“So are you?” I asked the chairman of the implosively-sized investment company Second Coming Asset Management as we enjoyed a pint or two of No Whitewash Over Equitable Life at The We’ll Believe That When We See It.
“So am I what?” replied the chairman predictably. “Oh come on,” I sighed. “You know I have to ask the question so why don’t we try and do this the easy way?”Are you going to bid for New Star?””Oh that,” said the chairman. “I fear you may not believe me but the honest answer is I’m not sure.” “Really?” I said. “I thought it was standard operating procedure at any of your companies to put in a bid for any rival fund manager – if only so you can give their accounts a thorough going over.”
“Yes, I do love a bit of due diligence,” smiled the chairman. “Especially when I have no intention of really going through with the deal. It’s the corporate equivalent of forcing someone to take all their clothes off and then having a good old laugh at their … well, anyway … New Star’s different and not just for the disturbing mental picture I’ve just conjured up.
“On the one hand, I have a real affinity towards it – and only partly because it launched shortly after I started my previous venture back in 2000. I just think we’re on a similar wavelength.” “You mean performance-oriented, properly incentivised and managers swiftly dispatched if they’re not pulling their weight?” I suggested.
“To answer your points in order,” said the chairman, “‘Chance would be a fine thing’, ‘Yes, if you’re referring to me’ and ‘Sometimes even if they are pulling their weight’. But maybe I can explain better with an example – you remember the company’s recent statement, which outlined among other things how concerns built up over its level of debt?”Well, it included the sentence, ‘The Board believes that the reporting requirements and public scrutiny that are part of being a listed company have served to magnify these concerns’. And, you know, that rather struck a chord with me.”
“You’re obviously not suggesting the company has a problem with reporting requirements and public scrutiny,” I said quickly in case any lawyers were within earshot.
“Absolutely not,” the chairman agreed. “I’m merely saying it occasionally crosses my mind how much simpler life is when you’re ruler of all you survey and, as such, aren’t beholden to anyone else.”
“I think I see your point,” I said. “So what’s putting you off going up against the other possible bidders cropping up in the press, such as Aberdeen and Neptune?”Oh, and of course Gartmore’s owner Hellman & Friedman – which reminds me, I really must track down Phil Wagstaff to get his thoughts on that one.”
“What’s putting me off?” replied the chairman. “In a word – banks. I’m afraid I’ve now reached the stage where, whenever I hear that banks are involved in anything, I believe no good can come of it.
“So only last week we were talking about how the banking lobby had so successfully managed to muddy the waters of the RDR by helping investors distinguish clearly between sales and advice through the ingenious mechanism of a ‘sales advice’ channel. And now we find some banks trying to recoup their £240m of forgiven debt by selling an asset manager in the depths of a recession.”
“You don’t think they’ll find a buyer?” I asked. “Oh, I’m sure they’ll find a buyer,” said the chairman. “What I’m less sure about is whether they’ll get close to the GBP 120m minimum price-tag I’ve seen reports they are after – especially when you consider New Star’s key assets all have two legs and a better than working knowledge of where the exits are.
“This may not come down to golden handcuffs so much as the construction of a golden Wormwood Scrubs opposite Harrods. In fact, I wonder whether any banker will be getting what they want for Christmas this year – particularly if Santa really has been making a list, checking it twice and doing a proper job of finding out who’s been naughty or nice.”
“And a Merry Christmas to you too,” I said.