Latest news with #BrunoSchroder
Yahoo
02-04-2025
- Business
- Yahoo
Schroders emerged during the Napoleonic Wars – now it faces a battle for its future
When blue-blooded fund manager Schroders opened its new headquarters near The Barbican seven years ago, it invited a suitably regal guest to do the honours. The historic money manager, which was founded during the Napoleonic Wars, invited the late Queen Elizabeth II to cut the ribbon for the 308,000 sq ft office, making a major coup for the eponymous Schroders family, who have controlled the business for two centuries. Flanked by Bruno Schroder, the 85-year-old family patriarch, and chairman Michael Dobson, the Queen's visit marked a new dawn for the FTSE 100 giant, which was attempting to reinvent itself as a modern-day asset manager. Yet seven years on from the prestigious opening, the British financial titan is at a crossroads. Buffeted by an industry-wide downturn, Schroders is trying to plot a new course in a rapidly changing environment. Schroders' problem had been a rapid sea change in investment markets, away from its bread-and-butter active stock picking model towards cheaper 'passive' funds – like ETFs – and private capital. It has tried to keep pace by buying numerous businesses that oversee private capital, but questions remain over the success of this strategy. As a result, investors are growing weary. Shares in Schroders hit their lowest level in a decade last year, and despite a recent upswing, remain 45pc below their recent peak in 2021. For the 15 or so members who form the 14th generation of the Schroder family, and still own 44pc of the group, the financial repercussions have been severe. Their combined wealth has dropped from an estimated £4.6bn when shares peaked to about £2.4bn today – a loss of £2.2bn in under four years. Bruno Schroder, who died in 2019, has since been replaced on the board by his daughter, the billionaire heiress Leonie Schroder. Along with her cousin, Claire Fitzalan Howard, they represent the interests of the secretive Schroder family, who are no doubt keen to see the firm prosper once more. 'The family wants to see a share price which is going in the right direction rather than the wrong direction – and it had been going in the wrong direction for seven years,' says Rae Maile, from Panmure Liberum. To arrest the slide, Richard Oldfield, the new chief executive who took the reins in November, has laid out a radical £150m cost-cutting plan and ambitious new financial targets. Hundreds of jobs could go as part of the overhaul, with the City abuzz with questions over whether Oldfield and Meagen Burnett, his finance chief, can turn the Schroders ship around – or whether a more dramatic break-up is needed. 'Schroders has been trying to be all things to all people, but they have missed out on the scale game,' says one industry observer. 'Their clients are buying cheaper passive funds at one end, and private markets funds at the other – and Schroders is getting squeezed in the middle.' Schroders had been Britain's leading stock picker since the 1960s when it rode the occupational pension scheme boom by managing money for the likes of the Post Office and the Marylebone Cricket Club. Such was its prestige that Michael Verey, the former chairman, once modestly declared that Schroders was 'rather good at investments, having done it for a long time, and is not a bit ashamed of it'. Yet despite its storied reputation, Schroders has struggled to maintain its dominance in the 21st century – as Wall Street machines like BlackRock and KKR have put the squeeze on the industry with their cut-throat American drive. Peter Harrison, who left in November after a decade as chief executive, sought to expand more into more esoteric investments such as private credit and real estate – areas he dubbed 'areas of fast-flowing waters' – to keep Schroders in the race. As part of the strategy, he acquired numerous companies in a scattergun M&A offensive, spending significant sums on 'alternative' fund managers like Benchmark Capital, Adveq, Blue Orchard, SPW, River and Greencoat Capital. But up against a better-resourced American private credit managers such as Carlyle and Blackstone, Schroders never appeared particularly comfortable operating away from its main strengths of stockpicking and wealth management. Some say Harrison had the right idea, but the execution let him down because he didn't put his foot on the gas. 'Harrison spent a lot of shareholder funds over a long period of time buying shiny new toys which then didn't actually deliver,' says Maile. 'The areas where it has been doing well were being sidelined by Harrison, who was chasing the view of the world that said it's all about private markets. If you did work in public markets at Schroders, you were the poor cousin.' Schroders' current predicament is ironic because it has rarely struggled for relevance in financial markets. Blue-blooded, old school and part of the financial establishment, the history of the group is entwined with the history of Britain. Founded in London by Johann Heinrich Schröder, a member of a prosperous Hamburg family, Schroders was for centuries a major British merchant bank, ranking alongside the Rothschilds, Kleinworts and Warburgs in terms of prestige. It originally financed cotton imports from the US before the Civil War, and later the construction of the London Underground and the Channel Tunnel. But in 2000, the Schroder family, then led by George Mallinckrodt and Bruno Schroder, severed that link. They sold the historic banking business to Citigroup, leaving it as a standalone fund manager. Despite the risks, their bold gamble paid handsome dividends. Assets under management at Schroders swelled from £132bn in 2000 to over £300bn just before Harrison took over in 2015. Since then, assets under management have jumped again to an astonishing £780bn. Yet this increase has masked hidden issues threatening the business. Last year, clients pulled more money than they put in, with many ditching their stock market investments for private capital. That has raised questions over what Schroders wants to be and whether it has the right strategy. 