Four years after its purchase of boutique fund management house JO Hambro Investment Management (JOH...
Four years after its purchase of boutique fund management house JO Hambro Investment Management (JOHIM), Credit Suisse has yet to agree on a remuneration package with senior management.
The issue was highlighted following the departure last month of JOHIM's star European manager Stuart Mitchell, who is to set up his own company but keep many of his JOHIM mandates, in effect making himself an outsourcing solution to his old company.
While the split was amicable – Mitchell will even use the JOHIM offices for administratiob and facilities – it is a blow for the company, which prides itself on the quality of its small in-house fund management team, all of whom expect generous incentives to remain with the company.
Anthony Balniel, CEO of JOHIM, concedes that the timing is unfortunate, coming as it does while negotiations are ongoing. "If people are going to jump before we have a solution, I cant stop them," he said. "But I can reassure them that discussions are ongoing."
Such negotiations are predictably delicate and are fenced in by well-defined limitations.
Balniel continued: "There is going to be no restructuring within the company – Credit Suisse will continue to control 100% of JOHIM. However, what we have been trying to do is tie in some of the key staff here while also being able to incentivise people to join us and build the business."
Mitchell's departure has focused both JOHIM's and Credit Suisse's attention on resolving the issue as soon as possible. However, according to Balniel, Mitchell's depature was always on the cards.
"Obviously we need some form of currency to attract people and to hold people but Stuart has always wanted to have his own business and we thoroughly support it," he said.
Mitchell will continue to run both the Waverton Continental European fund and the Charlemagne hedge fund, although technically he has to wait for a board decision on the Charlemagne vehicle to grant him the management contract.
The remaining European mandates, JOHIM European fund and Waverton Pan-European funds, are now run by the remaining members of the European team, Alex Pritchard and Oliver Kelton. JOHIM European has been placed under review by Standard & Poor's until it assesses Alex Pritchard in early April.
Mitchell's company, SW Mitchell Capital, will eventually launch its own long-only fund. This will be in direct competition to JOHIM's funds and will undoubtedly attract a certain amount of the assets from the JOHIM fund, but marketing director Patrick Cooper is not worried about losses to the fund.
"Only a relatively small number of investors are direct clients of Stuart, and lot of investors have already built a relationship with Alex Pritchard," he explained.
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An added tier of asset management can of course deliver additional benefits for certain investors, writes Graham Bentley - just be sure you can justify it to the regulator and, especially, the client