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Investment house chief 'disturbingly optimistic'

SCOTTISH investment house Edinburgh Partners enjoyed a further advance in revenues, profits and funds under management in its last financial year.

POSITIVE OUTLOOK: Sandy Nairn, chief executive of Edinburgh Partners. Picture:  Steve Cox
POSITIVE OUTLOOK: Sandy Nairn, chief executive of Edinburgh Partners. Picture: Steve Cox

Chief executive Sandy Nairn has declared himself "disturbingly optimistic" about the outlook for global equities.

Mr Nairn also highlighted his view that the Scottish fund management sector was in good shape, and noted the success of investment houses including fellow Edinburgh-based outfits Baillie Gifford and Walter Scott.

Accounts which are being filed with Companies House will show Edinburgh Partners achieved a rise in revenues to £45.8 million in its last financial year to the end of February 2012, from £40.5m in the prior 12 months.

Pre-tax profits increased from £21.8m to £25.9m, and Edinburgh Partners' capital and reserves rose from £24.9m to £38.9m during the year to February 2012.

Average funds under management in the year to February 2012 amounted to £9.19bn, up from £8.18bn in the prior 12 months.

Edinburgh Partners notes that the increase in revenue is "attributable to the increase in average funds under management".

It adds that its directors "remain confident in the long-term outlook for the company".

Mr Nairn said: "We have continued to make good progress. In terms of the (year to February) 2012 results, they probably flatter us a little bit."

The investment house, which is chaired by minority shareholder and Edinburgh merchant banker Sir Angus Grossart, manages funds almost exclusively on behalf of institutional investors. It has clients in Asia, Australasia, North America, the UK, and mainland Europe.

Edinburgh Partners has grown into one of Scotland's major fund management houses from a standing start in 2003, when Mr Nairn quit Scottish Widows Investment Partnership (SWIP) to set up the business. He was joined by several of his former colleagues from SWIP.

Asked for his view on the outlook for global stock markets, Mr Nairn replied: "I feel disturbingly optimistic, both on an absolute and relative basis. On an absolute basis, I think equities remain fairish value. Bonds look very expensive.

"That is fairish value on equities on a reasonably subdued economic outlook. It is not suggesting the whole economy breaks into song."

He added: "The probability of a financial sector collapse, driven by a eurozone disintegration, is receding. It is still there, but it is receding."

Mr Nairn signalled a belief that some people were over-reacting to a slowdown in Chinese growth. He said that, with China growing at 5% to 6% rather than 8% to 9%, the global economy "ticks along" between 2% and 3%, and between 2% and 2.5% initially.

Commenting on the state of Scottish fund management sector, Mr Nairn said: "The fund management sector in Scotland, to me, looks in reasonably good health. We have some quality companies out there who are doing reasonably well. We have benefited from that."

He added: "The more good reputations out there, the better for all of us, and there are some very good reputations out there, which is great."

Edinburgh Partners had an average of 62 employees during the year to February 2012, compared with 63 in the prior period.

The investment house's employees, including Mr Nairn, own the majority of Edinburgh Partners.

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