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MN exits UK fiduciary market despite vow to stand by business [updated]

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Dutch fiduciary manager MN has sold its UK business, only six months after senior management vowed it would remain in the market.

The business has been sold to Kempen Capital Management (KCM) for an undisclosed price, seven years after the company launched in the UK.

Paul Gerla, chief executive at KCM, said the acquisition was an “important landmark” for his company’s expansion.

“KCM has proven to be an entrepreneurial and innovative player in the highly competitive Dutch fiduciary management market,” he said. 

“We are committed to doing the same in the UK, where demand for fiduciary management is increasing.

“MN has successfully built a fiduciary business in the UK, and we look forward to developing that further.”

Pending regulatory approval, the companies hope to complete the deal by the beginning of October.

All MN staff will transfer to KCM.

The sale comes only a few months after MN in the Netherlands announced more than 200 redundancies.

At the time, outgoing chief executive Ruud Hagendijk was cautious about MN’s future in the UK, and conceded that it was pursuing a different business model than when it launched in 2008.

But he added: “The change in strategy does not mean we will leave England.”

KCM currently has fiduciary management mandates worth €23bn, largely in the Netherlands, compared with £2.7bn (€3.5bn) in full-service fiduciary mandates overseen by MN’s UK business.

According to IPE’s survey of Dutch institutional managers, KCM had €18.1bn in Dutch institutional assets at the end of September 2014.

Newer figures collected by IPE show KCM’s UK assets at €1bn, split between €419m managed for pension clients and €613m for other institutions.

Donny Hay, head of clients for the UK at MN, said the London office’s 24 staff would be retained, and that new members would join from KCM in Amsterdam, growing its manager selection team.

“There’s no change to the UK team’s existing business structure,” he added, confirming that Remco van Eeuwijk would remain as managing director and Jeff Neate would be head of client solutions.

He said MN had “done the hard work” in establishing a profitable UK business, but that, in the competitive market, further resources were required to grow.

The sentiment was echoed by Michiel Cleij, spokesman for MN in the Netherlands, who said the sale of its UK activities was a consequence of the company’s new strategy focusing on the Dutch market, as well as its Dutch clients and owners.

“Therefore, it is not logical to continue investing for further growth in the UK, where we were facing increasing competition,” he said.

Cleij stressed that the sale process had only gathered steam over the last six months, after MN found the “ideal” party in KCM.

“It already had a firm foothold in the UK, was keen to expand and was also willing to make the required investments,” he said.

“Moreover, KCM was also prepared to take over our entire team, as well as our clients.”

Commenting on the future of fiduciary management in the UK, Hay said: “The Dutch regulator is the consolidator in Holland, and fiduciary management will become one of the major consolidators in the UK for the years to come.”

He added that KCM would try to act as a “natural partner” for schemes above €1bn that wished to award partial mandates, where in-house management at pension funds could not compete with managers.

“Particularly in the alternatives space,” he said.

“That’s a space where the in-house teams either struggle to find time or the necessary talent and expertise to hunt out the appropriate opportunities – whether it be in hedge funds, or private equity or infrastructure.

“With Kempen, we get a partner with a very strong track record in areas like hedge funds, so we are keen to explore that.”

He also emphasised that, while UK pension trustees had done a good job of managing assets, the sector had struggled with liability management – especially due to the use of swaps and derivatives. 

When MN first entered the UK, it hoped to export its Dutch business model of full-service fiduciary management, as offered to Dutch metal sector schemes PMT and PME, among the largest pension funds in the Netherlands.

It later distanced itself from the approach and focused on individual mandates, managing a total of €10.9bn in assets at the end of December.

According to KPMG’s 2014 survey of fiduciary management activity in the UK, the total fiduciary mandate market was worth £72bn, split almost equally between £34bn in partial and £38bn in full fiduciary mandates.

But underscoring the problems MN faced in winning over full-service fiduciary clients, the survey found the £38bn in fully delegated mandates was split across 303 clients.

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