The boss of Britain’s biggest fund manager said there was a growing desire to invest in the UK that would not diminish because of the unrest in towns across the country.
António Simões, chief executive of Legal & General, which has £1.1 trillion of assets under management, said talks he had held with investors in recent weeks suggested there was “pent-up demand” to invest in Britain.
He has held more than 85 meetings with investors in the UK, the United States and Asia since setting out his strategy for the life insurance and savings giant on June 12.
“I think investors are quite keen to invest in the UK,” he said, adding that they were attracted by the “fundamentals of the UK economy”, including the country’s low unemployment and an inflation rate that has fallen back to the Bank of England’s target of 2 per cent.
Asked whether the riots that have gripped some British towns and cities over the past week could deter overseas investors, he said: “Most investors invest on the basis of the fundamentals of the economy so I don’t see a correlation there.”
The disorder has created a difficult backdrop for Rachel Reeves, the chancellor, who is visiting New York and Toronto this week to hold talks with big investors, including Canada’s giant pension funds, to encourage investment in Britain.
Reeves and the new government have made kick-starting economic growth central to their plans for Britain and are pursuing measures to bolster gross domestic product including an overhaul of planning regulations and boosting domestic investment by UK pension funds.
António Simões took over as chief executive of Legal & General at the start of this year
CHRIS RATCLIFFE/BLOOMBERG/GETTY IMAGES
The government’s mission should benefit L&G, according to Simões, who was speaking as the group reported first-half results. He said that “everything we’ve seen” from the new government was encouraging and was “very aligned with our own strategy”.
L&G is a financial services giant with businesses ranging from life insurance and pensions to housebuilding, as well as an asset management division that is the biggest in the UK and one of the largest in Europe.
However, its share price has moved sideways in recent years and Simões, a former banker who replaced Sir Nigel Wilson, L&G’s previous long-serving boss, at the start of the year, is under pressure to turbo-charge the group’s performance.
He outlined his strategy two months ago when he set out plans to simplify the sprawling group, offload non-core assets such as Cala, the housebuilder, and return £200 million to shareholders through a share buyback.
L&G further boosted cash returns to investors on Wednesday by increasing its interim dividend by 5 per cent to 6p a share. A 1 per cent rise in core operating profits to £849 million in the six months to the end of June also beat analyst expectations for £834 million and Simões said the business was working in line with his strategy.
“We’ve shown good momentum in a short period of time,” he said. Analysts at JPMorgan, the investment bank, said the insurer’s results were “strong”. Shares in the group closed up 2¾p, or 1.3 per cent, at 219½p on Wednesday.
Part of Simões’s overhaul includes merging Legal & General Investment Management, its underperforming asset management arm, with L&G Capital, which focuses on infrastructure and private assets. Assets under management at the newly created division slipped by 3 per cent to £1.1 trillion.
