Liontrust acquisition set to revitalise Neptune funds

Geffen relinquishing CEO role stands to benefit his funds

Liontrust

Liontrust has confirmed it is to acquire Neptune Investment Management for up to £40m, which will see its assets under management increase to £17bn.

The acquisition, which is subject to regulatory approval, will see all of the Neptune investment team, headed by Robin Geffen (pictured) and accounting for £2.8bn AUM, join Liontrust at its London offices.

As part of the deal, Geffen will step down from his role as chief executive to focus solely on the management of the funds and head the investment management team.

In a statement on Wednesday, Geffen said it has been “an easy decision” to sell Neptune to Liontrust, adding the deal will enable him to step away from managing the business and focus solely on his “real passion” of managing funds.

Geffen’s funds should perform better

Shore Financial Planning director Ben Yearsley said: “You’d hope without the management responsibility the funds will perform better. I’ve never been a fan of CEO being a fund manager as they are both full time jobs.

“Liontrust basically acquires teams and leaves them alone. So, from that perspective Geffen won’t need to fit in; probably a good thing.”

AJ Bell head of active portfolios Ryan Hughes said the integration of people is the hardest part of any takeover or merger, “particularly when one of the staff is the founder and even more so when that person has a big personality”.

“That said, I’m sure Geffen will in reality probably be quite pleased to be able to focus purely on running money rather than getting bogged down in strategy, regulation and everything else that comes with being in control,” he added.

“Time will tell how the Neptune managers and analysts fit into the broader business, but I’m sure Liontrust will be keen to ensure that one culture runs through the business.”

Tilney managing director Jason Hollands told Portfolio Adviser Geffen stepping down will be a change but being your own boss “is not always as appealing as it might seem”. “Paying the bills, dealing with staff issues, chairing committees is time consuming and hard to balance with managing portfolios.”

High price or too low?

Yearsley argued that £40m was a “high price” to pay for Neptune.

However, Hughes said: “Working on an AUM of £2.5bn it represents a ratio of 1.6% which is lower than we have historically seen for asset managers that have typically gone for around 2-3% of AUM.

“It seems prices have come down more recently and given a number of small funds in the Neptune stable, it may explain this figure.”

Neptune should be left with full ownership of processes

In a trading update, Liontrust said once the acquisition is complete, the Neptune Investment team will be renamed the Liontrust Global Equity team.

But Hollands said the Liontrust multi-boutique model is very accommodating as teams take full ownership of their processes and “are not shoe-horned” into an overarching “Liontrust way”.

Hollands added: “As an outsider looking in, Neptune appears to have experienced a fair bit of staff turnover in recent years and it has been subject to speculation about its future. This deal settles the latter and hopefully Geffen and his team will find the ability to refocus solely on investing, allowing Liontrust’s management team to run the business and focus on delivering new clients.

“More time focused on managing portfolios can only be a positive for generating performance.”

Earlier this month, Peel Hunt highlighted the concentration risk at Liontrust, with Anthony Cross’s economic advantage team accounting for almost half of assets under management.

Elsewhere, it was announced that Geffen had promoted his 24-year-old son William Geffen from graduate analyst to assistant fund manager after just one year which raised concerns for investors.

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