Silchester-backed asset management boutique shuts its doors

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Sanderson Asset Management, a UK boutique backed by prominent investor Silchester Partners, is closing down after more than two decades, highlighting the challenge asset managers face when trying to move from a founder-led business to one run by a new generation of partners.

Sanderson’s management told staff in July that the firm would be wound up and money returned to clients, according to three people familiar with the situation.

The retirement of the group’s eponymous founder, Tim Sanderson, in March last year unsettled clients, the people said. It had since been unable to agree on an ownership structure that would work for all of its stakeholders, including partners, employees and backers, and incentivise the next generation of leaders, the people said.

The retirement of Sanderson came just as value investing, a strategy pursued by the boutique that seeks to identify cheap companies based on measures such as profits, cash flows and book value, had fallen out of favour during the decade-long bull market in equities as high-growth stocks outperformed.

The group’s assets had dropped from about $12bn at their peak in 2017 to $1.4bn at the end of June, two of the people said. Sanderson, which was also co-founded by Catherine Rainey and Masaki Suganuma, focuses on international equities outside of the US and most of its clients are institutional investors in America. 

Sanderson Asset Management LLP reported profits of £2.2mn in the year to the end of March, down from £8.7mn the previous year, according to filings. The firm is expected to return money to clients by December and wind up operations by the end of next year.

One person familiar with the matter said that the decision to close the firm was particularly frustrating given that Sanderson’s performance has rebounded this year. 

In the 12 months to the end of August, its flagship Sanderson International Value Fund has gained 27.6 per cent, compared to its benchmark MSCI EAFE Index, which is up 17.9 per cent in the same period. Since it was started 23 years ago, Sanderson International Value has had an annualised return of 7.7 per cent compared with 4.2 per cent for the index. 

Silchester Partners took a 49.9 per cent stake in Sanderson in 2000. Since 1999, Silchester Partners has helped finance several new asset managers, taking large minority stakes in return and Sanderson was the second such investment. Alongside Sanderson, it owns stakes in eight other independent asset management companies.

Silchester International Investors was founded in 1994 by Stephen Butt, the former chief investment officer of Morgan Stanley’s London-based international equity programme, and other colleagues from the US bank, including Michael Cowan and Bertrand Le Pan de Ligny.

It has since grown to manage $40.9bn, making it one of the UK’s largest boutique asset managers, controlled by its partners and employees. Its parent company is Silchester Partners.

Like Sanderson, Silchester International Investors is an exponent of value investing, holding between 100 and 150 companies at any one point. It is a major shareholder in rival UK asset managers such as Man Group, GAM, Jupiter and Janus Henderson.

Sanderson and Silchester declined to comment.