Philippe Jabre’s unexpected second act

One sobering statistic to start: One in six asset managers will disappear by 2027 as the industry faces a challenging mixture of market volatility, high interest rates and downward pressure on fees, according to a new PwC report. It found that almost three-quarters of asset managers are considering acquiring or merging with a competitor.

From the trading floor to the factory floor

After stepping back from professional money management in 2018, renowned hedge fund manager Philippe Jabre admits that he was “bored to tears”. This was to prove relatively shortlived, as Raya Jalabi in Beirut and I explore in this article. Now the former GLG Partners trader and founder of Jabre Capital is enjoying an unexpected second act as a brewer, after buying back his family business. 

Brasserie Almaza was created by Jabre’s grandfather, Michel Jabre, 90 years ago in Lebanon. In mid-2021, Jabre learned that Almaza’s longtime backer Heineken was looking to sell off its controlling stake in the company due to Lebanon’s difficult economic circumstances. The brewery was at risk of shutting down for good, putting up to 200 jobs at risk.

“To be honest, I never really imagined that I would one day take over the Almaza brewery,” Jabre said in an interview, but “it didn’t sit well with me that it could shut its doors because of this crisis”. He added: “My family makes fun of me, because I’ve gotten really into it. But I’ve been enjoying the challenge of doing something completely different.”

Jabre, who hails from a prominent Lebanese Catholic family, carved out a reputation as a star manager at London-based GLG, where he ran as much as $7bn. 

But in 2006 he received what was then a record individual fine of £750,000 from the UK watchdog for trading on confidential information from Goldman Sachs about a 2003 convertible bond sale, although the authorities stopped short of calling his actions intentional. He moved to Switzerland from London and set up his eponymous investment firm. But after just over a decade in business, he announced in 2018 he would return money to outside investors after suffering heavy losses that year. 

Speaking from Almaza’s factory in Beirut, which has occupied the same building since its founding, Jabre said: “This is not Lebanon’s first crisis, and it’s not even its worst.” 

He added: “I hope to show others that they shouldn’t give up on Lebanon, that despite the difficulties, we should keep investing in our country.” 

Since 2019, Lebanon has been mired in one of the world’s worst economic crises in modern history and the country is also trudging through an unprecedented leadership vacuum.

Read the full story here, in which we explore the unique challenges of running a business in a country with a collapsed banking system, Jabre’s big plans for the brewer, and why a recent advertising campaign for Almaza Unfiltered — its first new product in a decade — has caused a furore in Lebanon. 

As for Jabre, he believes that his own switch from hedge fund manager to brewer shows that “life doesn’t stop. It just continues under a different hat.”

Hunt looks to City of London to bolster UK growth

Jeremy Hunt badly needs some good news. After weeks of gloomy economic data, especially on inflation, today the chancellor will turn to the City of London in the hope of channelling billions of pounds of the UK’s pensions savings into boosting growth. 

Hunt’s annual Mansion House speech comes at a crucial time for an economy hobbled by anaemic growth, poor investment and stubbornly high inflation. The chancellor, in an interview with the Financial Times, said he wanted to work with the financial services industry to release capital for fast-growing companies, by changing rules that are holding back investment. 

After months of speculation about his intentions, Hunt made it clear he would not order the City what to do or where to put its money. “This is about evolution, not revolution,” he said. “We are not seeking Big Bang II on this.” 

The chancellor has high hopes of an investment deal, to be announced today by lord mayor Nicholas Lyons, the veteran banker and insurance executive, who has persuaded companies to commit up to £50bn to private equity and early-stage businesses in areas such as fintech and life sciences.

Some of the biggest participants in the financial services sector, including FTSE 100 groups Aviva, Legal & General and Phoenix Group, have committed to put 5 per cent of investments in defined contribution pension schemes into what Hunt calls “productive assets”. This has helped to end fears in the City that the chancellor could instruct them to switch billions into privately owned high-growth companies. 

“We aren’t going to do mandation,” said Hunt. “There’s going to be a big commitment to invest in productive assets, but it will not be a UK commitment.” 

Three “golden rules” will underpin the reforms: to get the best possible outcome for pension savers, to strengthen the UK’s position as a leading international financial centre and to prioritise “a strong and diversified gilt market”.

Read the full interview here.

Chart of the week

BP is in talks over a landmark insurance deal for its £30bn final salary pension fund, which has the potential to be the biggest in the history of the industry. The deal reflects how activity in this once niche area of the financial sector, the so-called bulk annuity market, is at fever pitch as higher interest rates drive up scheme funding levels, as my colleagues report in this Big Read. That makes a buyout a more realistic option for hundreds of pension funds. 

“It’s a huge wave that is breaking now across the bulk annuity market,” says Charlie Finch, partner at consultancy LCP, which advises on deals. LCP estimates that about 1,000 schemes, nearly a fifth of the UK total, are now well-funded enough to be offloaded to an insurer.

Transferring pension liabilities to an insurer means that the sponsoring company no longer has to detail the pension surplus or deficit in its own accounts — or assist with any shortfall — potentially improving its capacity to borrow money, pay dividends, put itself up for sale or pursue a takeover of another company. Bulk annuity deals are also an increasingly important source of revenue growth for listed insurers such as Phoenix Group, Aviva and Legal & General, who compete with privately owned groups such as PIC and Rothesay Life for deals.

Read the full story here, in which we delve into the growing debate over the downsides of turning over pension assets to insurers who will run them to generate profits for shareholders or their private-equity backers, and explore how transferring pension liabilities to insurers might affect investment markets.

Five unmissable stories this week

Six more women have alleged that financier Crispin Odey sexually assaulted or harassed them, expanding the timeline of his abuse across five decades and raising further questions as to the extent his behaviour was tolerated by senior colleagues.

Steven Meier, chief investment officer for the $250bn New York City Retirement Systems, one of the largest pension schemes in the US, says it is planning to cut back investments in equity markets, in the latest sign that rising interest rates have brought an end to the “Tina” era that drove the past decade of stock price gains. 

The Financial Conduct Authority, the UK’s top financial regulator, has sharply criticised asset managers for potentially leaving their investors exposed to harm, after finding that firms’ plans to cover large-scale redemptions “lacked coherence”. 

Hedge fund manager Man Group has bought a controlling stake in $11.8bn credit fund Varagon Capital Partners, signalling its ambitions to grow in the private credit market. Here’s Alphaville on why private credit is having a “golden moment”.

Abu Dhabi’s sovereign wealth fund ADQ and Bank of Montreal have bought minority stakes in Sagard, a $14.5bn alternative asset manager that is backed by Canada’s Desmarais family. Insurer Great-West Lifeco is also increasing its holding in Sagard, whose controlling shareholder is Power Corporation of Canada. ADQ, BMO and GWL have committed $2bn in long-term capital to Sagard’s investment strategies.

And finally

I returned to Quo Vadis last week for the first time in years and highly recommend you do so too. Formerly a brothel and a home to Karl Marx, this Soho institution has a delicious menu of seasonal, regional British fare, with a menu conjured up by Jeremy Lee and his team. Lee’s cookbook, Cooking: Simply and Well, for One or Many, is a love song to time spent in the kitchen. In the book’s introduction, he quotes T S Eliot’s Four Quartets:

“We shall not cease from exploration / And the end of all our exploring / Will be to arrive where we started / And know the place for the first time” — the kitchen at home.