(Update) Stuart Widdowson, the star manager of Strategic Equity Capital (SEC) (pictured above), is to form a new fund management business backed by investment trust veteran Chris Mills after quitting GVQ Investment Management earlier today.
The new business will be jointly owned by Mills' Harwood Capital and Widdowson but will operate under a new brand. It will be chaired by Ian Armitage, the former chief executive of private equity manager HgCapital who first hired Widdowson when launching the firm in 2000 after leaving Mercury Private Equity following its acquisition by Merrill Lynch.
Widdowson had built up a strong track record in charge of SEC, which seeks to use private equity techniques to invest in a concentrated portfolio of smaller company stocks. Over five years, the trust's shares have delivered around 170%.
Armitage (left) said he had always admired Willowson's engagement with all aspects of the business. 'I was also particularly impressed with his innate desire to align the interests of fund managers and investors. Stuart’s proven track record and outstanding performance at SEC was more than enough to encourage me to buy a 5% share of the growing trust,' he said in a statement.
‘It was a very personal decision to back Stuart in his former role and naturally I am excited and very much looking forward to the prospect of working with him on this new venture,’ Armitage added.
Mills, chief executive of Harwood Capital and manager of the North Atlantic Smaller Companies (NAS) and Oryx International Growth (OIG) investment trusts, said: 'Stuart brings a highly complementary skill set and a distinctive investment strategy to the Harwood Capital Group.
'I have acquired a deep understanding of his unique investment style and techniques over many years which is why I am hugely confident in our ability to build a long term and successful partnership,’ he said.
Shares in Strategic Equity Capital (SEC), a top-performing UK small companies investment trust, tumbled 5.4% or 11.5p to 203p on news of Widdowson's departure from GVQ where he had worked for seven years.
Assistant manager Jeff Harris will take over the trust alongside Adam Khanbhai, who has been promoted from his role as senior analyst.
'Stuart Widdowson's departure comes as a surprise to us as he had established a strong track record at Strategic Equity Capital via a differentiated approach to investing in UK smaller companies,' said analysts at Numis.
'It is not yet clear to us what the longer-term implications are for Strategic Equity Capital. We do not expect any changes to the investment approach, but Stuart was very much "the face" of the company with shareholders, and we can understand that investors will be cautious in the near term.'
Widdowson's record had led to shares in the trust enjoying a high rating, with a discount in single figures. While they stood at a 7.9% discount to net asset value before today's announcement, that discount has now widened, and could come under further pressure should Widdowson and his immediate family sell their stake worth around £1.3 million in the trust.
New manager Harris also serves as assistant manager to GVQ's two open-ended funds GVQ UK focus and GVQ Opportunities, headed by GVQ chief executive, Citywire A-rated Jamie Seaton.
GVQ UK Focus enjoys a strong long-term track record, up 98% over five years, placing it towards the top of the UK All Companies sector, although the younger GVQ Opportunities has returned a more muted 11.5% since its launch in October 2015.
Seaton said Harris and Khanbhai's promotions were 'well deserved'. 'They have both made significant contributions to the firm's strong investment performance, and I look forward to continuing to work with them and the team in building on the success of both GVQ and Strategic Equity Capital,' he said.
GVQ is owned by global investment trust RIT Capital Partners (RCP), which also holds a 14% stake in Strategic Equity Capital. RIT shares were flat at £18.47.
Since retiring from HgCapital in 2012 Armitage, who has more than three decades' experience in private equity, has taken up a number of roles and is currently chairman of The Key and Tenzing Private Equity.
Daniel Grote owns shares in Strategic Equity Capital.