Richard Menzies-Gow

Thank you to The Times and Richard Fletcher for publishing my thoughts today on the Global Investment Summit which Keir Starmer and Rt Hon Rachel Reeves Reeves will host next month. I believe the Summit represents a golden opportunity not only to attract investment but to reset the UK's relationship with investing and (sensible) risk taking. About two thirds of US adults have made equity investments whilst, in the U.K., less than a quarter say they have done so. By introducing measures which have been tabled by the financial industry - such as scrapping stamp duty on shares, launching a "British ISA" or bringing in tax breaks for pension assets - the Government can make a real statement of intent and encourage a healthier investment culture which should benefit households, the economy and U.K. plc in the long term. Having committed to being the party of growth and wealth creation, they must decide whether they want the flagship event to be a feel-good PR exercise or a catalyst for genuine progress. https://lnkd.in/eBusTAn6

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The lack of distributions from private equity funds remains an issue for investors but as Paul Newsome highlights in our latest update, there are some bright spots. Click on the link below to read his thoughts on trends in the private equity market. 👇

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More top investors are backing pay rises for Britain's chief execs. Rathbones Asset Management's David Coombs told Financial News he voted to hike Smith & Nephew CEO Deepak Nath's pay to $11.8m. “Smith & Nephew lost their CEO because they couldn’t pay him alongside the US equivalent. If you’re going to compete in a global market you have got to be able to attract talent,” Coombs said. Meanwhile, LINDSELL TRAIN LIMITED backed a £13m pay deal for LSEG (London Stock Exchange Group) boss David Schwimmer. Nick Train told FN: “Even in the UK, where there is arguably a more mature corporate sector, you still want businesses to be run with an entrepreneurial mindset. We want hungry, ambitious entrepreneurs to be running the companies we invest in.” #execpay #remuneration #UKequities #assetmanagement https://lnkd.in/e2v6sTZV

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Itemised bill for Altice; MyTravel Plans Altice France’s cleansing statement for the French telecom group’s and senior secured creditors “final proposals” shows the bid/ask between the two sides has narrowed significantly. Frustratingly, the headline terms don’t give enough detail - it's tantalizingly close - for us to do a full valuation analysis to ascertain the size of the pie being divided. But we can assess some of the value drivers and value allocation at a high level, and identify the known unknowns. While the parties are close on debt reinstatement and debt terms, they are some way apart on equity splits and treatment of the junior debt. The EMEA Special Sits Weekly picks apart likely EV multiples, equity values and how a deal could be implemented, and in addition: We also highlight the importance of the MyTravel ruling on the treatment of out-of-the-money creditors in English Schemes and now RPs. This comes into sharp relief with the upcoming Thames Water UK RP, with the Relevant Alternative as a Special Administration, which none of the stakeholders want and destroys value for everyone - should a going concern valuation be a better comparator? And while we are at it, is the lack of a competitive DIP financing process, another deficiency for the UK RP? For non-Octus subscribers, DM if you want a copy/trial

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Investors ought to think very hard before voting in favour of share buyback mandates. I sometimes wonder if they are just giving companies a licence to punt around in the market. What purpose does it really serve? Here’s the latest #MarkToMarket column, which ran in today’s edition of #TheBusinessTimes: https://lnkd.in/ggSyXt6T

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Some context on the alarming market headlines of recent days, game on in US election and much more.. Our latest markets in 1 minute is well worth a read..#investment #markets #pensions #wealthmanagement

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What a letter The Financial Times from Mark Tennant (I think!) on investment trusts' role in contributing to the UK's wealth! "Investment trusts have three main advantages over their open-ended competitors: first, they can gear; second, they are not subject to portfolio wrecking when markets turn and investors flee; but most importantly they are closed-end funds and are therefore natural vehicles for investors wishing to include illiquid assets in their portfolio. They are an important component in the daunting task facing the new government: increasing GDP. "They are an important component in the daunting task facing the new government: increasing GDP." He suggests: "This is a moment when the sector should get together with pension funds, wealth managers and investment banks to launch massive rights issues underwritten by the pension funds to increase the capacity of private equity and variable capital company trusts by a factor of say £5bn or £6bn." Alexander Denny Gay Collins Stephanie Coxon Nick Britton, CFA, MCSI Nick Gardner Juliet Webber Vanessa Booth Cathy Pitt Simon Elliott Simon Crinage Dan Howe Christian Pittard Stephanie Carbonneil Alex Blake Sachin Saggar Ewan Lovett-Turner Christopher Brown Sapna Shah Tom Harris Tom Poynton Gillian Martin

