Paul Marshall’s evolution from financier to media baron

One podcast to start: Investors are expecting artificial intelligence to power the next tech revolution — but are they right? In this episode of the Money Clinic podcast, Claer Barrett sits down with “AI maximalist” Ben Rogoff, lead fund manager of Polar Capital’s £3.5bn Polar Capital Technology Trust. With more than 80 per cent of his fund’s underlying investments aimed at capturing future growth from AI, he explains what’s informing his investment strategy and responds to fears of a valuation bubble. Meanwhile Cliff Asness, co-founder of AQR Capital Management, tells my colleagues at Unhedged why he thinks AI is less than revolutionary for finance.

The hedge fund manager bankrolling GB News

Hands resting lightly on the lectern, Sir Paul Marshall laid into the three enemies of the free market, what he called the “mutant siblings” of capitalism: the “cronies” colluding at Davos, monopolies and “woke” corporations.

The British multi-millionaire, who built his fortune as co-founder of London-based hedge fund Marshall Wace, was speaking in the capital last October at the inaugural conference for the Alliance for Responsible Citizenship. Featuring controversial Canadian psychologist Jordan Peterson, the conference is the latest in a series of media ventures bankrolled by Marshall, who has emerged as an enthusiastic combatant in the UK’s own version of America’s culture wars.

As Daniel Thomas and I explore in this profile, over the past four decades, the 64-year-old evangelical Christian and financier has positioned himself as a philanthropist and political donor and as an education reformer, pulling strings behind the scenes at Westminster. Now he’s trying to influence the national conversation through the media. 

Last week, Marshall was forced to inject further funds into his growing media empire. Accounts showed that All Perspectives — the business he co-owns — had provided a further £41mn in funding to cover the lossmaking activities at GB News, an upstart British broadcaster in the vein of Rupert Murdoch’s Fox News.

Marshall’s supporters say his Arc address set out his position as defender of the free market, and point to his 38 per cent stake in GB News and ownership of digital media group UnHerd as commitments to free speech. “He is a self-described classical liberal,” said one close ally. “He is interested in opposing arguments and wants diverse and robust debate.”

But some media executives fear that the rest of the Arc conference, whose sessions included discussion of fringe, right-leaning ideology, was a more telling demonstration of where his politics lie. 

Dan and I bring you the inside story of how GB News has pushed the boundaries of the UK’s broadcasting code, Marshall’s surprising turn towards rightwing politics, and how if his bid for the Telegraph newspapers and The Spectator magazine are successful, it would make him the most powerful right-leaning UK media baron since Murdoch. 

Marshall’s growing media interests are more about influence than financial gain, says industry analyst Claire Enders. They reflect “his brand of conservatism and promote those who adhere to it as influential in party politics”. 

Read the full profile here. And if you want to remind yourself of how Marshall and his longtime business partner Ian Wace built their eponymous firm into one of Europe’s most successful hedge fund managers, here’s my deep dive from last year.

Abrdn cuts jobs, costs and investor confidence

Stephen Bird was brimming with ideas when he became Abrdn chief executive in September 2020.

The Scotsman soon told employees about his ambitions for the asset manager, according to two people on the late 2020 staff call, and referred to himself as a “futurist”: someone whose knowledge and research helps them to see the future. 

In this analysis, Emma Dunkley and Sally Hickey explore how now, three-and-a-half years later, Bird is facing difficult questions about his own future. The UK’s largest remaining pure-play asset manager is racing to cut costs and develop new revenue streams in order to stem the flow of assets to rivals and to low-cost passive managers. Some people think it might even be time to break the business up.

Bird’s aim was to cut expenses and boost income by expanding wealth management and selling more investments directly to consumers. The idea was to leave Abrdn less reliant on its £367bn investment business, which managed money for insurers and pension funds, among other clients.

At first, this plan showed promise: Abrdn acquired Interactive Investor, the UK’s second-largest consumer investment site by assets, and took the knife to group costs, in part by restructuring or closing more than 250 of the company’s investment funds.