'They're not trying to be KKR, they're trying to be like a version of Partners Group or Hamilton Lane in the US', says one fund industry expert, referring to groups that sell private assets to deep-pocketed pension funds and charities. Oldfield has pledged to get a grip on Schroders' private capital units, known as Schroders Capital, training up the 40 or so specialist salesmen who explain the fiendishly complex products to investors to increase investment flows. While assets under management have increased from £46bn in 2020 to £70bn today, inflows have slowed over the past two years. He has also dialled down expectations, pointing to the likelihood of lower inflows into the private markets business over the next three years. But what if Oldfield's plan to ride both horses in public and private markets fails? As another option, David McCann, a Numis analyst, says Schroders could ditch its in-house fund manager completely and become a standalone wealth manager. Schroders added to its blue-blooded credentials a decade ago when it bought Cazenove Capital, a one-time broker to the Queen and formerly chaired by David Mayhew, a former Etonian once dubbed one of Britain's most respected bankers. Today, Cazenove caters for the super-rich, with customers requiring a minimum of £3m just to get through the door. Splitting off the fund managers and focusing on blue-ribbon Cazenove would leave Schroders as a 'simpler, but market-leading wealth management business', McCann says – with the cash generated from the sale handed out to shareholders. Such a move would mirror Mallinckrodt and Bruno Schroder's turn-of-the-century decision to ditch its banking business – a bold gamble that paid off handsomely. Yet some are not convinced. 'Fund management runs through Schroders like a stick of rock. It's not as easy to do as it sounds,' says another City source. Oldfield has also played down the idea, pointing out that Cazenove relies heavily on Schroders' fund management division. Yet Schroders needs to keep running to stay in the race. In 1901, banking scion Herman Kleinwort said of the group: 'They are fond of big deals and do a lot of speculation.' The Schroder family, its 6,200 staff and the City of London itself will all be hoping that Oldfield pulls off his ambitious overhaul to help the historic fund manager rediscover some of that former magic. Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.
Telegraph
02-04-2025
- Business
- Telegraph
The blue-blooded City fund giant battling to stay relevant
When blue-blooded fund manager Schroders opened its new headquarters near The Barbican seven years ago, it invited a suitably regal guest to do the honours. The historic money manager, which was founded during the Napoleonic Wars, invited the late Queen Elizabeth II to cut the ribbon for the 308,000 sq ft office, making a major coup for the eponymous Schroders family, who have controlled the business for two centuries. Flanked by Bruno Schroder, the 85-year-old family patriarch, and chairman Michael Dobson, the Queen's visit marked a new dawn for the FTSE 100 giant, which was attempting to reinvent itself as a modern-day asset manager. Yet seven years on from the prestigious opening – the British financial titan is at a crossroads. Buffeted by an industry-wide downturn, Schroders is trying to plot a new course in a rapidly changing environment. Schroders' problem had been a rapid sea change in investment markets, away from its bread-and-butter active stock picking model towards cheaper 'passive' funds – like ETFs – and private capital. It has tried to keep pace by buying numerous businesses that oversee private capital, but questions remain over the success of this strategy. As a result, investors are growing weary. Shares in Schroders hit their lowest level in a decade last year, and despite a recent upswing, remain 45pc below their recent peak in 2021. For the 15 or so members who form the 14th generation of the Schroder family, and still own 44pc of the group, the financial repercussions have been severe. Their combined wealth has dropped from an estimated £4.6bn when shares peaked to about £2.4bn today– a loss of £2.2bn in under four years. Bruno Schroder, who died in 2019, has since been replaced on the board by his daughter, the billionaire heiress Leonie Schroder. Along with her cousin, Claire Fitzalan Howard, they represent the interests of the secretive Schroder family, who are no doubt keen to see the firm prosper once more. 'The family wants to see a share price which is going in the right direction rather than the wrong direction – and it had been going in the wrong direction for seven years,' says Rae Maile from Panmure Liberum. To arrest the slide, Richard Oldfield, the new chief executive who took the reins in November, has laid out a radical £150m cost-cutting plan and ambitious new financial targets. Hundreds of jobs could go as part of the overhaul, with the City abuzz with questions over whether Oldfield and Meagen Burnett, his finance chief, can turn the Schroders ship around – or whether a more dramatic break-up is needed. 'Schroders has been trying to be all things to all people, but they have missed out on the scale game,' says one industry observer. 