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So important for Schroders to be part of this crucial Financial Times debate - 'How to reboot Britain's capital markets' - https://shorturl.at/MtqSv. Peter Harrison, Schroders Group Chief Executive, said: "The amount of money which is flowing into people's savings is nothing like sufficient to provide for them in retirement. But even when it gets into their pension pots it's then directed to low returning assets that are low risk." #investment #london #capitalmarkets #pensions #economicgrowth

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#Hargreaves_Lansdown Hargreaves Lansdown backed the £5.4 billion bid for the FTSE 100 fund manager today from a private equity consortium, a deal that will end its time as a listed company. The Bristol-based finance firm has been listed in London since 2007. It said today that the final offer valued its shares at 1140p in cash and would include a 30p per share dividend for the financial year which ended on 30 June. Compared to the Hargreaves Lansdown share price before the approach was first made in April, the price is at a premium of over 54%. The consortium is made up of CVC, Nordic Capital and ADIA. Hargreaves Lansdown is named after its founders – Peter Hargreaves and Stephen Lansdown – who set it up as an investment tip sheet. It now runs a state-of-the-art trading platform from which clients can run their own portfolios and pensions. https://lnkd.in/dKpizupy

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Hello everyone. Hope your week has started well. I just wanted to highlight some excellent reporting from Jamie Colvin in Citywire - see article in first link below. Tom Poynton has also had the ingenious idea to create a "forum" to garner an understanding of retail investors' understanding of the many issues facing the investment companies sector (the link is in the article). Our campaign has often highlighted how new well-intended Consumer Duty regulations have turbo-charged the negative impact of IC "cost" disclosures. Recent attention has rightly been given to one aspect of this turbo-charging: retail platforms wrongly interpreting "value" and "cost" and not only misinforming consumers, but now banning them from investing in investment companies based on utterly floored logic. Do these platforms have the expertise to be making these judgements? Where they do not and they outsource, has there been proper due diligence on third parties used to make assessments of value? https://lnkd.in/eA4SHXjW We will not rest. Have a good week. Ben https://lnkd.in/eh9G9NWM

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Great to be able to contribute to this interesting piece on UK markets by David Craik at interactive investor. We’re continuing to see enormous amounts of value in the UK at BRI Wealth Management plc, especially in the mid and small cap end of the market. Investment trusts look even better value! #UKplc #investing #investmenttrusts

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Is Fundsmith's fee getting harder to justify? I'm a big believer in funds passing on the economies of scale to their investors as they grow, and many firms have been really good at this in recent years. So why, with assets of about £25 billion, is Fundsmith Equity still charging 1.04%? This week's column asks whether a pricey fee, coupled with a period of underperformance, is the reason for outflows from the fund. #fundsmith #investmentfees https://lnkd.in/eWq7Uen4

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Well, we did what we could. Motivated purely by the need to provide good outcomes for members, pension scheme practitioners worked long and hard to provide compelling evidence on the value of robust shareholder rights and offer pragmatic compromise solutions to policymakers**. Sometimes it's just not the right time for the evidence and arguments to be heard. My thanks to all those scheme practitioners and membership associations (esp. International Corporate Governance Network, Council of Institutional Investors, Australian Council of Superannuation Investors and Pensions and Lifetime Savings Association) who advocated alongside us for listings rules reforms which have the saver at their heart. And to those UK pension schemes frustrated and disappointed by what they have woken up to today: the campaign for robust investor protections continues! Please do consider joining the Asset Owner Council UK Corporate Governance Group (which I chair - link in the comments), which has been specifically designed to channel, focus and amplify the scheme practitioner voice on all things #corpgov. https://lnkd.in/g-RGe8zm **We note that the FCA has picked up on Railpen's suggestion for class-by-class vote disclosure - which builds on work by our Investor Coalition for Equal Votes (ICEV) partners Council of Institutional Investors - and look forward to working with the FCA and others in the industry on this. Deborah Gilshan Adam Matthews Stephen Barrie Helen Price Leanne Clements Vaishnavi Ravishankar Faith Ward Daniel Jarman Robert Hulme Sheila Stefani Oliver Wright Owen Thorne Claire Curtin Renata Kostrzewa Paul Hewitt David Murphy Rory Sullivan

