Firing line  

Aviva Investors boss on competing amid widespread M&A

Aviva Investors boss on competing amid widespread M&A
Mark Versey, chief executive of Aviva Investors.

There have been several substantial deals in the past few years in asset management world, although the less-than-stellar performance of many of the merged entities means the merits of such deals are often called into question.

But the pressures that drove some of the mergers and acquisition activity in the UK, notably the rise of passive investment products and regulatory pressure on fees, have not gone away.

Many have merged to seek the scale of Blackrock, while the boutiques such as Fundsmith and Lindsell Train have also thrived, but the losers from this market could be those in the middle.

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One of those at the front line of this problem right now is Mark Versey, chief executive of Aviva Investors.

Versey succeeded Euan Munro as chief executive of the business in January 2021.

Challenges for mid-sizers

Of the challenges of being a mid-sized player in a land of giants, he says: “It is very important that we stand out by focusing on what we are good at. And what we are good at is real assets and sustainable investing.

"What we were not good at is high alpha, unconstrained equity investing, so we do less of that. I think an issue in the past is we were trying to do too many things.”

Real assets, which covers such areas as infrastructure, is the department at Aviva Investors Versey ran prior to becoming chief executive.

He acknowledges that it is hardly original for an asset management company boss to be talking up the claims of his sustainable or broader ESG investment funds in the current climate, and says it is essential “that we have much better labelling. The term 'ESG' is too broad, it is a catch-all term.

"Some funds for example run what is called an exclusionary investment process, where they just choose not to invest in certain stocks, and that’s fine, but that approach is unlikely to create sustainable outcomes. That is something which needs to be looked at.”

Since taking the helm of the business, a number of funds have been merged or closed, and several fund managers, including the high-profile head of equities David Cumming, left the business.

Versey says the funds closed were in areas “where we were not seeing much client demand". 

Aviva Investors total assets under management is £232bn, much of which comes from capital placed with it by the parent company, Aviva.

Munro’s exit and Versey’s elevation to the chief executive role appeared to happen very suddenly, with the announcement taking even some Aviva colleagues by surprise. 

But Versey and Munro had known each other long before each worked at Aviva – Versey was directly hired for his role as chief investment officer for real assets by Munro, and was the designated successor to Munro as chief executive in the company’s own succession plan.