First State UK Business Overview

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Nov 18, 2013 (3 years and 11 months ago)

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First State UK

Business Overview

July 2003

1

Agenda



Company history


Current position


Strategic drivers


Core strategies


Appendix: Investment approach

2

Company history

Colonial First State UK


Legacy of Colonial Life UK


Established in 1998


1998
-

acquired Co
-
op Investment Mgt


Mar 1999
-

offered first external fund range in


May 1999


combined investment teams


Investment/ business management separation


At SICO acquisition:


£6.0bn FUM


45 staff (ex investments)


Poor external assets, profile and performance


Strong life company links



3

Company history

Stewart Ivory & Co


Management origins from 1873 (SAINTS)


Quasi
-
partnership in need of capital


Diverse business:


Private clients


Listed trusts


UK pension funds


Small retail presence


US institutional accounts


At SICO acquisition:


£3.0 bn FUM


110 staff


Poor external assets, profile and performance


Lack of investment across the business


4

Current position


Focused business and investment entity


Funds under management £5.3B (May 03)


180 staff, 59 investment staff


Single product range


Strengthened investment team, and improving
investment performance


Investment in systems, brand and distribution


Increasing brand awareness


Robust distribution development


Strong asset flow in a difficult environment

5

First State UK FUM breakdown May 03



Colonial First State Investments Group


£ 34.9bn*



First State Investments (UK)


£ 5.3bn



Global Equity Assets



£ 1.9bn

As at Mar 2003

All figures as at 30 May 2003 except Group figure which is as at 31 Mar 2003.

Client Type:

Product Type:

Institutional
73%
Retail
27%
UK Equi ty
2%
European Equi ty
3%
US Equi ty
4%
Asi a Paci fi c
ex Japan / GEM
20%
Gl obal Equi ty
37%
Bal anced
8%
Fi xed Interest
& Cash
26%
6

Fund ratings



Feri Trust


Forsyth

OBSR

Fund

Rating

Standard &
Poor's Fund
Manager
Rating


Standard &


Poor's

Fund Stars


Bluerating

Citywire

Wassum
Investment
Network

Asia Pacific

A


AAA

AAA





AAA

5 W
-
Rating

Global Emerging
Markets

A


AAA

AAA



AAA

5 W
-
Rating

European Smaller
Companies

A

AA

A



4 W
-
Rating

Global Growth

-

A

A



A

4 W
-
Rating

Global Health &
Biotechnology

-

-

A




-

Global Opportunities

-

A

-



-

A

-

British Mid
-
Cap

-

-

A

-

-

-

-

British Smaller
Companies

-

-

A



-

-

-

Corporate Bond

-

-

-



-

-

-

UK Gilt

-

-

A



-

-

-

As at 30 May 2003

7

Brand : Awareness of Competitors (Total)

Source : Continental Research, Ashes research 2003

% Yes

9
26
38
32
22
18
14
14
7
6
0
10
20
30
40
Pre Wave
Post Wave
FSI
M & G
Jupiter
Investec
New Star
8

Strong asset flow in a difficult environment

Inflows
Outflows
-800
-600
-400
-200
0
200
400
600
800
1,000
1,200
1,400
Jun-01
Jun-02
Jun-03 est
Pounds
£
m
Retail
Institutional
9

Strategic drivers


1.
Advent of compulsion

2.
Shift from “balanced” to “specialist” mandates

3.
Growing demand for “global” approach

4.
Asset management for Group entities

10

1. Advent of compulsion

The UK


£27 bn “savings gap”
(source:ABI Sept ’02)


No consumer take
-
up (mistrust/understanding)


Failure of ‘Stakeholder’


Poor standards of retail intermediation


Scheme deficits


Move from DB to DC

France & Germany


Proportionately similar savings gaps


Growing occupational pension sector


Same demographic profiles.





