After 13 years in the British army, Patrick Johns decided to try his hand at asset management in 1984. ?I had been medically downgraded in the army so I though that I had two choices. I was either going to sit behind a desk at the Ministry of Defence for the rest of my life or I could go and sit behind a desk somewhere else and maybe make a better fist of it,? he says.
His first asset management position was at Fleming Asset Management. In the mid-1980s Johns was based in Tokyo at Jardine Fleming. ?This was a fantastic time to be in Tokyo, with the stock market getting away with itself,? he says.
After a decade with the firm, he joined Prudential Portfolio Managers in 1995. ?[Prudential] was looking to build its third-party business,? he says. ?I had responsibility for business acquisition and client management.?
When Johns moved from Prudential to F&C in February 2000 his new company was known as Foreign & Colonial, had £25 billion ($48.5 billion) in assets under management, was 90% owned by HypoVereinsbank and reported in sterling. Since then it has been through several changes.
?When I arrived at Foreign and Colonial we were managing about £25 billion-worth of assets on behalf of UK investment trusts; HypoVereinsbank ? where we were running a significant amount of assets in retail funds for distribution through Germany's second-largest bank, at the time our 90% shareholder ? and UK pension funds, where we were managing money on behalf of the electricity companies that had recently been privatized,? says Johns. The firm continues to manage money for several UK electricity company pension schemes.
In the third quarter of 2000, HVB announced that it would be moving to an open architecture and, as a consequence, that it would sell Foreign and Colonial. An open architecture was attractive as around 75% of mutual funds get sold through banks in Germany. Johns says: ?We would remain a preferred supplier at the top table but clearly from an investment point of view there was no strategic logic in having a 90% stake in a single asset manager.?
Eureko buys F&C
Johns became involved in the sale process. ?We went through a period during the last quarter of 2000 presenting to a number of prospective suitors. The final approved suitor was Eureko which, funnily enough, was the company that had made the very first presentation to us, the management team, here at Foreign and Colonial.? Eureko's acquisition of Foreign & Colonial was completed at the beginning of 2001.
The next task was to merge the four asset management businesses that Eureko now owned into a single platform. ?We had a change of name [to F&C Management Ltd] and we reported in euros,? says Johns. ?Then around comes autumn 2004 and we find ourselves with a new majority parent, a quote and we're reporting in sterling again ? because we're a UK-listed company.?
In October last year, F&C and Isis Asset Management merged. Johns believes the two companies make good bedfellows. He says the pre-merger Isis had two key strengths that it brought to the table: its socially responsible investing capability and its UK property team. ?In bringing the two UK direct property teams together we now have a team that manages some £5.8 billion, which certainly makes us a top five manager of UK property. Before, the old F&C had had a third-party business managing around £1 billion and we recognized that we didn't quite have the critical mass to build on that organically.?
F&C, on the other hand, brought well-regarded bond and European and Emerging Markets equities capabilities. Post merger the bond team has gone from 26 people to 40 people. ?So what has come out of the merger is the creation of one of the largest bond teams certainly in the UK if not in Europe,? says Johns. ?Similarly on the European side, we've now been able to build a team of 40 covering a broad range of disciplines from high-alpha UK equity to high-alpha Pan-European equity,? he adds. The merged company, now known as F&C Asset Management, has £120 billion in assets under management and its focus for the medium term is to consolidate the business and grow its property, bond, equities and socially responsible investing capabilities organically.
On February 2 this year, Johns will celebrate the fifth anniversary of his having joined the firm. Johns says of the developments during his time at the firm: ?Those are the defining moments in the five years I've been here so you can't say I've let the grass grow under my feet for too long. It's kept me on my toes.?