Ex-Cazenove managers Tim Russell and Chris Rice are planning to adopt the Lindsell Train model by launching an investment trust that provides investors with a stake in their new boutique.
The duo is looking to raise no more than £50 million for the long-short pan-European investment trust, which is likely to be called the Sanditon investment trust. Lead managed by Russell (pictured), it is set to launch in the spring of next year and will offer investors a 20% stake in their new venture Sanditon Asset Management as one of its unlisted holdings.
The trust will invest predominantly in large caps, drawing on the expertise of the two managers. Russell will take a more concentrated approach that is less market neutral in comparison to the one he employed when he ran the Cazenove UK Absolute Target fund. While plans are in their early stages, it is likely the trust will have a 0.75% management fee and a performance fee that is accrued over three years. The hurdle rate is set to stand at RPIX plus 2% per annum with a high water mark.
Once the Sanditon trust has listed on the London Stock Exchange the asset management business will launch a four-strong range of open-ended funds. Subject to regulatory approval, the funds will comprise of one European long-only fund, one European long-short, and UK long-only and long-short funds.
The investment trust is unlikely to seed any of the open-ended funds that Sanditon is planning to launch. The duo do not intend to launch any B-share issues so that those that back them early are rewarded.
The company registration documents seen by Wealth Manager also show that the duo are joined as directors by Neil Canetty-Clarke, an experienced finance director who has worked at the Guardian Media Group, and by Rupert Tyer, a former Cazenove non-executive director.
When Russell left Cazenove in May 2011 to take a career break, he had posted 0.8% return with the Cazenove UK Absolute Target fund since it was launched in July 2008. During the same period the IMA Absolute Return Sector average was 11.9%, while the FTSE All Share rose by 26.1%.
Rice, meanwhile, departed Cazenove in July of this year ahead of the integration with Schroders following its acquisition of Cazenove. He formerly ran the Cazenove European and Cazenove European Income funds.