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First State UK Business Overview


Development/results of specialist houses. Role of asset ... Biotechnology. Dr Joe Anderson. Oliver Trefgarne. Lorenza Castellon. Technology &Communications ... – PowerPoint PPT presentation

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Title: First State UK Business Overview

First State UK Business Overview
  • July 2003

  • Company history
  • Current position
  • Strategic drivers
  • Core strategies
  • Appendix Investment approach

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

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

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

First State UK FUM breakdown May 03
Client Type
Product Type
  • 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.
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 µµµµµ AAA 5 W-Rating
Global Emerging Markets A AAA AAA µµµµµ AAA 5 W-Rating
European Smaller Companies A AA A µµµµµ 4 W-Rating
Global Growth - A A µµµ A 4 W-Rating
Global Health Biotechnology - - A µ -
Global Opportunities - A - µµµ - A -
British Mid-Cap - - A - - - -
British Smaller Companies - - A µµµµ - - -
Corporate Bond - - - µµµ - - -
UK Gilt - - A µ - - -
As at 30 May 2003
Brand Awareness of Competitors (Total)
Source Continental Research, Ashes research 2003
Strong asset flow in a difficult environment
Strategic drivers
  • Advent of compulsion
  • Shift from balanced to specialist mandates
  • Growing demand for global approach
  • Asset management for Group entities

1. Advent of compulsion
  • The UK
  • 27 bn savings gap (sourceABI 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.

2. Shift from balanced to specialist mandates
  • Single manager, asset allocator model
  • 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

3. Growing demand for global approach
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

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)

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.

Core strategies
  • 1. Drive pan European distribution
  • Low cost of incremental business flows
  • Solid margins
  • Improved market accessibility
  • Relative ease of distribution

Core strategies
  • Focus on institutional mezzanine distribution
  • Leverage global consultant recommendations
  • Low cost of incremental business
  • Limited registry needs
  • Solid margins
  • First State operational strength

Core strategies
  • Develop institutional distribution in the US
  • GEM market US3.7bn, Global market 25bn (2002)
  • Quality of our key funds
  • Growing demand for global equity strategies
  • Solid margins
  • Babson acquisition
  • Leverage global consultant recommendations

Core strategies
  • Focused manufacturing
  • Strong support of prime funds/teams
  • Build skills over medium term
  • Investment environment attracts talent

  • Four key strategic drivers
  • compulsion specialist funds global approach
  • Competitive advantages
  • business management Group heritage global use
    of technology.
  • Robust business structure
  • Growing market recognition
  • Key growth opportunity for IIS

Appendix Investment Philosophy
  • drives long term share prices
  • determines the sustainability of EPS growth
  • is all important. Everything has a price

Equity Investment Team
Regional Teams
Global Sector Analysts
Global Teams
Global/International Equities David Leary Andrew
Dalrymple Tom Mermagen Alistair Staddon Nicole
Mardell Trent Koch
Technology Communications Graham Hay Nigel
Asia Pacific Angus Tulloch Alistair
Thompson Susie Rippingall David Gait Vijay
Tohani Scott McNab
Chief Investment Officer Global Asset
Management Stuart Paul
Health Biotechnology Dr Joe Anderson Oliver
Trefgarne Lorenza Castellon
Continental European John Ewart Jimmy Burns
Equity Dealing Ian Firth Jeremy Campbell Stephen
Petersen Matthew McKeith
Financial Services Rob Grant Vincent Houtteville
Global Emerging Markets Angus Tulloch Alan
Nesbitt Charles Heenan Susie Rippingall Alistair
Thompson David Gait Vijay Tohani Millar
Mathieson Glen Finegan Scott McNab
North American Susan OBrien Julian Bishop
Consumer Products Neil Abbott Lynne Braddick
Investment Operations Shaun Forster Michael
Resources David Whitten Dr Joanne Warner Dr Chris
Baker Todd Warren
United Kingdom Derek Lygo Dr Paul Jourdan Adam
White Mikhail Zverev
As at 30th June 2003
Global Fixed Interest Team
FS Global Growth Fund Performance since inception
to 30/05/03
Source Reuters Hindsight, bid to bid, net
income reinvested, in sterling