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Magazine Issues » April 2011

EXECUTIVE INTERVIEW: Thames River's CEO Charlie Porter

Charlie_PorterCharlie Porter, CEO of Thames River Capital, has a distinctly hands-on approach to managing people, he pokes them in the back and asks them what they do. He tells Angele Spiteri Paris how it works

If you work at F&C, the London-listed fund manager, and this man (pictured) taps you on the back in the following weeks, it’s Charlie Porter, the chief executive officer of Thames River Capital. F&C bought the erstwhile boutique in September last year, reportedly for £53.6m (€60.7m), and Thames River is now F&C’s funds business.

Porter, a champion of the smaller, independent fund manager, wants to make sure the firm continues to function with its previous agility, and one action needed to ensure this is a cull of  the number of funds in the firm’s portfolio.

“2011 will likely see us cull a number of products. We will be reviewing them all and look at what worked and what didn’t,” he says.

Regulatory developments across Europe, such as Ucits IV, aim to make it easier for investment managers to reduce the number of funds in the crowded market, but this work must begin at firm level.

“The funds industry is good at creating products but not so good at killing products, which is actually very important because things change, markets change, investor needs and appetites change, and we have to react to that,” he says.

The question is: how will this be carried out? Porter explains. “In Q2 and Q3 this year, we will be going through the product prioritisation plan. In addition to looking at each fund, we’ll be looking at the umbrella structures and ask ourselves whether we need them all. The honest answer to that is probably not,” he says.

Known to be a hands-on boss, he talks about the practicalities of his new role within the F&C structure. “I spend time here [at Thames River’s Mayfair headquarters] and at F&C [based four miles away in the City of London]. I need to make myself known among  my new F&C colleagues,” he says. “I manage people by poking them in the back and asking them what they do. That is how I learn more about the company and what needs to be done to make it more efficient.”

One must consider that after all, Porter’s remit grew significantly following the acquisition. He is no longer just CEO of Thames River, he is also responsible for F&C’s retail and wholesale funds business with around £8.1bn (€9.2bn) of assets under management.

Branding will form part of Porter’s tasks as he sails the F&C Thames River ship. And, indeed, ‘F&C Thames River’ is most most of the funds will be called in future.

Porter and his colleagues have had to sift  through both firms’ products and consider their brand presence to decide which name should be used where.

“In Asia and North America, F&C has a wonderful brand and, therefore, the F&C name will be used when selling in those regions. In the UK wholesale arena however, the F&C brand is not as strong as Thames River,” he says.

Regarding the retail market, Porter explains that although Thames River has only been active for around three years, some products, such as its long-only multi-manager, have raised a significant amount of money.

“The long-only multi-manager product will continue to be called Thames River and also our F&C Lifestyle brand will be maintained as it has become very powerful
in the UK IFA [independent financial adviser] market which will be very important to us in the new RDR [Retail Distribution Review] landscape,” he says.

Long-only multi-management and European equities were the only two areas of crossover between Thames River and F&C.

Overlaps and responsibilities
Once those two overlaps were identified, the decision had to be made about which business was going to remain responsible for what.

But the choice about European equities was pretty much made for them when Thames River lost the managers running its European Dynamic Growth Fund, Trygve Toraasen and Carlos Moreno, earlier this year. The €9.7m fund they managed was absorbed by F&C European equities vehicles, overseen by Paras Anand.

It was a different story when it came to the multi-manager product.

“Thames River had a bigger profile in multi-management,” Porter explains. “Gary Potter and Rob Burdett have made themselves very accessible to IFAs and, therefore, F&C’s multi-manager business has been absorbed into Thames River.”

Industrial logic
Given that Porter has been such a champion of the independent, boutique approach to fund management, and Thames River itself a paragon, it has to be asked why its shareholders chose to sell to a firm with £105.8bn of assets under management.

Porter says: “We had to do a transaction, we had no choice. We had come to the end of our relationship with our venture capital backer and couldn’t see how we could go on otherwise.

“We identified seven companies, mostly in Europe, but including one US player whom we thought it made sense to do that transaction with. There was an element of industrial logic to our choice – the fit, even culturally, had to be very strong.

“With F&C, on the outside it seems as though we might not culturally fit. But actually, when you get down to it, the two firms are not dissimilar as our people largely came from traditional long-only buy-side firms.”

The addition of Thames River to its portfolio represents somewhat of a revitalisation for F&C. It got that boost and a new chairman in one fell swoop. But that is a whole other story.

Getting back to Porter, he explains the changes Thames River made and the speed of implementation. “In a matter of months we were appointing an [investor services] outsourcer and are now choosing between two players,” he says.

This means difficult changes on the people front; around 110 in-house positions will transfer to the outsourcer. Porter says this will make F&C more efficient and lead to a more flexible cost base.

An obvious issue is whether “big company” problems could creep in to what proved to be a successful business model.

But Porter says: “We’ve made sure it’s a one-way valve – the positive aspects of Thames River filter through to F&C and we in turn benefit from their scale and get access to additional products they manage. But none of the bad stuff comes back the other way and while I’m here, this will not change.”

©2011 funds europe