equivalent to the value of the dead spouse’s ISA will pass to the surviving spouse. ISA consolidation is another important thing to consider says Sean; “We see instances of people having numerous ISAs set up but not really knowing what is going on with them. By bringing these investments together in one place they can be more easily monitored and managed.” Given the newly incumbent Government’s favourable attitude towards ISAs, the savings vehicles are likely to remain a good option for investors in the medium term, says Sean. He concludes, “By undertaking a quick review of your ISAs, you could identify additional opportunities to boost savings and reduce tax. It’s an easy win and one that many more people could take advantage of.” Investors should remember that the value of investments and the income from them can go down as well as up.
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Neil Simpson
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Structuring for Success: LLP or Ltd? By Neil Simpson, Partner, Haysmacintyre.
Making distributions is a further area of flexibility afforded to the LLP. Subject to the cash being available the LLP may freely distribute profits, advance loans, and return capital with minimum formality. The Limited Company, subject as it is to capital maintenance rules, requires available reserves to distribute and must meet restrictive company law requirements in making loans and returning share capital whether by way of share buyback or liquidation.
Paradoxically, given the title of this piece, it is strongly arguable that the first requirement of the “successful” business structure is limited liability: without this protection against failure many businesses would simply not assume the commercial risks necessary to succeed. If this is correct then the available choice of structure is essentially a binary one: a Limited Liability Partnership (LLP) or Limited Company. Both are corporate bodies and both provide limited liability to their members or shareholders.
A further flexibility available to the LLP, is the ease with which new members may be admitted (and removed) - the simple execution of a deed of adherence to the Members Agreement being sufficient to introduce a new member. This flexibility may again be compared with the relative difficulty in introducing new members in a Limited Company (in funding the acquisition of shares or in dilution of other shareholders’ interests) and of removing director shareholders and in recovering their shares (employment rights, valuation and funding the purchase of the departing shareholder’s shares).
This does not mean that the choice of structure is necessarily determined by whether a corporate or partnership business ethos is favoured. The management or business ethos is not determined by the structure: many LLPs are managed by a “board” of their senior members on corporate lines while equally many Limited Companies are managed on a more inclusive basis as quasi partnerships. The choice of structure may facilitate a preferred management ethos but it does not determine it.
Most significantly, the above flexibility is available to the LLP on a tax neutral basis. The distribution of profits, the return of capital, the introduction and removal of members may all be achieved without tax costs for the LLP or its members. By comparison, the payment of dividends, the return of capital, the transfer of shares between members, the admission of new shareholders on favourable terms are all occasions of potential tax charge to shareholders. On the face of it, therefore, the LLP is more flexible and outperforms the Limited Company in that other requirement of a successful structure: tax efficiency.
This chameleon ability to accommodate a very different business ethos in one structure, whether LLP or Limited, is illustrative of perhaps the foremost requirement of any structure - it should not get in the way - and on this view the more “successful” business structure is simply the one that gets in the way the least! Expressed more positively: the foremost requirement of a successful business structure is flexibility - an ability to accommodate the changing commercial requirements of the business and its owners over time - and, importantly, on a tax efficient basis.
Inevitably this is not the complete picture and in one important respect is positively misleading. The LLP‘s apparent tax efficiency is illusory. It is described as a partnership not simply because of its particular company law attributes but because it is treated as a partnership for tax purposes. As a partnership its profits are charged directly on its members (partners) as they arise (are recognised in the accounts) and irrespective of whether the profits are distributed or retained in the business. If profits are taxed on the members on an arising basis and at their marginal rate of income tax (which may be 47% for an additional rate tax payer) their subsequent distribution has no tax significance. Hence the tax neutrality and apparent (but illusory) tax efficiency of the LLP. If all the profits have been taxed as they arise then what happens thereafter is of little interest to HM Revenue and Customs!
In terms of comparative flexibility, the LLP, significantly, has no share capital or capital maintenance requirements and it is this that makes it much the more flexible (and potentially attractive) structure. The profits of an LLP may be allocated on a wholly discretionary basis. By comparison, the allocation of profit by a Limited Company is necessarily constrained by the fixed shareholding percentages held by the owners (although this can be overcome by arranging for different classes of share, so called alphabet share arrangements, to target profit distributions to individual shareholders).