Bird also sought to restructure other underperforming parts of the business, selling off Abrdn’s £7.5bn private equity arm and offloading its 50 per cent stake in a joint venture with the bank Virgin Money — although for less than half the amount it paid.

Under Bird’s tenure, the firm has cut jobs, costs, vowels from its name — as part of a much-ridiculed rebranding — and even the office in the Scottish city after which it is named.

But analysts argue the turnaround has floundered. Costs remain stubbornly high, the share price has fallen by a third and underperformed the FTSE 350 asset managers’ benchmark since Bird’s appointment, and the group has twice been ejected from the blue-chip FTSE 100 index.

Others question whether it is Abrdn’s management that is itself the problem. “It is abundantly clear that a change of leadership is required,” says Samuel Johar, chair of board advisory group Buchanan Harvey. “The only discussion is whether it should begin with the chair or the CEO.”

Read the full story here

Chart of the week

Last November, the $1.6tn Norwegian sovereign wealth fund once more asked the government if it could be allowed to invest in private equity. This is potentially a big deal, given the size of Norges Bank Investment Management and its status as the world’s biggest and broadest de facto index fund. 

Our friends over at FT Alphaville calculate that the proposal to move gradually to a 3 to 5 per cent allocation would mean almost $80bn — roughly the equivalent of a TPG, Warburg Pincus or General Atlantic. But to make the effort worthwhile, NBIM would probably over time target a 10 per cent allocation, which would mean a $160bn slug of money — equal to the entire private equity arms of Blackstone, KKR, or Carlyle. 

Lies, damned lies and investment return statistics. In this must-read deep dive FT Alphaville editor Robin Wigglesworth weighs up the increasingly pertinent and hotly debated pros and cons of the private equity industry in an attempt to answer the $5tn question: is private equity actually worth it?

Meanwhile private equity groups globally are sitting on a record 28,000 unsold companies worth more than $3tn, according to consultancy firm Bain & Co’s annual report on the industry, as a sharp slowdown in dealmaking creates a crunch for investors looking to sell assets.

Five unmissable stories this week

British savers will be handed an extra tax-free allowance for owning UK equities, part of a package of measures including a public sale of NatWest aimed at boosting investment in London-listed companies. Meanwhile wealthy foreigners have expressed anger and “dismay” at chancellor Jeremy Hunt’s decision to abolish the colonial era “non-dom” regime that allowed them to avoid paying tax on overseas income. Will the Budget leave you better off? Here’s our guide

UK asset manager Jupiter is considering dumping £1bn of holdings in its own funds as one of its star managers prepares to leave the company. David Lewis, a manager of Jupiter’s Merlin range, which invests in other funds, said during an investor roadshow last week that the firm was considering pulling the money from Ben Whitmore’s mandates when he leaves Jupiter later this year. The Merlin range has nearly a fifth of its equity assets — or £1bn — in two funds managed by Whitmore, illustrating the perils of key man risk. 

Hedge funds are threatening to pull investments from India because of controversial new rules introduced in response to last year’s short seller attack on Adani, one of the country’s biggest companies. The rules, from Indian markets regulator Sebi, require big foreign investors — including hedge funds — betting on Indian stocks to reveal all their end investors, something the funds argue would create “severe practical difficulties” for funds and mark a stark departure from international practice.

Stefanie Drews, the head of Japan’s Nikko Asset Management, reflects on her career path and on the sector’s future working patterns. The interview with Drews, one of the very few women at the top of asset management globally and the only foreign leader of a leading financial services company in Japan, is part of our latest Women in Business report, featuring women at the top, workplace trends and career tips.

The Church of England has been urged to target £1bn in funding for a new investment fund to address its involvement in the transatlantic slave trade after an earlier pledge was deemed insufficient. An independent oversight group chaired by Bishop Rosemarie Mallett said that £100mn already earmarked to address “past wrongs” by the church was “not enough”.

And finally

Dreaming of Tuna Fight Club and Izakaya Nights at the Holland Park pop-up turned permanent fixture Supermarket of Dreams.