‘Capitalism without the capital’ | Financial Times

One thing to start: Five of the UK’s largest pension schemes, including Nest and the Universities Superannuation Scheme, will vote against the reappointment of BP’s chair Helge Lund at its AGM on Thursday. BP is the first of the big oil majors to face a shareholder vote this season and it marks a crucial test for its decision to slow planned cuts in fossil fuel production and carbon emissions.

And another: Ahead of the Future of Asset Management Asia taking place on 11 May at the Westin Singapore, we sat down with five asset management executives and created an exclusive expert insight booklet that gives a taste of what will be discussed at the in-person event. Speakers featured in the booklet include Soraphol Tulayasathein, senior executive vice president, The Stock Exchange of Thailand; Stefanie Drews, president, Nikko Asset Management; and Ajai Kaul, chief executive officer, APAC, Alliance Bernstein. Access the speaker showcase here.

‘Capitalism without the capital’

Immunocore is a success story for the UK’s ambitions in biotechnology. Spun out of Oxford university in 1999, it is pioneering a new generation of medicines to treat cancers, viral infections and autoimmune diseases from the leafy market town of Abingdon-on-Thames. 

But for Sir John Bell, the Canadian-British chair of the company and one of the world’s leading immunologists, its story stands out for a less distinguished reason. “Immunocore is, I fear, a classic example of what the UK has been losing,” he says. 

In its early days, Immunocore attracted some backing from domestic investors. But three later funding rounds failed to secure any more UK money. When it grew large enough to list on the stock market in 2021, it shunned London in favour of Nasdaq, where its market capitalisation now stands at $2.6bn.

“There wasn’t really any access to long-term scale-up capital in the UK ecosystem,” recalls Bell, who is also regius professor of medicine at Oxford. “UK venture capitalists didn’t have pockets deep enough” and domestic pension plans “had no interest” because they are “too conservative to invest in the growth sector”. The result, as he puts it, is that “the most successful British biotech company is now really plugged into the American capital markets”.

In this Big Read, markets editor Katie Martin and I explore how the fortunes of Immuncore reflect a wider Britian malaise, where a risk-averse pension system and a moribund market for new equities issues are driving growth and prosperity elsewhere. 

We look at how a series of changes to tax, regulation and accounting rules from the ’90s onwards that Sir John Kay, one of Britain’s leading economists, characterises as “one of the great avoidable catastrophes of British public policy” beat the risk appetite out of UK defined-benefit schemes.

And we consider some of the possible solutions, including an overhaul of the UK’s Local Government Pension Schemes, the Canadian model espoused by “Maple Revolutionaries” like the Ontario Teachers’ Pension Plan, and how the growth of defined-contribution plans might be accelerated and harnessed to support the UK.

The stakes are high. Robert Swannell, a director of the Investor Forum and a senior adviser at Citi, calls it “among the biggest financial issues facing the UK government today”. If policymakers don’t get the switch to defined-contribution schemes right, it “will turn what’s been a tragedy in the demise of DB to a disappointing outcome, at best, in DC.” 

Immunocore’s Bell sums up Britain’s plight:

“At the moment we’re trying to do capitalism without any capital, an unwillingness to take any risk and a slightly begrudging attitude to people who make money. We’ve basically put a bomb under the whole concept of this being a capitalist country.”

Read the full story here

Bloomberg after Bloomberg

If data really is the oil of the 21st century, then Michael Bloomberg is today’s John D Rockefeller.

His $94bn fortune — as estimated by Forbes since Bloomberg News’ billionaires index doesn’t track its owner — means that only Warren Buffett has ever made more money out of the business of money.

But now one of the world’s most valuable private companies, a data behemoth so enmeshed with the financial industry that it may be of greater importance than any single investment group, is at a turning point as it contemplates life after its 81-year-old founder.

Don’t miss this must-read profile by my colleague Robin Wigglesworth, the editor of FT Alphaville, in which he reveals a company increasingly consumed with the question of Bloomberg after Bloomberg.