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In contrast a Limited Company is taxed independently from its shareholders and pays corporation tax at a rate of 20% on its profits. There is no tax charge on the shareholders until those profits are distributed as dividends or returned on liquidation. The limited company therefore offers a material tax deferral (of as much as 27%) as compared to the members of an LLP where the individual might be paying income tax at a marginal rate as high as 47%. The LLP has been the business model of choice in recent times: this due to its flexibility and the fact that the impact of the arising basis might effectively be avoided by adopting a hybrid structure. The hybrid structure, as the name implies, sought to access the benefit of both structures by the simple expedient of combining both structures! The individual member would hold his or her economic interest in the LLP both directly, as an individual member, and indirectly by arranging for a company in the member’s ownership also to be admitted as a member of the LLP. The profits due to the member might then be allocated as required to the company (with the benefit of tax deferral at corporation tax rates) or to the individual to be distributed. Such structuring is now ineffective for tax purposes as any profits allocated to such a hybrid company are now taxed on the individual member (the company is simply ignored for tax purposes). The intention behind these changes is to force a choice between the LLP and the Limited Company (at least for tax purposes) by excluding the benefit of both worlds, in the form of the hybrid partnership. So for the first time that binary decision between the LLP and Limited Company has to be faced rather than fudged. Of course, if profits are to be fully distributed to the owners then the arising basis gives no disadvantage (or more correctly the deferral advantage of the Limited Company does not arise) and the greater flexibility of the LLP will generally favour that structure. But what of the situation where profits are required to be retained in the business to fund growth and working capital? The ability to retain such profits taxed at corporate rates of 20% rather than profits taxed at marginal rates of income tax as high as 47% will favour the Limited Company, for all the desirable flexibility of the LLP. But this assumes that the decision over structure, LLP or Limited, reduces itself to simply what is the more important: flexibility or tax efficient funding? These are generally the most important considerations: but not in all cases or at all times. Inevitably there is no “correct” answer. Much will depend upon individual circumstances and may even, as suggested earlier, extend to such “soft” benefits as to whether a partnership or corporate ethos more properly reflects the relationship between the owners. What may be important now may change over time. What of the future and possible exit planning? The LLP certainly cannot be listed and the question is will the sale of an LLP maximise the value of the business when most purchasers still regard an LLP (unfairly) with some suspicion when it comes to making a corporate acquisition. An LLP may strictly be a corporate entity but that is not its perception. The best that might be concluded is that when in doubt perhaps the flexibility of the LLP once again favours it: certainly it is a relatively more simple matter to fully incorporate an LLP into a Limited Company (and on a tax neutral basis) than to try to restructure by moving in the opposite direction!
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Wealth & Finance International | August 2015
Socially Responsible Investing: The Next Big Thing? By Michael Hatchwell, Consultant with law and professional services firm, Gordon Dadds.
There has been an increasing trend in some parts of the world to focus on Corporate Social Responsibility (CSR). CSR is a term frequently used to encompass a whole range of corporate activities but which fundamentally encompasses corporate self-regulation: how large corporates ensure that their businesses respect the law and certain ethical and moral standards and in many cases give something back to the community.
Impact Investing, Community Investment and Positive Investing are all terms used in the context of SRI and which are self-explanatory. But does SRI mean lower profitability? Morgan Stanley produced a report in April 2015 which concludes that sustainable investment has “usually met and often exceeded, the performance of comparable traditional investments”.
A good example is companies ensuring that their products are not made by children or people working in unsafe factories. This has impacted and raised standards in many countries which previously took a more relaxed approach to such concerns, with the rag trade in particular suffering first-hand the tragic consequences of inadequate and unstable warehouse foundations.
Many jurisdictions have responded to and also encouraged SRI by introducing corporate vehicles with, in some cases, fiscal incentives, to create a legal framework for businesses with a social purpose – for example, B-Corporations in the US and Community Interest Companies in the UK. It is of course emotive to seek to label entrepreneurs as social or antisocial depending upon how the sectors they invest in are regarded. Views on this change frequently and often with the fashion du jour. The biggest proponents of gambling are the world’s governments hungry for hefty tax revenue generated by casino houses and online betting companies. Given that many of these are elected governments, can gambling really be branded antisocial?