'Their clients are buying cheaper passive funds at one end, and private markets funds at the other – and Schroders is getting squeezed in the middle.' Schroders had been Britain's leading stock picker since the 1960s when it rode the occupational pension scheme boom by managing money for the likes of the Post Office and the Marylebone Cricket Club. Such was its prestige that Michael Verey, the former chairman, once modestly declared that Schroders was 'rather good at investments, having done it for a long time, and is not a bit ashamed of it'. Struggled to maintain dominance Yet despite its storied reputation, Schroders has struggled to maintain its dominance in the 21st century – as Wall Street machines like BlackRock and KKR have put the squeeze on the industry with their cut-throat American drive. Peter Harrison, who left in November after a decade as chief executive, sought to expand more into more esoteric investments such as private credit and real estate – areas he dubbed 'areas of fast-flowing waters' – to keep Schroders in the race. As part of the strategy, he acquired numerous companies in a scattergun M&A offensive, spending significant sums on 'alternative' fund managers like Benchmark Capital, Adveq, Blue Orchard, SPW, River and Greencoat Capital. But up against a better-resourced American private credit managers such as Carlyle and Blackstone, Schroders never appeared particularly comfortable operating away from its main strengths of stockpicking and wealth management. Some say Harrison had the right idea, but the execution let him down because he didn't put his foot on the gas. 'Harrison spent a lot of shareholder funds over a long period of time buying shiny new toys which then didn't actually deliver,' says Maile. 'The areas where it has been doing well were being sidelined by Harrison, who was chasing the view of the world that said it's all about private markets. If you did work in public markets at Schroders, you were the poor cousin.' Schroders' current predicament is ironic because it has rarely struggled for relevance in financial markets. Blue-blooded, old school and part of the financial establishment, the history of the group is entwined with the history of Britain. Founded in London by Johann Heinrich Schröder, a member of a prosperous Hamburg family, Schroders was for centuries a major British merchant bank, ranking alongside the Rothschilds, Kleinworts and Warburgs in terms of prestige. It originally financed cotton imports from the US before the Civil War, and later the construction of the London Underground and the Channel Tunnel. But in 2000, the Schroder family, then led by George Mallinckrodt and Bruno Schroder, severed that link. They sold the historic banking business to Citigroup, leaving it as a standalone fund manager. Despite the risks, their bold gamble paid handsome dividends. Assets under management at Schroders swelled from £132bn in 2000 to over £300bn just before Harrison took over in 2015. Since then, assets under management have jumped again to an astonishing £780bn. Yet this increase has masked hidden issues threatening the business. Last year, clients pulled more money than they put in, with many ditching their stock market investments for private capital. That has raised questions over what Schroders wants to be and whether it has the right strategy. 'They're not trying to be KKR, they're trying to be like a version of Partners Group or Hamilton Lane in the US', says one fund industry expert, referring to groups that sell private assets to deep-pocketed pension funds and charities. Oldfield has pledged to get a grip on Schroders' private capital units, known as Schroders Capital, training up the 40 or so specialist salesmen who explain the fiendishly complex products to investors to increase investment flows. While assets under management have increased from £46bn in 2020 to £70bn today, inflows have slowed over the past two years. He has also dialled down expectations, pointing to the likelihood of lower inflows into the private markets business over the next three years. Fund management 'runs through Schroders like a stick of rock' But what if Oldfield's plan to ride both horses in public and private markets fails? As another option, David McCann, a Numis analyst, says Schroders could ditch its in-house fund manager completely and become a standalone wealth manager. Schroders added to its blue-blooded credentials a decade ago when it bought Cazenove Capital, a one-time broker to the Queen and formerly chaired by David Mayhew, a former Etonian once dubbed one of Britain's most respected bankers. Today, Cazenove caters for the super-rich, with customers requiring a minimum of £3m just to get through the door. Splitting off the fund managers and focusing on blue-ribbon Cazenove would leave Schroders as a 'simpler, but market-leading wealth management business', McCann says – with the cash generated from the sale handed out to shareholders. Such a move would mirror Mallinckrodt and Bruno Schroder's turn-of-the-century decision to ditch its banking business – a bold gamble that paid off handsomely. Yet some are not convinced. 'Fund management runs through Schroders like a stick of rock. It's not as easy to do as it sounds,' says another City source. Oldfield has also played down the idea, pointing out that Cazenove relies heavily on Schroders' fund management division. Yet Schroders needs to keep running to stay in the race. In 1901, banking scion Herman Kleinwort said of the group: 'They are fond of big deals and do a lot of speculation.' The Schroder family, its 6,200 staff and the City of London itself will all be hoping that Oldfield pulls off his ambitious overhaul to help the historic fund manager rediscover some of that former magic.
