F&C investors back Bramson’s plan to slash costs and cut staff

Executive chairman Edward Bramson plans to reduce firm’s expenses by £33m.

F&C’s share price rocketed last week as investors welcomed plans from Sherborne Investors’ Edward Bramson to slash costs and cut staff.

Shares in the asset manager rose 8.26% or 5.15p to 67.5p on Tuesday after Bramson’s eagerly anticipated strategic review into F&C laid out plans to cut costs, with staff redundancies outlined.

The group reported a £4.8bn fall in AUM for the third quarter, with its open-ended fund business posting a net outflow of £559m.

Activist investor and new executive chairman Bramson has moved swiftly to convince investors F&C can reverse the losses it has suffered in the past few months, upping its expense reduction target from £12m to £33.2m.

Bramson said there will be staff  cuts primarily affecting back office and corporate staff, with “limited impact” on the investment teams and client-facing staff.

“No reductions are being implemented in the group’s compliance or risk functions.”

The cost cutting programme will aim to protect the group’s dividend as well as enabling long-term growth.

“The expense reduction programme will provide resources for consistent investment in long-term growth strategies; will result in a significantly enhanced level of dividend cover; and provide the group with the ability to accelerate retirement of its long-term debt,” F&C said.

Bramson has also laid out a revised strategy for the group, aiming to generate above average growth with below average volatility.

“The third quarter was a difficult one for the fund management industry given the sharp sell-off in risk assets,” he said.

“However, F&C’s AUM strongly benefitted from the bias in our business mix towards less volatile asset classes, a characteristic we see as a core strength of the group.”

Bramson added he is looking to build out the group’s investment trust range and will unveil plans in the first half of next year, in the second phase of his strategic review.

In June F&C appointed Charlie Porter to head up its investment trust business, alongside the group’s retail and wholesale open-ended funds business.

F&C also announced the hire of two independent non-executive directors, with Keith Jones and Keith Percy joining the board, subject to regulatory approval.

Keith Jones was formely chief executive officer of Morley Fund Managemnt, while Percy joins from Société Générale Asset Management UK, where he was CEO.

Sherborne Investors, the company Bramson founded, won its public spat to oust members of F&C’s board in February.

The activist installed three of its members onto the board, dislodging the chairman at the time, Nicholas MacAndrew, and director Brian Larcombe.

Sherborne’s Ian Brindle and Derham O’Neill were appointed as their replacements, with Bramson becoming chairman.

The change in board members marked the end of a bitter row, in which Sherborne publicly criticised F&C’s acquisition of Thames River, claiming the purchase was harmful to shareholders’ interests.

Bramson has been steadily increasing his shareholding in F&C and has built up a 20% stake in the group.