Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
UK regulator’s gaffe keeps GBST in play for FNZ
FNZ has won a last-ditch bid to relitigate the looming forced sale of Australian software firm GBST after the UK competition authority flagged possible mistakes in figures underpinning its earlier decision.
In a notice published late last year, the Competition and Markets Authority (CMA) said it would refer the case back for a rethink after uncovering data inconsistencies in the wake of a FNZ appeal to the Competition Appeal Tribunal (CAT).
“Following receipt of the Notice of Application [FNZ appeal], the CMA identified certain potential errors in its market share calculations as a result of the provision of inconsistent information during the course of the CMA’s investigation,” the note says. “The CMA will now ask the CAT to send the case back to the CMA to reconsider.”
FNZ bought the-then ASX-listed GBST in July 2019 for about A$260 million, triggering a CMA investigation in November that year in the UK, where the two investment software firms hold significant share of the platform market.
After a lengthy consultation, the CMA handed down its final ruling in November 2020 requiring FNZ to sell GBST in short order, declaring the merger raised “significant competition concerns in the supply of retail platform solutions to investment platforms in the UK”.
On December 15 the CMA published the ‘final undertakings’, pending sign-off from relevant parties, laying out the proposed sales process and measures to maintain FNZ and GBST as separate businesses in the interim. However, the official documents redact dates for the proposed GBST sale timetable.
The CMA has not yet indicated when a final decision is due with the case now heading back to the competition authority amid a COVID-19 full lockdown in the UK.
FNZ previously argued GBST was a complementary business rather than competitor in the UK, stating its full-service platform model was distinct from the Australian firm’s software-only approach.
Founded in Wellington, NZ, in 2004 by Adrian Durham under the original ownership of First NZ Capital (now Jarden), FNZ has grown into a global enterprise valued at about NZ$3.5 billion (A$3.25 billion) based on a part-sale to new private equity shareholders in 2018.
After expanding into the UK, Europe and Asia, FNZ ventured into the US platform market last July in a deal with State Street. Under the arrangement, FNZ bought most of the State Street US wealth management services business for an undisclosed sum. However, State Street retains a minority interest in the wealth management business as well as serving as sub-custodian.
Post the State Street deal, FNZ also notched up platform purchases in Ireland and, in November last year, South Africa, where it bought the Silica third-party investment administration system from wealth management firm Ninety One (formerly known as Investec Asset Management).
– Investment News NZ