In many parts of the world CSR remains an alien concept or at least one which is not embraced as it is seen as interfering in the ultimate goal of maximising profit. Also, there are and presumably always will be industries which require investment but are perceived by some as antisocial, immoral or contrary to public decency. Arms, gambling, cigarettes, alcohol, pornography and no doubt others may be considered to fall into this category, but it is unlikely that these industries are going to disappear soon and therefore innovation and investment will continue in those sectors and there will be entrepreneurs investing in existing and new businesses occupying those spaces, and there will be start-ups seeking to exploit those markets with new solutions and products. Such start-ups are likely still to attract investment.
It is worth noting, too, that a business engaged in what might be regarded as an “antisocial” sector is also capable of engaging in considerable positive action through CSR, SRI etc.
Socially responsible investing (SRI) takes CSR a step further and seeks to encourage corporate practices that promote sustainability, consumer protection, human rights and diversity. Certain investors and funds will deliberately avoid the above mentioned sectors and make a virtue of not investing in, what some may perceive as, these ethically lacking concepts.
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Rates, Risk and Return:
What You Need to Know as We Edge Towards Raised Interest Rates Richard Carter CFA, Fixed Interest Specialist, Quilter Cheviot. With the Greek crisis seemingly on hold for the time being, markets are beginning to focus more on the prospect of higher interest rates in the US and the UK. Investors have grown very used to rates at close to zero but are now having to consider how their portfolio will respond if the Federal Reserve and the Bank of England change policy. Take, for example, bonds. Although often seen as the more predictable and defensive part of a portfolio, they are certainly not risk free. While the coupon rate is generally fixed, bond prices move inversely to yields and can therefore fall if interest rates rise and vice versa. UK government gilts lost over 3% during the second quarter of this year and corporate bonds fared even worse. So what lies ahead for this type of investment and how concerned should we be about the potential for future losses?
way to go to maturity and are quite sensitive to changing interest rate expectations. There is also very little cushion at the moment in terms of income and a rise of just 1% in yields could lead to losses of roughly 8% on the gilt index – far more than a lot of cautious investors would be willing to countenance. There are concerns about the potential impact on mainstream corporate bond funds too, partly because they tend to be quite long duration but also because the corporate debt market can be illiquid and this could exacerbate price losses if rates had to go up.
The first thing to say is that rate rises are not a done deal by any means. Over the last few years, the market has frequently worried about tighter monetary policy in the US and UK only for economic growth to disappoint or inflation to fall, resulting in a rapid scaling back of forecasts for higher rates. Indeed, at the start of the year, economists were widely, and with great certainty, predicting a June rate rise by the Fed but this has already come and gone without any action being taken.
More nuanced analysis is required, however. Escalating interest rates are also often interpreted as a sign that an economy is doing well, and may continue to do well in the coming years. This can often encourage more adventurous investors to buy up shares in businesses, in anticipation of future growth. The less adventurous, however, might be satisfied by the higher interest rates they can now receive on their cash reserves, and therefore discouraged from the riskier practice of investing in equities.
But what about elsewhere in the market? You could be forgiven for thinking that it’s simple. When interest rates go up, some businesses’ profits may go down, and take investors’ dividends with them. These falling profits can lead to the market downgrading its estimate of the value of the company, causing share prices to fall.
In the UK, interest rates are not expected to go up until early 2016 because inflation is so far below the Bank of England’s target. We also have to allow for the ongoing QE program in the Eurozone, where the ECB is buying roughly €60bn of government bonds per month. This is likely to keep a lid on bond yields in markets like France and Germany and make investments such as gilts and US Treasuries more attractive for international investors.
To complicate the picture further, some sectors are more likely to benefit from stronger economic growth even if interest rates are rising. For example, companies and industries which tend to experience cyclical growth, such as the construction industry, can generate high returns in this kind of environment. Similarly, banks and insurance companies will often do well in a rising interest rate environment because they can generate better yields from the deposits and premiums they hold. If and when the economy hits the doldrums, however, the returns from these investments may suffer with it.
