Jonny Maxwell's departure from UK financial services group Standard Life, where he had built its fund of funds business over more than a decade, was the story of the past two months on PEO. The abrupt end to his tenure caught many by surprise and it was a big hit with our readers. Standard Life cited differences of opinion over the strategic direction of the unit.
A source familiar with the breakdown said it had been swift, once it became apparent that negotiations for Maxwell's planned spinout of the business known as Standard Life Investments Private Equity were going nowhere.
Once Standard Life had declined his offer to take the business off their hands, Maxwell had nowhere to go but out the door. They do say at the heart of every buyout is a form of blackmail. Give me the keys to the business or I walk.
The gamble any board takes in rebuffing a buyout is whether the business can survive the departure of management.
Maxwell never claimed he was a one-man-band and he had built, with his partner and successor David Currie, a capable team, even if it was often in the background. Standard Life clearly believes the business will weather the resignation of one of the industry's most popular, voluble and persuasive advocates for the asset class.
What is clear from the industry's reaction, however, is Standard Life has potentially seeded a forceful rival. As one managing partner of a European mid-market manager told PEO: “Jonny is well liked. If he wants to start a fund of funds there are plenty of managers who will be happy to give him a slice of their fund. And that is what investors in fund of funds are looking for: access to the best managers. Jonny could deliver that.”
For now a well-deserved rest is probably top of Maxwell's priorities. But should his plans develop, then one fund that any investor would be pleased to see in the portfolio is Langholm Capital's second fund, if PEO's Top Ten for December and January is a gauge of interest. The Unilever-backed mid-market firm notched not one but two appearances.
Langholm recently enjoyed a spectacular return on its investment in Just Retirement, an insurance business targeting an ageing population, which it floated. The returns from the offering covered the firm's equity investment of about £25 million, while leaving a large unrealised profit on the table. It was a public validation of the firm's investment thesis: Langholm's investors are participants in the sectors targeted by the firm and they work closely to maximise value for the fund.
The firm can offer a Unilever executive on secondment to help develop your consumer branded goods business. Or in the case of Just Retirement, expertise from its financial services backers, Hannover Re and Rabobank.
The success of Just Retirement was a well-timed preamble to the firm's fundraising, a PEO exclusive, and Langholm's second big story of the month.
The offering would have won plaudits too from John Hess, CEO of gatekeeper Altius, who has railed against buyout firm's high-handed treatment of public market investors. Hess warned in a recent PEO story of the risks the industry is running if it does not leave more value on the table for investors buying into the IPO. Some long-only asset managers are feeling short-changed in public to private deals and they are beginning to think twice about buying the stock on exit.
Buyout firms beware.