Troubled City Financial falls into administration

Compliance chief and COO break away to form business backed by City Financial investor

Troubled City Financial has entered administration after a punishing 2018 that saw its assets halve and debt situation balloon out of control.

The Times has reported that the $1.2bn firm appointed FRP Advisory as administrator late last week and was in the process of offloading its funds, as well as its subsidiaries in Hong Kong and Singapore.

A spokesperson from City Financial declined to comment.

City Financial, which was taken over by former Invesco colleagues Andy Williams and Rob Hain in 2006, had come under great financial strain in recent years. In 2017 it reported a loss before tax of £16.7m after spending £9m on funds, IT and “human resource cost”. Accounts revealed that Hain and Williams had borrowed close to £4m from the business through a combination of loans and 4% interest that built up over several years, the Times previously reported.

News broke earlier this month that the London-based investment firm had filed a notice of its intention to appoint an administrator after a difficult 2018 in which assets under management slumped and its debt ballooned.

Falling assets were chiefly down to its Decca fund, which made up one third of the firm’s $3.3bn (£2.5bn) AUM and lost 21% last year after making a bad call in volatile markets. The group shuttered the fund last December, at which point its total assets had more than halved to $1.2bn (£910m).

Fund transfers to Garraway

City Financial began offloading its funds in mid-March, transferring its flailing absolute return fund and a multi-asset range with £250m worth of assets between them to boutique manager Garraway.

Absolute Equity managers David Crawford and Ade Roberts are reportedly moving across to Garraway and will continue managing the fund. Mark Harris who runs the multi-asset range will also be joining.

The Absolute Equity fund temporarily suspended dealing on 4 March after it was unable to cope with a wave of redemptions following news of City’s financial difficulties.

On transferring City Financial’s remaining funds FRP Advisory told The Times: “The priority . . . is to ensure the assets of the business are transferred to new owners in a smooth and orderly way.”

Breakaway firm

Meanwhile City Financial’s compliance chief, Dallas McGillivray, and chief operating officer, Ed Orlebar, have set up a new asset management business this month that is owned by a City Financial investor.

The company called Maple Asset Management was set up by the duo on 1 March, according to a Companies House filing, weeks after City Financial’s Hain was looking into appointing administrators.

Maple is owned by MPI Capital, which The Times said is a City Financial investor that has a charge over some of its assets.

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