Crikey, you can actually hear the creaking as the industry grinds its gears and gets back to some kind of cruising speed. Welcome back, those of you who are slowly reanimating yourselves. We’ve been keeping it warm for you while you were away. So settle back in, have a wee moan about the unseasonal heat, and then get back to work.
As you do, you’ll notice some actual News happening; I’ll take two (2) bits for your edification and delight this week. First, big news over with our friends at 7IM, who’ve been mainly purchased by Canadian teachers. Rumours have swirled around 7IM for ages, as their existing majority owners, Caledonia were coming to the end of their run.
So what does it mean to be purchased by Canadian teachers? Some of the natural advantages, such as cheaper prescription medication than the USA, and a polite, passive-aggressive demeanour allied to a slight inferiority complex are taken care of already with the various elements of British heritage 7IM enjoys. I’ll let you decide which part is the Scottish one. Other parts – cabin culture, a predilection for poutine (recette ici) and nanaimo bars, an invariant tic only otherwise found in certain areas of Glasgow, and Bryan Adams – well, we’ll have to wait and see. I like the cabin culture bit particularly. See you there; or not.
The main thing to know about the Ontario Teachers’ Pension Plan, though, is that those pedagogues have got a few quid. The fund runs about C$250bn; that’s about £145bn Imperial Credits Of The Realm. The private equity element of that is about £35bn, so the £225m OTPP is dropping on 7IM is significant of course, but in context 7IM is now part of quite a big family. Other OTPP investments in the UK include Busy Bees Nurseries, Bristol and London City Airports and SSEN (part of Scottish and Southern Energy).
So it’s a PE firm taking over from a PE firm, but the one thing I know about some of these major superannuation investment groups is that their time horizons tend to be longer than straight-up red-in-tooth-and-claw PE firms, and they often look for firms where they believe in the management that’s there to run a strategy for the medium term. This doesn’t mean they’re a soft touch – far from it – but equally they’re thought of as generally eyes-on and hands-off so long as things are going acceptably.
So if you’re a 7IM client or user, I think this is a good result. For observers from the outside, I think it’s interesting and here’s why: 7IM has been talked about as a target for acquisition and consolidation by other providers for some time. As a mid-size firm, with about £17bn or so under management, that’s natural. Everyone’s looking for the next bit of platform consolidation, and 7IM, with a high average balance and a pretty clean book is an attractive prospect. But that hasn’t happened. So those looking for it will have to search elsewhere for the next one.
I said we’d do two, so very quickly, let’s cover something you might not have spotted. Many of you may not know who Criterion are. They used to be part of Origo, but are now an independent not-for-profit company, and are the people who come up with the messaging standards that make moving data from one system to another at least relatively bearable where their standards have been adopted. Theirs is a thankless task, but it’s plumbing that you would definitely miss if it wasn’t there.
The reason for bringing it up is that – and I don’t want to spoil any surprises here – the movement of data when it comes to DFM model portfolio services on platforms is, and I’m using a technical term, a midden. So Criterion has published a set of draft standards that are trying to bring sense to this. If you’re an MPS user, this is worth keeping an eye on; if platforms and DFMs and practice management systems all sign up, life is going to get quite a lot better. For example, if you’re a DFM and you list your MPS on 15 different platforms, when it comes to rebalance day you are going to need a) 15 laptops, b) the patience of a saint and c) a lot of coffee. Everyone has their own way of doing things; standards won’t standardise admin procedures but they will help with making sure there is one way of transmitting information, and that can’t do anything but help. The industry isn’t good at this just now; this is one important reason that the results of the Mark Polson MPS on Platform A can be markedly different from Platform B. And we have had enough of that.
I’m not a standards expert, but this appears to be a Good Thing, and given that providers of all stripes and hues tend to be most responsive to new Good Things when their users all shout at them to Get On With It, this might be a good time to make encouraging noises. As The Streets once said: let’s push things forward.
Take a look below.
And your music choice this week isn’t The Streets. It’s something quite wonderful from Slowdive, nineties shoegaze pioneers, who’ve got a new record out against all the odds. The whole album – everything is alive – is great, but we have to choose one track, so here’s kisses, the lead single. Whatever was running through their heads when they put this together is something I would like to access on an ongoing basis. Transcendent stuff.
See you next week