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Where did it all go wrong at Jupiter?

Where did it all go wrong at Jupiter?
(Pablo Garcia Saldana/Unsplash)

The two men at the City restaurant knew each other well, and were veterans of this type of deal. 

It was early 2020, and by the time their business was done the fate of one long-established City company had changed markedly, while another would disappear altogether.  

The two were Edward Bonham-Carter, deputy chairman at Jupiter, who was negotiating with Richard Buxton, a veteran UK equity manager who had led a management buyout in 2019 from Old Mutual, which led to the creation of Merian Global Investors.

The common link between the men, apart from personal acquaintance, was private equity company TA Associates.

Bonham-Carter (descendant of an early 20th century prime minister) had started as a fund manager, and, as chief investment officer, had worked with TA to lead a management buyout of the business Jupiter from Commerzbank.

Buxton had become one of the best-known UK equity managers in the market, and worked with several colleagues at Old Mutual, and with TA, to buy the asset management arm of his employer in late 2017. 

But the latter deal soured quickly amid discord between Buxton and other members of the buyout team.

At this time, the company’s flagship mandate, its Global Equity Absolute Return (GEAR) strategy began to suffer sharp outflows, and had shrunk by around 90 per cent from when the deal was done.

Those factors prompted TA to decide it wanted out of the Merian deal. Some of the Merian staff had borrowed money to buy shares in the company, and were worried about repaying this as the financial performance of Merian seemed to be deteriorating.

So as he met with Bonham-Carter, Buxton was close to being a distressed seller.

But all was not well in Bonham-Carter’s garden either.

Out of fashion

Outflows were starting to mount at his business, particularly in the wake of Alexander Darwall quitting, taking a European investment trust with him, and contributing to about £4bn of net outflows that year, and indeed, every year since.

Jupiter was known as a specialist in the value style of investing, which has been sharply out of favour for most of the past decade.

The eventual deal for Jupiter to acquire Merian was announced in 2020, and very shortly afterwards it was confirmed the Merian brand would disappear. 

The deal created an asset management business with assets of £65bn. Its most recent assets under management update revealed its AUM is now £55bn, a drop of £10bn in about 27 months. 

That prompted Jon Little, a former director of the company and still a significant shareholder, to call for a change in strategy. 

The chief executive Andrew Formica recently announced his exit, for what he called personal reasons and a desire to return to Australia. 

Outflows had been about £4bn a year for each of the past four years. 

Jason Hollands, managing director for business development at Evelyn Partners, says one issue has been that Jupiter’s product range is suffering from being “mature”, that is, long established and with earlier clients now at retirement and withdrawing their capital, with insufficient replacement clients entering the funds.