Schroders changes private markets focus as part of turnaround plans
Schroders is planning to divest non-core parts of its private markets business and focus on several key areas including securitised credit, as part of the asset manager’s turnaround plan.
Schroders Capital which has £70.1bn of assets under management, will invest in and scale its higher-returning, specialist capabilities, the asset manager said in a strategy update.
It has £500m for seed and co-investment from its balance sheet and is planning to build a 40-strong specialist sales team to support its growth plans.
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Securitised credit will be a key focus, alongside renewable energy infrastructure and “growth sectors” in real estate such as hospitality, future workspaces and logistics.
Within private equity it will focus on venture capital and SME buyout solutions.
“To create capacity, we will divest from smaller, non-core capabilities where we do not see the required levels of future client demand,” the firm said.
“We will drive flows into our targeted growth capabilities by building a specialist sales team, with 40 dedicated individuals. Finally, we will continue to leverage the group’s strong position in the wealth segment, and explore external partnerships which open pathways to long-term sustainable capital flow, for example, with insurance companies and banks.”
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It is targeting cumulative net new business (NNB) of £20bn between 2025 and 2027.
Schroders Capital raised £10.8bn last year, up from £9.3bn in 2023, with more than half of this capital generated by the private debt and credit alternatives business.
Schroders Capital NNB was flat year-on-year at £4.5bn, while net operating revenue grew to £426.7m from £422.8m.
The Schroders Capital update comes as part of the asset management group’s wider three-year plan to save costs and turn around its fortunes, alongside its annual results.
The FTSE 100 asset manager is planning to deliver £150m of annualised cost savings over the next three years, stabilise its revenues in public markets and achieve a NNB rate in wealth management of five to seven per cent of opening assets under management per annum.
“Today, we are setting out a clear plan to return to profitable growth, with ambitious new three-year targets,” said group chief executive Richard Oldfield.
“We will re-focus on our considerable areas of strength and have a firm grip on our challenges. Our transformation plan is underway, and will benefit not just our shareholders, but also our people and, most importantly, our clients. We have a strong balance sheet and will deploy our resources and capital rigorously.
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“In an era of highly-concentrated and volatile markets, our active, forward-thinking and agile approach optimises the risk-return-cost equation. We are unashamed advocates of the power of active management to address our clients’ complex needs.”
Schroders Group reported a three per cent drop in operating profit to £640.5m, which it attributed to higher operating expenses, lower performance fees and reduced returns from joint ventures and associates.
However, pre-tax profits rose by 14 per cent to £588.1m.
Net operating revenue ticked up by two per cent to £2,294.3m, boosted by a stronger performance in its wealth management division and Schroders Capital.
Overall assets under management grew by four per cent to £778.7bn.
