Asset Management: Paul Marshall readies Telegraph bid

One scoop to start: Pelham Capital, once one of the biggest names in London’s equity hedge fund sector, has lost more than three-quarters of its assets in the past three years amid poor performance, investor withdrawals and team departures. Assets at the firm, which was founded by former Lansdowne Partners fund manager Ross Turner and is backed by Goldman Sachs’s publicly listed Petershill fund, have dropped from $4.5bn in October 2020 to about $1bn today.

And another thing: Our friends at FT Due Diligence are holding their flagship annual event, DD Live, tomorrow at London’s Biltmore Mayfair. It features some of the biggest names in global finance. Click here for a special discount.

The hedge fund boss preparing a bid for the Telegraph

Over a July lunch at Marshall Wace’s London headquarters, the hedge fund manager’s co-founder Sir Paul Marshall invited US billionaire Ken Griffin to join a consortium of investors preparing a bid for the Telegraph Group. 

The proposal to buy the UK newspaper publisher struck a chord with Griffin, founder of US hedge fund Citadel and a staunch advocate of free expression who in 2020 paid $43.2mn for a rare first printing of the US Constitution. 

“It’s important to me to maintain the ethos of freedom of speech in the US and the UK as a model for the rest of the world,” Griffin told me in this profile that my colleague Daniel Thomas and I wrote on Marshall and his Telegraph bid. “Paul’s passionate about this and I’m happy to support him.”

The pair are among the favourites to acquire the Telegraph newspapers and Spectator magazine when they are put up for sale by Lloyds Banking Group in the next few weeks, in a deal that could fetch more than £500mn on the upper level of newspaper valuations.

Marshall, who holds a 45 per cent stake in upstart broadcaster GB News and owns digital media group UnHerd, is the latest in a long line of wealthy individuals to turn media baron. 

Ownership of the Telegraph, the largest nationally important UK newspaper to be sold in almost a decade, would propel the Brexit-supporting self-styled classical liberal into the public spotlight. The plan marks the latest iteration of the financier’s efforts over the past four decades to influence and shape the national conversation through involvement in politics, education, philanthropy and media.

Marshall is not the first in his family to pursue media interests. His mother Mary was a freelance journalist, and family lore has it that she was the first woman to use a four-letter word on the BBC, discussing a book she had written on the origin of swear words . . . 

Read the full story here in which we explore why Marshall wants to buy the Telegraph and his plans for it if the bid were to be successful.

St James’s Place pushed by regulators to overhaul fees

The UK’s Retail Distribution Review, or RDR, over a decade ago, was meant to improve standards of financial advice and consumers’ understanding of the cost of investing. But when it comes to transparency on fees, the UK’s largest wealth manager St James’s Place didn’t appear to get the memo. Now that finally seems to be about to change. 

Shares in SJP fell 20 per cent on Friday following an important scoop by my colleagues Sally Hickey, Stephen Morris and Robert Smith reporting that it is under pressure from regulators to ensure it complies with the UK’s new consumer duty. The shares have shed 40 per cent of their value since the start of the year.

SJP, which is listed on the FTSE 100, has faced scrutiny over what critics say are opaque and expensive charges for financial advice and stiff penalties for early withdrawals. 

Investors’ concerns over SJP’s business model have intensified since the Financial Conduct Authority introduced “consumer duty” rules in July, which force companies to show they are acting in customers’ best interests.

But, as my colleagues reveal, the company has been discussing further reforms to assuage regulators’ concerns. 

It has proposed removing early withdrawal charges for new customers by mid-2025 and simplifying — or “unbundling” — fees for a variety of advisory and administrative services. Executives have been warned by regulators that even these changes may not go far enough. 

SJP has a complex fee structure involving upfront fees and ongoing annual charges. Some of those recurring charges do not apply during the first six years, but certain clients have to pay early-withdrawal charges — exit fees — if they pull their money during that time. 

Executives have been asked to justify keeping exit fees for existing customers while scrapping them for new ones. Under SJP’s proposals, clients who invested before 2025 would still face early-withdrawal charges, which start at 1 per cent and in some cases can be applicable for the first 11 years. 

Watchdogs are also concerned about whether high upfront advice costs are in customers’ best interests and whether SJP makes it too difficult for customers to stop paying advice fees further down the line. 

But SJP has expressed concerns that scrapping exit fees for existing customers could have a significant accounting impact on its balance sheet. About £47bn — 30 per cent — of SJP’s assets under management were subject to exit penalties as of June this year.

Read the full report here. Have you or someone you know been caught on the wrong side of SJP’s fee structures? Email me: [email protected]

Chart of the week

The war between Israel and Hamas is heaping pressure on borrowing costs in neighbouring countries, as international investors grow increasingly concerned that the conflict will rapidly escalate.

The spreads — or gaps — between the average yields on both Jordan’s and Egypt’s dollar-denominated bonds and equivalent US Treasuries have shot up this week as investors have priced in more risk for owning the debt writes Mary McDougall in London. In contrast, spreads across the broader emerging markets index have tightened.

Spreads moved wider on Friday after Israel’s military warned more than 1mn Palestinians to leave Gaza City and its outskirts, in a move the United Nations said would cause a “calamitous” mass civilian displacement.

Since October 6 the yield on Jordan’s 2030 dollar-denominated bond has jumped from 8.5 per cent to 9.45 per cent, the highest level since October last year. Yields move inversely to prices.

“By Jordanian standards, it’s a big move,” said Edwin Gutierrez, head of emerging market sovereign debt at fund manager Abrdn. “The market is reading through and pricing that Jordan and Egypt could be dealing with a refugee crisis.”

Jordan’s economy is also heavily reliant on tourism, which accounts for roughly 10 per cent of gross domestic product. Analysts at Goldman Sachs said this left Jordan “particularly vulnerable” as the conflict unfolded, “but so far it has not pushed Jordan’s USD [dollar] bonds into distress”.

Five unmissable stories this week

BlackRock, the world’s largest asset manager, beat expectations with profits that rose 13 per cent year on year but volatile markets drove down assets under management and resulted in the group’s first quarterly net long-term outflows since the early days of the Covid-19 pandemic. 

Data on borrowed stocks will for the first time be made public in the US under new rules adopted by the Securities and Exchange Commission. Lenders will be required to report new loans, and modifications to existing ones, by the end of each trading day. The measure stopped short of Wall Street’s worst fears, dropping initial plans for publishing deal details within 15 minutes of trades being struck.

Australia-based IFM Investors, one of the world’s biggest infrastructure investors, says the UK is no longer an attractive place to invest due to political upheaval and uncertainty over the direction of government policy. The owner of the M6 toll road and one of the biggest shareholders in Manchester airport, says it has cooled on making further significant investments in new infrastructure due to the high levels of uncertainty caused by government dysfunction and inefficient planning processes.

Odey Asset Management’s wealth business is to close and return assets to clients months after founder Crispin Odey was accused of sexual misconduct. The wealth business is closing in both Guernsey and the UK. The Financial Conduct Authority, the UK regulator, said it would work closely with the firm as it winds down, to ensure clients are treated fairly.

Schroders Greencoat, the specialist renewables manager of Schroders Capital, has closed £330mn in commitments from six Local Government Pension Schemes in the Brunel Pension Partnership. The mandate will make long-term investments in renewable infrastructure and energy transition assets across the south-west of England.

And finally

To the Young Vic theatre for Kimber Lee’s untitled f*ck m*ss s**gon play, a blazingly satirical drama about the prejudice and casual stereotyping that so many British east Asian and south-east Asian actors have encountered. On until November 4, youngvic.org