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Lansdown: ‘Come back? I’ve never been away’

Stephen Lansdown, co-founder of Hargreaves Lansdown, discusses his return to the limelight at helm of Guernsey-based financial services group Ravenscroft.

 
Lansdown: ‘Come back? I’ve never been away’
 

‘Come back? I’m not sure I’ve ever been away to be honest,’ says Stephen Lansdown on his return to the limelight as the non-executive chairman of Ravenscroft.

The co-founder of Hargreaves Lansdown (HL) is in town to promote Guernsey-based Ravenscroft’s expansion into the UKwith the launch of two new funds and a further couple planned in the next few months.

Lansdown’s relationship with the company began shortly after he moved to the island in 2010, when he became a client. Impressed by its culture, he took a 10% stake in the business in 2012, buying out broker Cenkos.

This led to the firm being rebranded as Ravenscroft. Lansdown increased his holding to around 28% in September 2015, taking a seat on the board, and he is increasingly becoming the face of the company.

‘I liked what I saw: a young company with a good culture and I just felt there were exciting times ahead and if I could be of assistance to them, it would be nice to do it,’ Lansdown said. 

Ravenscroft offers a full range of financial services in the Channel Islands, including stockbroking, treasury management and private equity, but it is the investment management side of the business that is now being launched into the UK.

The firm acquired a 75% stake in Peterborough-based stockbroker A Vartan in 2015, through which its Huntress fund range will be sold into the domestic market, and hired former Aberdeen multi-manager stalwart Mark Harries as head of UK investment management the following year.

Ravenscroft has initially launched its Global Blue Chip and Balanced fund of funds, with UK versions of its Global Growth and Global Income funds set to be introduced around the end of the year.

The firm’s investment philosophy is very much global, looking to identify key long-term trends – such as demographics, the emerging middle class, technology and healthcare – that will shape the world in years to come. At the heart of the ethos is a desire to keep it simple, investing purely in equities, bonds and cash, with no use of derivatives.

Although Lansdown is under no illusion about the difficulty in building a brand in the crowded investment market place, he believes the proposition is distinctive and differentiated enough to stand out.

‘The team has an almost unique investment philosophy and has produced very good performance, and we want to take that story one stage further,’ he said.

‘The interesting challenge is who’s heard of Ravenscroft? What the aim will be is for the funds to continue the performance that they’ve had to date and that’s why we’re launching in the UK, on the back of those figures. If the investments continue to perform, the more that brand builds up.

‘Ravenscroft has got significant brand awareness in Guernsey, but not outside and obviously that’s what we need to build. That’s the challenge – people will associate my name with it, but the reality is that it’s not me running the money. I’m there as chairman to challenge and make sure the board is operating correctly and make sure that we’re doing everything we should be doing.’

Life post-Hargreaves Lansdown

Ravenscroft is one of a number of business interests held by Lansdown, who has built up a varied portfolio since stepping down as a non-executive director of Hargreaves Lansdown in 2012. He still retains a 12.3% stake after selling down £191 million worth of shares in it last week, but he said his main focus is now on three areas.

‘I get loads of approaches about investment, some of them I’ve done, but generally speaking, you get to the point where you have to say no because you can’t do them all. Not that they’re bad ideas, you just get saturated,’ he said.

‘One of the things coming out of financial services was to try things, like investing in a car dealership, that’s outside of my comfort zone, so it’s interesting and different.

‘I really focus now on three areas: Ravenscroft; Bristol Sport [which includes Bristol City Football Club, which he also chairs]; and the other area I’m very keen on and getting involved in more is conservation in Africa [where he spends around three months per year].’

His interest in conservation plays into the broader theme of sustainability, which he is a keen advocate of, particularly sustainable energy.

He co-founded specialist investment manager Sustainable Technology Investments Guernsey (Stig) with former ProVen Private Equity boss Gordon Power in 2009. This business went on to acquire Earth Capital Partners (ECP), which the pair use as a platform for taking stakes in boutiques around the world that focus on renewables.

ECP has just soft closed a fund, the Nobel Sustainability Trust, with a second fundraising for it set to get underway. 

‘It has the name of the Nobel family, which gives it a lot of beans,’ Lansdown said.

‘Its investments range from agricultural security, so we have a farm in central Botswana, to renewables – wind farms and solar – and we have a number of investments in the UK, including some hydro in Scotland.

‘They’re early stage investments, so is it something to wheel out to private investors? Yes, but only those that are high net worth and can afford to lose the investment.’

He said ECP could potentially run a sustainable mandate for Ravenscroft down the line, although there are no immediate plans for any launch. 

The outlook for Hargreaves Lansdown

Last week, Lansdown sold down a portion of his stake in the FTSE 100 business he co-founded in 1981, though he remains not only a significant shareholder in the business, but also a keen supporter. He said he remains in regular contact with both the company and fellow co-founder Peter Hargreaves and is bullish about its prospects.

‘I’m a long-term supporter of Hargreaves Lansdown, but does that mean never selling the stock? No of course it doesn’t,’ he said.

‘When I moved [to Guernsey in 2010] I had 28%, so I always envisaged selling that down for when I needed funds for other purposes, so that’s what I’ve done.’

He said the key drivers of HL’s success – the UK’s demographics and increasing need to save for retirement – remain in place and if anything are accelerating, which should enable the company to continue to grow its client bank and assets under administration. He also cites the firm’s formidable investment in IT as a real barrier to entry in the industry.

Lansdown does admit to being unhappy that it did not pay out a special dividend  last year for the first time since floating in 2007, but more due to the Financial Conduct Authority’s (FCA) approach. HL said it needed to retain an additional £50 million of cash, after the regulator announced plans to ‘reassess’ the firm’s capital requirements.

‘When we first started paying out the special dividend, I made it clear that it was exactly that, a special dividend, and it would only be paid out if the funds were available or they weren’t needed for anything else. The trouble is, when you start doing that, people start thinking it’s the norm,’ he said.

‘I don’t like the fact that the special dividend hasn’t been paid this year because it’s cost me a little bit. But I’m really annoyed with the FCA because it was not so much that “we think you have to keep this back”, it was more that “we think you’re going to have to do more” and [HL] couldn’t really pay it out with this in the background, so they obviously had to make the announcement early that this was what’s going to happen.’

Lansdown plays down the threat of Vanguard’s platform to HL, saying it does not have the captive client bank that HL has spent years broadening and points out it offers a much more limited service.

‘If you want to buy a Vanguard fund, the Vanguard platform is the cheapest, but if you want any service on the back of it, you don’t get it,’ he said.

‘One of the fundamental bits of [HL’s platform] Vantage when it was first launched was to be able to have all of your assets in one place so you could look at your portfolio and make decisions on any aspect of it. Vanguard won’t do that, so it means you have to look at Vanguard, you’ve got to look at HL and whatever else.’  

 

2 comments so far. Why not have your say?

Dennis .

Oct 21, 2017 at 10:50

HL is expensive, my wife and I haveI have £450k in there. I am in the process of pulling out due to the fact that I am paying over £2k/annum in management charges.

report this

Dennis .

Oct 21, 2017 at 10:54

Just looked at Directors' deals on HL stock. They are all selling out. Mark Dampier just sold £3m worth.

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