A lot will depend on how high the market expects rates to go ultimately – at the moment, they are not expected to return to pre-crisis levels of around 4-5% because there is still too much debt in the system and a range of 2-3% would seem more likely. Even to reach that modest level is going to take time - the market is currently forecasting that UK interest rates will not return to 2% until the end of 2018 and if that is the case, bond markets will probably avoid serious losses.
Of course, as ever, the best way for investors to mitigate the risk of interest rate increases is to diversify their portfolio with investments that respond differently to various economic stimuli. This will help ameliorate the effect of phenomena such as fluctuations in interest rates (and more unforeseen events) and help ensure that the portfolio generates good returns over time.
There are still some grounds for concern though. One of the main issues with gilts, in theory the ‘safe and boring’ part of a portfolio, is that they can actually be quite volatile in terms of prices. A lot of bonds in a standard gilt index product are very long ‘duration’, i.e. they have a long
Investors should remember that the value of investments and the income from them can go down as well as up.
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LSBF Great Minds Live: ‘Private Equity’s Biggest Challenge Is Its Own Success’, Says Terra Firma Founder, Guy Hands
London, 28 July 2015 – The growth of private equity markets in the last two decades has made its very success its biggest challenge, believes Guy Hands, Chairman and Founder of one of Europe’s leading private equity firms, Terra Firma.
and its ability to nurture talent. “London can continue to grow, becoming the heart of trading for all emerging markets. Catering to a global market with an international outlook would help foster great economic growth,” he noted.
Speaking to an audience of business students in Central London for the London School of Business and Finance’s (LSBF) Great Minds series, he stated that the private equity industry has grown enormously and, owing to increased competition in the market, its high levels of success pose a great challenge for firms.
Advising students to aim to be entrepreneurial, Mr Hands said, “Aspire to be entrepreneurial; innovate and build businesses. If you have that mindset, you will go on to create a better world through your business and the jobs [you will create].” Mr Hands spoke in London at LSBF Great Minds Live, an interactive event initiative where students have the unique opportunity to listen to, and discuss with, illustrious business and political leaders on a vast array of topics ranging from education and careers to business and entrepreneurship.
“Private equity firms tend to start small but, as they grow in size, competitiveness [in the private equity market] has increased while the margins have decreased,” he said. “Twenty years ago, working with or in big firms, cost effectiveness and mergers and acquisitions alone could lead you to outperform stock markets; this is no longer the case.”
LSBF Great Minds Series As well as offering programmes dedicated to fostering leadership skills, LSBF also endeavours to provide students with insight and inspiration through a number of innovative resources. One of these initiatives is the LSBF Great Minds Series: a collection of video interviews with leading business and political leaders promoting debate on education, employability, entrepreneurship and the economy.
Reflecting on what has steered Terra Firma’s success in this competitive market, Mr Hands noted that being different with the aim of transforming a business is what drives success. “Making money today is about understanding where the market is headed.” “How will you provide, through your investments, more than what others in the market already provide? That is the question. Creating value with innovation and strategy is vital,” he added.
The video series started in 2011 with a conversation with former British Prime Minister Tony Blair, followed by an interview with former Education Secretary Lord Kenneth Baker. In 2012, entrepreneur Sir Richard Branson, founder and chairman of the Virgin Group said that universities worldwide should become hubs to boost entrepreneurship and inspire self-starters to develop their own businesses. In 2014, LSBF spoke to Will Butler-Adams from Brompton Bicycle, Guy Hayward-Cole from Nomura Bank International, with former British Prime Minister Sir John Major, entrepreneur and investor Deborah Meaden, Google UK sales director Kevin Mathers and BBC Worldwide CEO Tim Davie.
In just over two decades since founding Terra Firma in 1994, Mr Hands has overseen the firm invest over €15 billion in 33 businesses with an aggregate enterprise value of over €48 billion. The firm’s growth is driven by its approach to business, which has been to raise long-term capital from a wide range of investors to buy and transform businesses in order to create value for stakeholders. Mr Hands’ career has seen him pioneer the markets of global securitisation, by innovating to expand processes to include debt instruments and assets such as mobile homes, shopping centres and distressed loans.
