In an exclusive interview, City A.M. sits down with Gavin Rochussen, the CEO of St. James’s-based Polar Capital, to talk all things asset management, how the pandemic has changed working practices, navigating acquisitions in lockdown and how culture is so important to success.
You told me that Polar Capital is a boutique asset manager, but many would argue that with over $28bn in assets under management, you are far from small. Why do you call yourself a boutique firm?
I have spent almost my entire career in financial services and 4 years ago I decided to move from J O Hambro where I had grown the business from £1.5bn in assets under management to £23.9bn.
Some were surprised by the move, and I should say I am still involved in a spin-off of that business, James Hambro & Partners, the wealth management and financial advice boutique. I enjoy growing a business and when Tim Woolley, the then CEO of Polar Capital approached me, it wasn’t a difficult decision. Polar Capital is very similar to J O Hambro, and that was what was so attractive.
For me, being a boutique asset manager is about the culture, it isn’t about the size of the total assets that are managed.
I guess the best way to describe Polar Capital is that we are an integrated multi-boutique. The real strength, and why I am regularly approached by fund teams across the globe, is that the investment teams have autonomy over their investment process and philosophy, they focus on making investment decisions to perform for their clients, with best-in-class operational and client service support around them.
We provide a flexible, entrepreneurial and transparent culture and that means we can attract and retain individuals who like to collaborate and that are driven and focussed on what they do. We strive to create an environment in which talent can flourish and be appropriately rewarded for performance – a genuine meritocracy.
Maintaining that culture must have been difficult through lockdown, how did you keep it going?
When the UK went into the first lockdown in March last year, it was a testament to everyone at Polar Capital that we were able to effectively transition to a remote working status immediately. We moved from an office in London with 147 staff to 147 decentralised offices each with one staff member.
Due to the nature of those who work at Polar Capital, we all rallied together in the typical collegiate Polar way to make sure that we were able to work from home whilst still managing our funds and servicing our clients.
We have managed to continue with the social side of life, virtually of course, even increasing the yoga classes that people enjoy and are so important to everyone’s well being.
Communication has been the most important aspect, we have continued to keep everyone up to date on what is happening around the business, we have continued to hire people, undertaken acquisitions and the business continues to grow and be successful during these unusual and, sometimes difficult times.
You bought Dalton Strategic Partnership late last year. Can you talk us through that deal and what challenges you faced due to lockdown?
Back in December 2020, we reached an agreement to acquire Dalton Strategic Partnership, they are a really interesting firm based in the UK and like us, an investment led boutique asset management culture.
When I joined Polar Capital, almost four years ago, I set out a strategy of growth with diversification of fund strategies and client geographies. This was a great example, they are an excellent strategic, geographic and cultural fit with our existing business.
The two businesses share common philosophies and cultures. For Dalton Strategic Partnership it made sense to join forces with a larger organisation, like Polar Capital, so that its funds could flourish; one that provides greater financial and operational resources with which to navigate the years ahead. We are confident that the deal is an excellent strategic fit.
Was the deal process hindered due to the limitations to travel and working from home restrictions?
2020 was a learning experience for all of us in financial services and it is amazing to see how well everyone has coped and also thrived in this environment. I have never envisaged closing a deal remotely, but in fact, as I and other senior members of the Polar Capital team have known Dalton Strategic Partnership for a long time, it made little difference in the end.
ESG is a theme that was emphasised during the height of the pandemic. How are you looking to integrate ESG across your business?
The consideration of ESG issues is not new and has always been at the heart of our decision making. ESG has been part of the research and evaluation process used by Polar Capital’s fund managers for many years and incorporated as a factor in their assessment of the risks and opportunities facing companies in which they may invest.
As I mentioned earlier, investment autonomy is central to our approach. Nevertheless, portfolio characteristics are observed and monitored centrally by Polar Capital’s CIO and risk team. ESG monitoring is an integral part of the oversight process. The risk team monitors each portfolio’s ESG characteristics every month and circulates the results to the portfolio managers. Each strategy is then reviewed in detail every four months in a meeting with the lead fund managers. Analysis of each strategy’s ESG profile is part of this process.
I have never envisaged closing a deal remotely, but in fact, it made little difference in the end.
We have done a lot of work throughout 2020 to integrate ESG principles and investing into individual teams. In November. Alexander ‘Zandy’ Macdonald was appointed head of sustainability for the Group. Zandy leads and co-ordinates Polar Capital’s sustainability initiatives at a corporate level and acts as a focal point for ESG activity in investment portfolios.