Reuters
28-02-2025
- Business
- Reuters
Focus: Schroders CEO plans reboot under pressure from founding family, sources say
Summary Companies New CEO expected to outline cost cuts, growth plan on March 6 Founding family voiced concerns about share price, sources say Mid-sized asset managers struggle as big get bigger LONDON, Feb 28 (Reuters) - When Schroders (SDR.L), opens new tab CEO Richard Oldfield presents his revamp of the 221-year-old British fund manager next week, one group of investors will be watching more closely than usual: the founding family. Oldfield, at the helm since November, is expected to outline cost cuts and prioritise areas where Schroders is growing, such as wealth and private markets, according to three people close to the firm. Some representatives of the influential Schroder family have challenged executives to improve the company's performance faster after a poor run of earnings, the sources said. Schroders' stock fell 25% last year, a third straight annual decline that returned share prices to 2020 levels. Oldfield, who joined Schroders as finance director in 2023, has the board's backing and will be given time to pursue his strategy, according to two of the sources. Schroders' shares have risen 15% this year ahead of the review. Schroders declined to comment. The family holds significant sway at the company, with a 44% stake and two representatives on the board, including Leonie Schroder, the daughter of late City grandee Bruno Schroder who held the seat for 56 years before her. The board is having to contend with a rapidly changing industry and is challenging executives about the trajectory of the firm, the people said. The likes of BlackRock (BLK.N), opens new tab, Vanguard and Amundi ( opens new tab have hoovered up assets through low-cost passive funds, leaving mid-sized fund firms including Schroders losing clients and raising doubts about their long-term independence. Schroders' core business remains actively managed stocks and bonds, but it has tried to bulk up in areas that generate higher fees, including in wealth and private markets, aided by acquisitions including wealth manager Cazenove in 2013, and infrastructure investor Greencoat in 2021. Its wealth assets under management have grown more than two-thirds since 2020 to 121.3 billion pounds. Founded in 1804 when Johann Heinrich Schroder, a member of Hamburg's elite, joined forces in London with his brother Johann Friedrich, Schroders financed transatlantic trade before moving into corporate finance and managing investments for the well-heeled. In more recent times, Bruno Schroder represented one wing of the family for decades, while the late George Mallinckrodt, who married Bruno's sister Charmaine and later became executive chairman, represented the other. Mallinckrodt's son Philip took over his seat, before his sister, Claire Fitzalan Howard, succeeded him in 2020. The large family ownership has historically been seen as a steadying force - Bruno was close to long-time CEO Michael Dobson - that shielded management from the demands for rapid action seen at many listed companies. FAST-CHANGING LANDSCAPE With a market value of 6 billion pounds and 777 billion pounds in total assets under management, Schroders could prove too big for many potential European buyers or partners. Asset management combinations have proven difficult, even as European consolidation picks up with France's BNP Paribas ( opens new tab snapping up AXA's ( opens new tab investment arm, Natixis agreeing to combine with Italy's Generali, and Germany's Allianz looking to sell its investment unit. The people close to Schroders caution not to expect a big strategic shift soon even though Oldfield, who has already cut around 200 staff and more than halved the executive committee, recently said standing still is "not an option" for the company. Ultimately, pressures on asset management's "squeezed middle" should prompt a more "radical approach" at Schroders, such as selling its asset management business to focus on wealth, said David McCann, an analyst at Deutsche Numis. Schroders is also likely to face questions about French money manager Tikehau Capital, which in February leapt into its top five shareholders after amassing a 5% stake, regulatory filings show. Tikehau has said it sees potential for "commercial collaboration" with the FTSE 100 firm, without elaborating further, and called Schroders "one of the best remaining global brands" in an industry it expects to change "very fast". A person close to Tikehau said its main interest was in Schroders' private markets business while a spokesperson declined to comment further. Schroders' third quarter report underlined its problems, as it warned four departing clients would withdraw around 10 billion pounds. It more recently picked up a 5.2 billion pound sustainable investment mandate from St James's Place in January, but investors will still need convincing, analysts say. "It's been a double whammy", said Mandeep Japgal, analyst at RBC, referring to declining investor confidence and earnings expectations. "The strategy is likely to maintain a focus on private assets, solutions and wealth. It's just about reigniting the growth within those areas." ($1 = 0.7915 pounds)
