The surprise announcement from Jupiter’s board this morning (28 June) that Andrew Formica was stepping down in October and would be returning to Australia has been meant with a degree of understanding from the industry.
One investment expert pointed to the four page letter issued to the chair of the board in May from Jon Little, outlining his dissatisfaction with the current state of the company and Formica’s leadership in particular. In his letter, Little said the appointment of Formica was “a mistake” and described his performance as “disappointing” under numerous metrics.
Jupiter has been struggling with flows over recent years and in the first quarter of 2022 it suffered another £1.9bn of outflows, according to its latest earnings.
Some hope the change in leadership will be enough to turn the fate of the company in the right direction.
“I think it will mark a new chapter for Jupiter, and probably at a good time,” explained Darius McDermott, managing director at FundCalibre. “With any luck, we will be in a slightly more certain environment towards the end of the year and, with a new focus, the business can start to turn outflows into inflows.”
Jupiter’s Formica to retire in October
Jason Hollands, managing director of corporate affairs for Evelyn Partners, agreed, noting that since the firm does not have a single house investment process the appointment, while “big industry news”, will not have a big impact for advisers and wealth managers.
“The appointment of Matthew Beesley, a former fund manager as the new CEO, will hopefully go down well with the front office and should reassure clients that Jupiter will remain an investment-led business,” he said.
Beesley, who only joined Jupiter in January this year, was previously CIO of Artemis Investment Management and before that held roles at GAM Investment and Henderson Global Investors.
One expert said he was a “strong character”, and while it is too soon to say what influence he has had at Jupiter in his five months, the industry could look to his time at Artemis for a taste of his style.
“I can say with confidence he is a good CIO,” the expert, who wish to be unnamed said. “He has shown rigour, looks to reduce risk and is strong on governance. However, the jump to CEO is a big and it is more commercial.”
The expert flagged that in his time at Artemis the CIO implemented ESG frameworks and flagged that Jupiter has improved in that area in recent times.
Ben Yearsley, managing director at Fairview Investing, was also cautious given the significant difference between the roles of CIO and CEO.
“I am not sure the history of CIO to CEO is a particularly happy one – two very different skill sets especially in a quoted business,” he said. “Jupiter clearly has many issues, including the end of the lock ups of the former Merian managers over the next year.”
Monthly outflows persist across equity UCITS and AIFs in April
The Merian acquisition has proven difficult for Jupiter and while it was supposed to diversify its product range and bring in more long-term investors, assets under management have shrunk instead.
The upcoming three year anniversary of the acquisition will be especially challenging as under the terms of the sale agreement inventive packages to encourage the retention of high profile fund managers such as Richard Buxton, Ian Heslop and others pay out.
“The incoming CIO has many issues to grapple with,” said Yearsley. “I cannot see Jupiter surviving as an independent business – somebody will swoop in and take them out probably at a bargain basement valuation.”
Jupiter’s share price fell 1.1% this morning, according to Google Finance and year to date it is down 41.3%. This compares to the FTSE 250 which is up 0.2% today and down 19% year to date.