To be called a “snake oil salesman” by a politician would probably make a person ponder their life choices, and the definition of irony.
Such was the fate of Martin Gilbert, the founder and then chief executive of Aberdeen Asset Management, when he was brought before the Treasury Committee in 2002 in the aftermath of the split caps investment crisis that left thousands of retail investors nursing losses, and the business Gilbert built on the edge of collapse.
He is now a million miles from that saga, with a new business, AssetCo, that has just made its first major acquisition: the purchase of River & Mercantile for £99m. But the memories of the split cap investment trust saga remain.
It is during the bad times that a CEO proves their worth Martin GilbertSplit capital trusts were investment trusts that frequently used derivatives and high levels of debt to amplify returns, and some bought shares in each other.
A general decline in the FTSE in 2003 precipitated a crisis in these types of investments, with some investors reporting to the Treasury Committee that they lost thousands of pounds.
Aberdeen Asset Management were not the only major business to manage split cap trusts, nor was an Aberdeen product the first one to run into trouble, but that slice of invective towards Gilbert from the MP John McFall, and the former’s awkward performance at the committee, means the issue is now and forever associated with him.
Speaking to FTAdviser about it now, he shows contrition by saying he “understands” why retail investors abandoned his business over the issue (Aberdeen later sold the retail operation in its entirety), and acknowledges his luck that staff and most other clients stuck with him. But he also shows a flash of pride: “It was an horrendous time, but it is during the bad times that a CEO proves their worth. Being a CEO is easy in the good times, it’s what you do during the tough times that matter. We tried to be open with everyone, the temptation is to adopt a bunker mentality, but we chose not to do that.”
Gilbert achieved something that is surely the dream of very many but reality for very few; joining a tiny business in his hometown, becoming chief executive and leading it into the top leagues of the FTSE 100.
A certain kind of character
Individuals who do that typically fall within one of two character types: either tightly wound alphas whose intensity lacks charm but provides a presence that blasts through life’s problems, or super emollient types, whose charm bestows upon the recipient a feeling of gratitude that they are able to do the other person a favour.
Gilbert does not fit into either of these boxes; his greatest interpersonal skill may be that his extremely easy going manner puts the other person at their ease, but the flashes of the drive that took him from provincial Scotland to regular attendee at the World Economic Summits in Davos is evidenced by some of his language, as he refers to a continued desire to achieve and learn, and says he wants to continue working forever.
Another hint as to his character is provided by the fact he is speaking to FTAdviser from his skiing holiday in Switzerland, but still apologises for being two minutes late.
Gilbert’s time at the business he created ended about 18 months after he merged it with Scottish fund house Standard Life. He says the exit was planned well in advance, but with a smile doused in irony notes the combined business has reverted to the Aberdeen name, “minus a few of the letters”.
Having reached the age when he can claim a bus pass, Gilbert could have been enjoying the Après Ski and reflecting on a life well lived, buffeted by a lengthy list of non-exec and pro bono roles, but instead is back on the road, promoting his asset management consolidator AssetCo, a business that he hopes to take from a cash shell to the FTSE 250 before he is done.
He says: "I find business to be fun. A lot of the people I am working with on AssetCo are people I have worked with before, and it is fun to work with them. I didn’t want to stop working – I wanted to build up another business."
AssetCo recently completed its largest deal, the takeover of fund house River & Mercantile, which joins a stable of businesses including a platform, an ETF provider and another fund house, but prompts the question: is there an underlying strategy?
Gilbert says: “We believe in active equities, there is a perception out there that such funds are on the way out, but we think good fund managers still add a lot of value. There is a perception that there are too many funds. I think there are too many very small funds and too many very large funds, but the spot between £100m and £5bn, that is where the opportunity is.
"And lots of those funds are run by boutiques, and they have the investment performance, but maybe they don’t have the distribution capability. Our focus is on buying the firms with an investment-led CEO, not a distribution-led CEO, so we can help with the latter. I think I’m a mixture of the two.”
Gilbert began his career as a fund manager, after graduating with degrees in law and accountancy he joined a law practice in his native Aberdeen. He was assigned to the investment management unit, which ran money for the clients of the law firm and others, and was one of three staff. Within a year the three had split away, to create a separate asset management business, which eventually became Aberdeen Asset Management.
Of the pressure associated with helping to run a business within a year of leaving university, Gilbert says: “I was always attracted to being in business,” but acknowledges that attending a Scottish boarding school and growing up for the first decade of his life in Asia, where his family worked, may have imbued him with an atypical level of self-reliance.
Within a year, the asset management business he helped co-found lost half its assets, and they had to start again. He says: “We decided to expand, but thought that people in Edinburgh wouldn’t respond to guys from a provincial city, so we headed for London to expand and acquire, but of course came back to Edinburgh later.”
Glimpse of the future
His approach to M&A at AssetCo will be different, as he is willing to acquire stakes in companies, but not necessarily 100 per cent, as was the case while at Aberdeen. This is because, in acquiring smaller businesses, he is aware that the fund managers might choose to leave, so in order to keep them, he is happy for them to remain as shareholders.
AssetCo is also interested in growing its product range in the unquoted space, but Gilbert says this will not happen as a result of takeovers. He says: “What we like about fund management M&A now is you can buy the companies for what are single digit price-to-earnings ratios. But in the private markets space, the p/e ratios are more like 20, so we won’t be buying in that space.”
The other focus he has at AssetCo, he says, is to "make a lot of money for investors in our products. At Aberdeen, Hugh Young and I launched a fund that is the best-performing Isa investment trust ever (according to Interactive Investor), it is now called Asia Focus. I would like to do something like that again."
Gilbert lives in England now and AssetCo is headquartered in London. His wife has a senior academic post at Cambridge University, but he still visits Aberdeen roughly every two weeks and is on a number of boards and committees in Scotland.
Until 2018 he sat on the board of UK broadcaster Sky alongside members of the Murdoch family, but he remains a board member of Glencore and is also chair of fintech Revolut, the Net Zero Technology Centre in Aberdeen and Scottish Golf – it was through the Scottish golf scene that he met former US president Donald Trump, who invited him to his inauguration in 2017.
He says: “I think you should join any board you can, every board is different and so you learn something from all of them. I mean, mining is as different as it gets from asset management, but that is why I went onto the Glencore board, doing something different is very enjoyable.
"And Revolut is a fintech. People in our industry think fintech isn’t real, and it is a very fast moving space. I am enjoying learning about it, that is the appeal, the fun.”
Gilbert does have the etchings of a retirement plan in his mind, speaking of how he would “love to live on a golf course, but not yet”.
However long it is before Gilbert decides he has reached the final hole of his storied career, it is likely that his actions between now and then will impact how advisers do business.
David Thorpe is special projects editor of FTAdviser