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This should be required reading for investors. Kudos to Caroline Escott and Chris Hodge. Audit underpins market integrity, yet there is strong evidence that it is failing. The US regulator’s latest inspections bring this to life (https://lnkd.in/eVxwrhkZ): 34% of reviewed audits by six global firms lacked evidence to support their opinions. High rates of audit deficiencies are repeated globally (International Forum of Independent Audit Regulators (IFIAR). Two points I’d highlight on the back of this report: 1. Investors should use their votes Of the steps that Railpen points to, one that investors can immediately action is their vote. Despite audit failings, investors keep reappointing auditors and audit committees. Auditors in the UK received an average 99% support in 2023. In the US, the figure was 98%. Investor indifference permits poor audit quality. Please see my article on the need for robust voting: https://lnkd.in/epsep6WK 2. Poor audit quality is a risk to capital protection One insidious consequence of audit weakness is not getting the attention it should. Auditors appear to be failing to check company compliance with capital maintenance rules, opening the door to over-distribution, weaker capital buffers and heightened risk of failure. Auditors generally have a role in policing capital maintenance rules (not the same as accounting standards – https://lnkd.in/eWzBy3_7). Critically, companies generally mustn’t distribute (i.e. pay dividends / share buybacks) out of unrealised (e.g. mark-to-market) gains. It is not clear, however, that this is being enforced. This was a key conclusion of the UK’s BEIS Select Committee 2019 inquiry into audit (https://lnkd.in/e8vqGGBd), chaired by Rt Hon Rachel Reeves, now Chancellor. The Committee called for urgent action to enforce capital maintenance rules. Recent research by Andy Haldane (https://lnkd.in/ecqct3Tj) and Adam Leaver (https://lnkd.in/ev43tNP6) underlines ongoing problems of overdistribution. As the UK advances its Audit and Corporate Governance Reform Bill, it should return to the Select Committee’s original proposals. Companies should publish in full their distributable reserves and a breakdown of their unrealised and realised profits, taking away the veil which can enable over-distribution. Auditors should be held accountable for ensuring this is done. Of the options on the table to boost growth, this has the advantage of being fiscally neutral. For their part, investors should start holding auditors and audit committees accountable for capital maintenance.

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In our latest LDI Alert, Amy Trainor explains why US corporate DB plans may have a rare and limited opportunity to derisk and offers suggested action steps. #LDI #CorporateDB #pensions Learn more: https://lnkd.in/g36ftgGt

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For a better understanding of the intricate, high-stakes challenges shaping HIGHGATE's dispute resolution practice check out this FT article by Thomas Eymond-Laritaz and Jay Newman, discussing how to tackle sovereign disputes.

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BVCA Budget Response Today was a significant moment for the new Government, and the private capital industry. It is clear that Rt Hon Rachel Reeves understands the importance of retaining Britain’s status as Europe’s leading hub for private capital. At the British Private Equity & Venture Capital Association (BVCA), we focus on sharing how the private capital industry creates value in the economy. Today’s Budget should mean that more of the £178bn in UK managed funds can be invested domestically rather than in competitor nations. Responding to the Budget, Michael Moore put it well when he said: “It is welcome that the government has listened to our arguments on the value of the private capital industry and how important this sector is to the economy. “We recognise that the Government has had to balance the need to raise revenue for essential public services with the requirement to keep our economy competitive. “The announcement on carried interest recognises that a tax treatment which reflects the long term, risk-based nature of private capital investments is necessary to ensure that this important UK sector can continue to flourish in an increasingly competitive international environment. “Our industry will work with the government as it consults on implementing these changes and ensures any risks of reducing investment are mitigated.”

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The latest edition of Rathbones Asset Management’s In Conversation has arrived. Watch the latest Rathbone Ethical Bond Fund video here: https://lnkd.in/eANbx9mw For Professional Investors. #ProfessionalInvestorsOnly #InConversation #RathbonesAssetManagement #OutNow #RathboneEthicalBondFund #FixedIncome

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Afternoon, my latest blog on Labour spending and the possible impact on rates and gilts.

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