Guinness family office opens up
When the Guinness brewing business was floated successfully for £5m on the London stock market in 1886, Edward Guinness, the first Earl of Iveagh, decided to set up a family investment office to oversee the management of the proceeds.
Four generations on and another Edward Guinness, the fourth Earl of Iveagh, has decided to turn the family’s investment office into a business. Iveagh, which calls itself a “private investment house”, has been open to outsiders for two years, although it declines to disclose how successful it has been in attracting non-family money.
In August, the firm cast its net wider with the launch of Iveagh Wealth, a multi-asset fund open to anyone with £50,000 or more to invest. The firm manages the assets of the 38-year-old Lord Iveagh and his younger brother Rory, and looks after much of the wealth of their cousins, Henry and Georgina Channon.
All four have offices in the converted 17th century town house off St James’s Park that serves as Iveagh’s headquarters.
Lord Iveagh’s move to turn his family’s investment office into a business is part of a growing trend towards multi-family offices in Europe.
Research by Cerulli Associates this year found traditional wealth managers are losing out to multi-family offices in the battle for ultra-high net worth clients – those with €30m or more to invest.
Like Iveagh, most multi-family offices start life as the investment operations of single families. Clubbing together with other, like-minded families enables them to share costs, increase buying power and end up with a more professional asset management capability – or so the theory goes. The next step is turn this expense into a potential profit centre.
Iveagh’s move to become a more mainstream wealth manager is less common, although in the UK comparisons could be drawn with the Rothschild family’s investment trust, RIT Capital, which has around £2bn of assets under management, and the Cayzer family’s Caledonia investments.
Iveagh was set up in 2006, a year after the original, 120-year-old Guinness family office was disbanded following a series of disagreements on how it should be run. When it closed, the office was serving 75 family members and 140 trusts.
“Some family members wanted to use it for a host of other interests not necessarily connected to finance and this led to disputes,” says Lord Iveagh.
“The new family office was to be about investment and little else.”
Iveagh’s fund management team includes former JP Morgan private banker Chris Wyllie, who heads portfolio management, and John Ricciardi, former head of asset allocation at Alliance Bernstein.
Shortly after launch, the new family office merged with Arundel Partners, a fund of hedge funds manager, doubling its assets under management.
Paul Ross, Arundel’s chief executive, became head of the new operation. Using a top-down asset allocation model, Iveagh money is allocated to a host of investment classes including hedge funds and private equity.
Managers are then selected to maximize returns. The firm has not escaped unscathed from the market crisis. Earlier this year, it emerged that one of Iveagh’s investment vehicles lost 7% of its value from an investment in Peloton Partners, the collapsed US hedge fund.
Lord Iveagh shrugs off the loss and points out that in recent times even the smartest of investors have been caught out. He says he wants to make sure Iveagh’s growth is managed carefully and that new investors need to have the same values as the founding family.
“We have to agree on practical goals and quality of service can’t suffer by bringing in too many investors.”
The decision to launch Iveagh Wealth – essentially a retail offering – might seem at odds with these goals. A London-based analyst also suggests the firm may struggle to attract clients: “In the current environment, investors will be looking for managers with more of a track record.”
Lord Iveagh’s other interests include a 23,000 acre estate in Suffolk which boasts the biggest onion farm in the UK and various board positions with worthy causes. He says his time spent at Iveagh varies from as little as a day a month to three days a week if required.
It means he has little opportunity to enjoy a pint of his family’s eponymous brew. “I love the drink,” he says, “but running the ever-growing family businesses doesn’t give me much time to go down to the local pub.”
Iveagh Wealth
Iveagh Wealth is aiming to generate returns of 9.5% a year by investing across multiple assets including hedge funds, private equity, commodities, equities, bonds and cash.
It will invest almost entirely in listed securities. It will use a quarterly asset allocation rebalancing to reduce risk exposures through the use of exchanged-traded funds and government bonds.
The strategy on which the fund is based returned 8.5% a year on average from the start of 2001 to the end of June and returned -1.5% in the first six months of this year.
The fund will be co-managed by the Iveagh Investment Committee.
The managers looking after it will be John Ricciardi, a former head of global asset allocation at Alliance Bernstein, who founded advisory partnership RPMH in 2006, and Cambiz Alikhani, a former debt trader and head of fixed income sales at Morgan Stanley, who joined Iveagh in 2002.
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