11

2. Shift from balanced to specialist mandates


Single manager, asset allocator model
unsuccessful


Development/results of specialist houses


Role of asset consultants


“Core” and “satellite” approach


Loss of mandates from traditional managers:


Schroders


lost 40% of balanced mandates in ‘02


Merrill Lynch


lost 25% of balanced mandates in ‘02


12

3. Growing demand for global approach

13

3. Growing demand for global approach


Views of the global consulting firms


Fewer regional diversification opportunities:


Technology


Communications


Cross
-
border investment


Continued opening of markets


Increased analytical focus on global industries


Lack of consistent results in asset allocation



14

4. Investment mgt for Group entities


One centre of excellence:


Global equities


Global fixed income


Consistency of approach


Leverage infrastructure


Economies of scale


Future avenue of growth for Investment and
Insurance Services (IIS)



15

‘Local’ leverage opportunity


Expected development of intermediation


Growth in consumer awareness


Growth in platforms


Alignment of retail and institutional markets


Poor local standards of business management


Restrictions of legacy products and systems


Proven business model, refined for UK/Europe.



16

Core strategies

1.

Drive pan European distribution




Low cost of incremental business flows


Solid margins


Improved market accessibility


Relative ease of distribution





17

Core strategies

2.
Focus on institutional & mezzanine distribution





Leverage global consultant recommendations


Low cost of incremental business


Limited registry needs


Solid margins


First State operational strength

18

Core strategies

3.
Develop institutional distribution in the US




GEM market US$3.7bn, Global market $25bn (2002)


Quality of our key funds


Growing demand for global equity strategies


Solid margins


Babson acquisition


Leverage global consultant recommendations



19

Core strategies

4.
Focused manufacturing




Strong support of prime funds/teams


Build skills over medium term


Investment environment attracts talent



20

Summary


Four key strategic drivers:


compulsion; specialist funds; global approach; Group.



Competitive advantages:


business management; Group; heritage; global; use of
technology.


Robust business structure


Growing market recognition


Key growth opportunity for IIS



21

Appendix: Investment Philosophy


EPS GROWTH



drives long term share prices



QUALITY


determines the sustainability of EPS growth



VALUATION



is all important. Everything has a price

22

Equity Investment Team

Global/International
Equities

David Leary

Andrew Dalrymple

Tom Mermagen

Alistair Staddon

Nicole Mardell

Trent Koch


Global Emerging Markets

Angus Tulloch

Alan Nesbitt

Charles Heenan

Susie Rippingall

Alistair Thompson

David Gait

Vijay Tohani

Millar Mathieson

Glen Finegan

Scott McNab


Health &

Biotechnology

Dr Joe Anderson


Oliver Trefgarne

Lorenza Castellon

Technology
&Communications


Graham Hay

Nigel Masding

Financial

Services

Rob Grant

Vincent Houtteville

Consumer

Products

Neil Abbott

Lynne Braddick

Resources

David Whitten

Dr Joanne Warner

Dr Chris Baker

Todd Warren

Continental

European

John Ewart

Jimmy Burns

North American

Susan O’Brien

Julian Bishop

United Kingdom

Derek Lygo

Dr Paul Jourdan

Adam White

Mikhail Zverev

Regional Teams

Global Sector

Analysts

Global Teams

Asia Pacific

Angus Tulloch

Alistair Thompson

Susie Rippingall

David Gait

Vijay Tohani

Scott McNab

Equity Dealing

Ian Firth

Jeremy Campbell

Stephen Petersen

Matthew McKeith

Chief Investment

Officer

Global Asset Management

Stuart Paul

Investment

Operations

Shaun Forster

Michael Summers

As at 30
th

June 2003

23

Head of Global

Fixed Interest

Kevin Colglazier

Head of Global

Credit

Malcolm White

Head of UK

Fixed Interest

John Creet

Senior Portfolio

Manager
-

Global

Steven Murphy

Portfolio Manager

Cash

Murray Collis

Dealer

Stuart Doyle


Hong Kong

Credit Team

Staff: 4

Sydney

Credit Team

Staff: 8

Global Fixed Interest Team

24


Source: Reuters Hindsight, bid to bid, net income reinvested, in £ sterling

FS Global Growth Fund

Performance since inception to 30/05/03

-40
-20
0
20
40
60
Mar-99
Aug-99
Jan-00
Jun-00
Nov-00
Apr-01
Sep-01
Feb-02
Jul-02
Dec-02
May-03
First State Global Growth A (MF)
AUTIF/IMA Global Growth (IN)
MSCI World