Kicking off 2015, LSBF hosted interviews with Andrew Miller, CEO of Guardian Media Group; Jill McDonald, CEO of McDonald’s UK; Kevin Costello, CEO of Haymarket Group; Amy McPherson, CEO of Marriott Hotels Europe; veteran BAFTA-winning broadcaster Jon Snow; live chats with Kevin Ellis, Managing Partner of PricewaterhouseCoopers, Claudine Collins, Managing Director of MediaCom UK, and Robert West, Partner at Baker & McKenzie; Mark Wood, CEO of JLT Employee Benefits; and, most recently, Tom Cijffers, MD of Zenith UK.
Addressing the role of leadership in his success, Mr Hands emphasised the importance of motivating colleagues to aim higher, and achieve greater heights, as a key element of his approach to management. ”I aim to inspire, energise and challenge,” he said. Mr Hands also underlined the significant role London does, and can continue to, play in the business world, through its global standing
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About London School of Business and Finance (LSBF) London School of Business and Finance (LSBF) is a global provider of professional, executive, vocational and higher education. With campuses across three continents and 40,000 students from over 150 countries, LSBF offers industry-relevant programmes that are tailored to the career goals of today’s students and professionals. Under the royal patronage of Prince Michel of Kent, LSBF has a powerful e-learning platform and over 130 programmes, covering industries from fashion to finance. LSBF is a Queen’s Awards for Enterprise winner and an ACCA Approved Learning Provider Gold, in the London, Birmingham and Manchester campuses.
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60-Second Interview: Laureola Advisors Inc.
What does your business do?
What’s the aim for your business?
We are the Investment Advisors for the Laureola Fund, a Fund dedicated to Life Settlements. We perform the role of the portfolio manager - selecting the assets, completing the transactions, servicing and administering the assets - in short managing the portfolio of the Fund on a discretionary basis.
To make money for our investors. Life Settlements offers high level of predictability, double digit returns, and genuine non-correlation with currency crises and bursting stock market bubbles. Our goal is to capture these opportunities for our investors.
What’s your company’s biggest challenge?
Who are your clients?
To deal with the hostile regulatory environment and to attract the attention of investors in a world overflowing with investment options. The Fund’s performance helps with the latter.
The Fund’s investors are predominantly Private Clients and smaller Family Offices. For larger institutional wishing to access we construct their own portfolio designed according to their unique requirements. The Fund’s clients are truly international and come from North America, Europe, and Asia.
What business/business person do you most admire and why?
What makes you unique?
Most in the investment business will have high admiration for Warren Buffet and we are no exception. He has an exceptional track record over many decades. Among his many admirable qualities: ability to think long term, admitting and learning from mistakes, keeping firmly grounded in the basics. Mr. Buffet focuses on private and public equity but has also invested in Life Settlements - an encouraging sign.
Christopher Erwin (Chief Investment Officer) is a member of both the Orange County Bar Association and the Life Insurance Settlement Association. He has over 10 years experience in all aspects of evaluating and transacting Life Settlements, and has built a successful business with this expertise. He is supported by a group of 8 Life Settlement professionals. Chris ensures that the Laureola Fund has access to the deal flow.
Name: Tony Bremness Company: Laureola Advisors Inc. Email: Tony.Bremness@LaureolaAdvisors.com Web Address: www.LaureolaAdvisors.com Address: 30 de Castro Street, Road Town, BVI VG 1110 Skype: tony.bremness
Successful Life Settlement investing requires a unique set of skills: knowledge of Life Insurance, Life Settlement experience, legal and investment expertise, fund structuring and design capabilities, and the all important access to the deal flow.
Tony Bremness (Managing Director) has over 30 years experience in Portfolio Management and Fund design an structure; he graduated with an MBA and has been accredited the CFA designation. Tony manages the day to day operation of the Laureola Fund.
What’s the biggest challenge facing you at present?
The regulatory environment - particularly in the Western world - is increasingly hostile to asset management, to alternative fund managers in particular, and to less liquid strategies especially. It is unfortunate, as the blizzard of regulations since 2008 does very little to protect investors, but does a lot to increase their costs. Well thought out, effective regulation is necessary, but the current regulatory thinking that more is always better is misguided. It has the result of preventing access to innovative smaller managers who often have the better investment ideas.
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