Man Group urges investors to back Jersey move
Holding group in tax haven will free global operations from UK regulatory oversight
Man Group has urged shareholders to sign off its plan to set up a holding company in Jersey, after the alternative investment specialist won regulatory approval for the move.
The Financial Conduct Authority has agreed to Man’s proposal, which the London-listed group said would free its global operations from British regulatory oversight.
Man said it did not expect the arrangement to affect its tax rate as it would still be domiciled in the UK for tax purposes but market-watchers suggested the move would bring advantages.
“This added ‘flexibility’ will make it easier to access potential tax savings structures, such as easier sharing of tax losses between entities, especially in the US,” said David McCann, an analyst at Numis.
Man’s chairman, Ian Livingston, wrote to shareholders last week asking them to back the plan at the company’s annual meeting on May 10. Man needs the support of shareholders that own 75 per cent of its stock. This would allow the group to set up the structure later that month.
Big shareholders in Man include Franklin Templeton, Silchester, BlackRock and Standard Life Aberdeen. Analysts expect the vote to pass with little resistance.
Man would still be listed on the FTSE 250 index. The UK and European businesses would continue to be regulated by the FCA and report into the Jersey holding company, while the US and Asian entities would report directly into the holding company and bypass the UK regulator.
“At present, Man’s businesses in the US and Asia are prudentially regulated by the UK authorities as well as local regulators,” Lord Livingston wrote to shareholders. “The proposed structure would result in the group no longer being subject to global consolidated capital requirements and would therefore provide the group with greater flexibility going forward comparable to other such global groups.”
The FCA has taken an increasingly tough stance on the asset management industry after a hard-hitting government investigation two years ago. Last week, for example, the FCA said it would publish profit margins of investment groups and increase its scrutiny of the fees charged by active managers.
Analysts said the reorganisation offered other advantages. “The proposed structure would result in Man Group no longer being subject to global consolidated capital requirements and would thereby provide it with greater flexibility comparable to other such global groups,” wrote Jon Peace, an analyst at Credit Suisse.
Man said it was following international best practice. Janus Henderson, the New York and Sydney-listed group, has a similar structure, with a holding company registered in Jersey. Henderson Group set up the Jersey entity in 2008. Janus Henderson is tax-domiciled in the UK.
Fidelity International, the sister company of US manager Fidelity Investments, is registered in Bermuda. Fidelity said it paid taxes in all the countries in which it operated and did business.
Man said there would be no effect on its London operations, although Robyn Grew, the group’s chief operating officer and general counsel, would relocate to the US as part of the restructure. The company said the impetus for the change was its increased business in North America.
“I believe part of the rationale is to make it easier for them the manage the group and in particular acquisitions in the US should they wish to do more in the future,” said Mr McCann.
“The other component is to create greater distributable reserves to allow for less disruption to the dividend in event of distributions in excess of statutory profits.”
This month, Man reported a $3.8bn increase in assets under management in its first-quarter results to $112bn thanks to market returns, despite $700m net outflows.