JupiterFeb 25 2022

Jupiter CEO rules out M&A as profits rise 

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Jupiter CEO rules out M&A as profits rise 

Andrew Formica, chief executive at fund house Jupiter, said the firm does not see itself being part of the present wave of consolidation in the sector.

Speaking on a results call this morning (February 25), Formica said: “It is not our intention to look at M&A as part of delivering on our strategy, either though us doing a transaction or else being bought.” 

Formica said the appointment of boutique corporate advisory firm Robey Warshaw, a firm which specialises in M&A corporate advice, had been instigated by Jupiter chairman Nicola Pease and was "part of the normal course of business.

"Pease just wanted to make sure the thinking at board level was refreshed, and they advise us on industry trends.” 

This was the first full year of Jupiter results to include the impact of its acquisition of Merian Global Investors.

Overall, the group suffered net outflows of £3.8bn despite gross inflows of £16.5bn. Though the outflows were down 5 per cent on 2020.

Two of the three areas which Formica said had contributed to net outflows in 2021 were the group's systematic equities and UK strategies, both product areas which Jupiter took on as part of the Merian deal.

Formica said these redemptions were mostly the result of negative client sentiment at the asset class level, but added this has since begun to change. 

In particular, the firm’s UK equity and systematic equity mandates use the value style of investing, which Formica said was out of favour to the extent that “you literally could not mention it to clients at times in 2021."

He added: "That is changing now.”

The third segment where outflows were concentrated was European equities, where Jupiter’s franchise has suffered since fund manager Alexander Darwall quit to set up his own firm, Devon Equity Management, and took the European equity investment trust he ran at Jupiter with him. 

Jupiter highlighted the inflows seen in its recently launched products, with the global sustainable equities strategy boosted by net inflows of £200mn, after launching a Luxembourg-domiciled Sicav vehicle to make it more accessible to clients.

Assets under management rose 3 per cent in the year, to hit £605bn, and the group’s pre-tax profit rose 21 per cent, to £216.7mn, pushing basic earnings per share up 30 per cent to 27.6p.

The company expects to return capital to shareholders at the end of this year, which the group's chief financial officer Wayne Mepham, said could come in the form of a share buyback.

sally.hickey@ft.com and david.thorpe@ft.com