Cheviot Asset Management founder Michael Kerr-Dineen has made a dramatic return to the industry, recruiting 24 staff from Quilter Cheviot for his newly launched wealth firm, Wealth Manager can reveal.
Kerr-Dineen (pictured) will chair the company, Vermeer, with former Collins Stewart CEO Simon Melling to serve as chief executive.
Wealth Manager revealed last week the names of 12 ex-Cheviot staff who had left Quilter Cheviot, but the number is actually much higher. Alongside the dozen investment managers, their support staff will also join the new firm. Some of them have already joined, but a number are moving over in the New Year when their non-compete clauses expire.
The managers who left Quilter Cheviot are said to run around £3 billion combined, with the majority of their clients expected to move across to Vermeer.
The partners, of which there are thought to be eight, have put in a total of £500,000 to get the business started and will each take a 10% stake.
The partners will effectively operate as businesses within the business and will be free to hire their own teams, who they will pay for out of their own earnings. They can also allocate some of their equity to them.
Compliance will be a centralised function and the firm will take a collaborative approach to research, while the business will avoid having large marketing and IT departments to reduce costs.
The firm will operate under fund boutique Vermeer Investment Management’s regulatory umbrella and it will provide the compliance. However, it will be a completely independent private client business. Its back office will be outsourced to Pershing.
Back in 2006, Kerr-Dineen convinced 80 individuals to quit UBS to set up Cheviot, a discretionary investment firm with a partnership structure. He was formerly chief executive of stockbroker Laing & Cruickshank, which was bought by UBS in 2004 for £160 million. He decided to leave UBS and set up the new business because he said investment managers were coming under pressure to use in-house products.
At the time, he received backing from Sir George Mathewson, the former chair and chief executive of Royal Bank of Scotland, and Martin Hughes, the manager of Toscafund, to set up Cheviot. It is thought that 93% of assets managed by the 80 ex-UBS staff were transferred to the new business.
Cheviot had attracted more than £4 billion in assets by 2013, when it was sold to private equity firm Bridgepoint for around £100 million. Bridgepoint already owned Quilter and proceeded to merge the two companies, creating a £12.3 billion business.
Two years later, Bridgepoint sold Quilter Cheviot to Old Mutual for £585 million. By this time, its assets had grown to £16.7 billion. Old Mutual Wealth, as it became, has since rebranded to Quilter and floated on the stock exchange.
The dozen investment managers who left resigned following Quilter’s flotation. A spokesperson for the company said that contingency planning had already been in place and their clients were being looked after by others.
In its half year results, Quilter CEO Paul Feeney said that the departures are expected to lead to higher than trend outflows in 12 to 18 months’ time.
Last week, the firm’s third quarter trading update showed that net inflows were 70% lower year-on-year at £500 million. Feeney attributed the lower retail flows to weaker investor sentiment due to volatile investment markets and geopolitical uncertainty.