Beyond its succession plans, as the finance industry continues to be transformed by changes to technology and new ways of working, a question even more urgent is coming to the fore: what comes after the ubiquitous terminal, its clunky-but-powerful data and analytics portal?

The terminal is the sun around which Bloomberg has revolved. Today, there are about 365,000 Bloombergs on the desks of investment bankers, bond traders, equity analysts, pension fund managers, sovereign wealth funds and central bank officials. Every day, the terminal processes an average of more than 300bn bits of financial information and sends about 1.4bn messages and 30mn “Instant Bloomberg” chat messages that ricochet around the world.

Read the full profile here

Chart of the week

Smaller wealth managers in the UK have been given their starkest warning yet that they may be living on borrowed time as their industry rapidly scales up, writes Emma Dunkley in London.

Rathbones’ £839mn deal to buy Investec Wealth & Investment UK earlier this month and create a wealth management powerhouse was heralded by some as necessary to cut costs in the face of surging inflation.

But critics warn it could also mean fewer choices for consumers and lower fees for midsized fund groups — the likes of Abrdn, Jupiter and Liontrust — which sell their products to the wealth managers.

The tie-up between two of the UK’s most well-known wealth groups, which manage money on behalf of individuals, has positioned the enlarged Rathbones as one of the largest players in the sector, overseeing £100bn of assets.

At the heart of the deal is a plan to strip out nearly £60mn of annual costs by sharing resources, shrinking the real estate portfolio and reducing headcount.

It is emblematic of an industry under pressure, from inflation to mounting competition from low-cost investments, such as index-tracking funds, and cheap DIY investment supermarkets.

Five unmissable stories this week

Jonathan Gray, the head of the world’s largest alternative asset manager Blackstone, has warned that investors are overestimating how quickly the US Federal Reserve will cut rates. He said that while the Fed would probably hold off from further interest rate rises because of cooler inflation, financial markets have overpriced the odds of the central bank reducing the cost of borrowing.

Canada’s $190bn Ontario Teachers’ Pension Plan says it is steering clear of the cryptocurrency sector after writing off a $95mn investment in FTX, the failed digital currency exchange. And the $306bn California State Teachers’ Retirement System (Calstrs) is preparing to write down the value of its $52bn real estate portfolio in the latest sign that higher interest rates and the recent turmoil in the banking sector are causing pain in the property sector. 

BlackRock has warned that a classic 60/40 portfolio of 60 per cent stocks and 40 per cent fixed income will serve investors poorly over the long term, despite a simultaneous rebound for equities and bonds this year. The world’s largest asset manager called time on a strategy that has been a cornerstone for many asset managers for more than 30 years. 

Investors representing $4.5bn of wiped-out Credit Suisse bonds have filed a lawsuit against Switzerland’s banking regulator Finma. Meanwhile at least 80 Credit Suisse investors in Singapore are in talks to sue the Swiss government over its decision to write down $17bn of Credit Suisse bonds on the grounds it violated a free trade agreement. 

Switzerland’s Zürcher Kantonalbank and UK fund management boutique Liontrust have emerged as suitors to take over GAM, the troubled Swiss asset manager that is racing to find a buyer this month. 

And finally

Irish-born artist Sean Scully has taken over the grounds and historic interiors of Houghton Hall in Norfolk for an exhibition of his sculpture. Sean Scully at Houghton Hall – Smaller Than The Sky will run until October 29.

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FT Live event: Future of Asset Management Asia

The Future of Asset Management Asia is taking place for the first time in-person on 11 May at the Westin Singapore and will bring together Asia’s leading asset managers, service providers and regulators, including Asian Development Bank, The Stock Exchange of Thailand (SET), Allianz Global Investors and many more. For a limited time, save up to 20 per cent off on your in-person or digital pass and uncover the industry’s top trends and opportunities. Register now