Activist fund targets St James’s Place

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St James’s Place, the UK’s largest wealth supervisor, has been focused by activist funding fund PrimeStone Capital for its excessive price base and for failing to ship worth to shareholders.

On Monday, London-based PrimeStone, which was based by three former executives at personal fairness agency Carlyle Group, unveiled a 1.2 per cent stake within the wealth supervisor, a holding price nearly £61m.

In a letter, which was despatched to SJP’s board of administrators and printed on PrimeStone’s web site, the activist group criticised SJP’s “bloated organisational construction,” “extreme govt pay” and struggling Asia operation for hurting shareholder returns.

SJP, recognized for its costly administration charges, has come beneath fireplace as higher-cost asset managers face intense strain to ship worth whereas cheaper funding platforms corresponding to Vanguard and AJ Bell scale quickly within the UK.

PrimeStone companions Benoît Colas and Damian Hahnloser stated within the letter: “It’s time for the corporate to handle its excessive price base and alter its tradition . . . to ship its full value-creation potential to long-neglected homeowners.”

SJP has greater than doubled consumer belongings beneath administration prior to now 5 years, from about £55bn in August 2015 to £115bn in August 2020, when the corporate reported its half-year outcomes. The wealth supervisor is thought for its actively managed funds, and the excessive premium it locations on — and fees for — recommendation.

SJP’s profitability has declined by 20 per cent over the identical five-year interval as rivals Hargreaves Lansdown and AJ Bell have grown by greater than 25 per cent, regardless of comparable web inflows of two per cent to three per cent per quarter, in accordance with PrimeStone’s evaluation.

Shareholder returns in SJP had been simply 2 per cent a yr since 2015, PrimeStone stated, under that of the FTSE 100.

PrimeStone additionally criticised SJP’s construction, noting that greater than 120 staff have job titles that included “head of”.

“We battle to grasp how SJP can have that many departments to be headed,” stated the activist investor.

One-quarter of SJP staff earn greater than £89,000 a yr — “a staggering statistic”, the letter stated, and better than the sector common of £67,000. SJP employs greater than 1,300 individuals, in accordance with firm studies from 2019.

There are greater than 80 individuals within the advertising and marketing crew alone, regardless of SJP’s assertion that 90 per cent of latest enterprise comes from current shoppers or consumer referrals, in accordance with the activist.

PrimeStone stated SJP’s Asia operation was lossmaking — pointing to £22m in annual losses and, the funding fund stated, no path to profitability. “Solely an absence of consideration to shareholder worth can clarify the continued help given by SJP to this structurally unprofitable exercise over so a few years.”

SJP acknowledged the letter and stated “it appears to be like ahead to commencing a dialogue” with PrimeStone. The wealth supervisor will report its third-quarter outcomes on Tuesday.

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