Wednesday, 8 October 2008

Guernsey and London connection: Rowlands single family office and Blackfish Capital Holdings

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Toby Birch, who departed a role as an investment manager in a well known private bank, took up a position with the Rowland family office based in Guernsey on their breathtaking estate at Havilland Hall and also in their London office in Saville Row.

Following Toby’s book, Final Crash (written under name Hugo Boleau), he found many of his views aligned with the Rowlands, particularly Jonathan Rowland one of the five children of David Rowland, who runs the family investment management arm in London, managing the reported £700million fortune, so when a position arose Toby jumped at it. Although Jonathan Rowland does say gently that his outlook isn’t quite as “doom and gloom as the Final Crash book.”

Toby, who has been with the Rowland family office for several months (he joined autumn 2007), has become Executive Director of Blackfish Capital Exodus Fund which has been launched to capture flight money leaving dollar investments with a plan to invest in gold and commodities. “Gold is like an insurance policy that you don’t claim on.” Says Toby. He adds that some are calling the current swing to gold: ‘the gold bug.’

The Exodus Fund named after the land of milk and honey, which is run with co-manager Martyn Konig CEO of Blackfish Capital and who has a CV that includes NM Rothschild, Goldman Sachs and UBS, launched with $20million of Rowland money has a $5bn capacity (soft close at $3bn) with a modest entry level of US$250,000. Target returns are 15% per annum with 8% volatility with fees at 1.5% (management) and a performance fee of 20% (high watermark and equalisation). There is also a joint venture with Investec called the Blackfish Investec Capital Management fund which Toby explains, from the elegant boardroom at the family office is because, “the family have a lot of experience with gold and commodities with silver mines owned by the fund in South America.”

Toby, who also has an Islamic finance qualification, predicts strong flows of money from areas like the Middle East out of the USA and into Europe and sees three areas that will benefit . “They will be precious metals, oil, food and non base metals and non US assets.” He is devoting his time to Bloomberg with Goldman Sachs who are prime broker and custodian, stress testing all their investment strategy.
Jonathan Rowland, has been with the family office for fifteen years and works with his siblings, in different areas of the investment office where Toby is. “We are primarily investment and financiers looking for opportunities globally in equities, debt, direct investment and trading opportunities. And as a secondary area we also look at emerging markets.”  He says.

Jonathan, who is down to earth and friendly, says they run a tight ship and keep costs in the family office low. “We bring in experience where we need it but generally keep our head count to around ten.” He says his golden rules for investment include: “If you don’t understand investments don’t do them.” And “moving and adapting quickly to how markets are moving.”

Having known Toby for five years , Jonathan confirms that the Rowlands family view is generally in line with his, so more pessimistic than optimistic which is why the Final Crash book resonated. “We’re always looking at the worse case scenarios and think Toby’s book has a significant place in the world.” He adds a surprising comment about their current policy. “We’ve liquidated everything we have and tightened our belts to take advantage of market opportunities that will arise with the economic instability.”

This is a trend that Jonathan says he is also seeing repeated with other “older and cleverer”  families. “Core businesses are being kept, but we are all awaiting the right opportunities now, whether value, miss priced or distressed particularly with institutions running for the hills after credit crunch losses.”

Sovereign funds are something the Rowland family office has dealings with so I ask for his view of them . “I think we’d be in a lot more trouble with out them so on balance they are good. They support the market, move quickly and are a lot smarter than they were thirty years ago.”

The vision for the Blackfish fund Management business is to build a brand owned by the family  which Jonathan plans to build into Fleming family office proportions. “With five to ten years we might do that.” He says. “We plan to support people, like Toby, who have interesting strategies to help us build a significant business.”

Of market conditions Jonathan shares the family view. “We are cautious but are starting to see close to the bottom of the market in some sectors. There are already some more interesting valuations for instance with British Land which we may look to buy as well as banking stocks. I think commercial property still has a long way to drop though and residential won’t see confidence back until well into 2009.”
David Rowland, his father, who is reported to have made his first million at twenty three, is still very active in the business and sits as Chairman although he has closed down all his former business operations.

The driver is to build the Rowland family brand rather that just focusing on individual successes.” He adds that as well as his father, he admires people who take risks like entrepreneurs.

Forward motion sees the family office looking at China, South America and the Middle East for investment opportunities but Jonathan says he isn’t jumping on planes all the time. “I need a reason to go somewhere these days and want my trip to pay for itself. I’m not interested in speculative trips.”

And with nearly all his dreams come true at thirty three, is retirement at thirty five an option? I have no plans to retire.” He says. “But I might take a bit of time out for a career break.”

Article re published from Citywealth from February 2008.

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