Emerging markets manager suffers assets fall
Charlemagne Capital, a specialist emerging-markets fund manager, suffered an 11.6% drop in assets under management during the first half and a 29% decline in operating profits, which it blamed on adverse market conditions.
The profits fall was primarily due to an 80% decline in the company's performance fee revenue, which fell to $3.3m (€2.3m). During the six months to June 30 2007, the company made $16.4m from such fees, which are levied only when performance targets are met.
Thanks to the revenues drop, Charlemagne said it would not pay a special dividend at the half-year stage. The shares were down 0.25p, or 0.75%, to 33.25p as of 10:16 GMT this morning.
Nevertheless, management fee revenues were 32% higher, at $25.1m, than for the first half of last year. Such fees are charged at a flat rate on assets, and despite the fall in the first half, Charlemagne still had more money under management at June 30 than it did on the same date the year before.
Nitin Arora, an equity analyst at the boutique investment bank Noble, sounded a note of further scepticism, however.
He said: "Whilst there is little information on trading to date in today’s results, the data from Charlemagne’s website suggests that in the last two months FUM has declined by 22% from $5.7bn on June 30 to $4.46bn on August 31.
"Yesterday we changed our stance to Negative on the back of deteriorating investment performance and accelerating outflows." Noble recommends investors avoid the stock.
Charlemagne said it had continued to win new business in the first half of this year, attracting "seven major new institutional investors" who have put a combined $357m with the company.
The fund manager has also launched new funds covering Brazil and the regions of Middle East and North Africa.
Jayne Sutcliffe, chief executive, said in a statement: "In a difficult period for the asset management industry Charlemagne has increased net management fee revenues year on year and we continue to strengthen and build the business."
--write mcobley@efinancialnews.com
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