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Jim Pettigrew, finance director, Ashmore Group

Jim Pettigrew likes to be boring. Boring is good. The more boring, the
better. “I am a very cautious man, being a Scottish chartered accountant – and
from the east coast, as well,” the recently installed FD of Ashmore Group tells

That much we already knew: when we interviewed Pettigrew in mid-2003 he was
the finance director of ICAP, an inter-dealer broker that had grown to the point
where it was handling $500bn (£255bn) a day and yet he managed to make the job
sound strictly textbook: “You just have to have resilient systems that are
scalable…” he told us then.

Such comments belie his achievements at ICAP. Having joined a £200m market
cap business called Garban in 1999 and then merged it with ICAP, he helped take
the combined business to a valuation of around £3bn – enough to get it in the
FTSE-100. Along the way, Pettigrew had to rebuild the financial systems when the
business’s New York offices were destroyed in the terrorist attack on the World
Trade Center. (Fortunately, ICAP suffered just a single loss of life;
tragically, its biggest rival, Cantor Fitzgerald, was almost wiped out with the
loss of hundreds.)

Rapid growth, a big City merger, a harrowing crisis – it all sounds far from
boring, even if one might have wished for less excitement rather than have to
work through the trauma of 9/11. And yet, as Pettigrew explains it from the
Covent Garden office he joined in the summer of 2006, the first thing from his
ICAP days that he wants to bring to Ashmore is his “boring reputation” for
giving the City “no nasty surprises”.

Over the years, investors got to know Pettigrew as someone who explains how
the dynamics of the business work. Then, whatever he tells the City that the
business is going to do, it does. “It’s just what we said was going to happen,”
he says. “Maybe for some people that’s a little bit unexciting but, in a strange
perverse way, that’s actually what excites me. I’m not a great one for standing
on rooftops and saying how wonderful things are. I prefer to get it right and
then let people observe for themselves.”

Ashmore is a fund management group with a specialisation in emerging markets
debt. Led by chief executive Mark Coombs, the business was a management buyout
from Australian bank ANZ in 1999, when it had just $500m of client money to look
after. Today it has more than $23bn of assets under management and, after its
October initial public offering on the London market, it has a market
capitalisation of £1.6bn – enough to put it high up the FTSE-250. So, like ICAP,
whose chief executive Michael Spencer is one of the City’s leading lights,
Ashmore is another fast-growing money business led by a highly entrepreneurial –
and almost impossibly wealthy – individual: Spencer’s 22% stake in his business
is worth around £635m, while Coombs trousered £170m when Ashmore floated and
still has shares worth around £720m.

New challenge
So why the move? “I’d done it for eight years,” Pettigrew explains, “or just
coming up to eight years. They were fantastic, successful years, on any
criteria. And it had been very rewarding in terms of business experience and
helping to build up a business. But I think all good things have to come to an
end at some point and I think eight years is a pretty decent time. I just felt a
need for a new challenge and, to be honest, I think a lot of people don’t do
that. It’s very easy to not do that. Sometimes you get into a comfort zone.
There comes a point where I just felt the easy option would be for me to stay. I
think sometimes in life you just have to do the difficult things.”

A difficult thing indeed awaited. Pettigrew joined Ashmore in time to help
with the company’s flotation. There’s nothing quite like having to help prepare
an IPO prospectus while trying to get your feet under the table in a new
business. “It was a baptism of fire,” Pettigrew admits, explaining that his
responsibilities ranged from the fine detail in the 180-page document, which
was published three months after he joined, through to explaining it all to the
analysts at the City roadshows. “Coming into a business, you’ve got to get to
grips with the ropes very quickly and get on with it, and so I actually found it
a most invigorating experience – a tough one, as well,” he says. Sixteen-hour
days? “It was very demanding, yes, but if you want to do things properly, you’ve
got to put in the effort. So it was very much full-on from the day I joined.”

Starting on a high and then getting back to the boring business of delivering
results? Up to a point, perhaps. “Ashmore is entering a new phase, clearly, and
the IPO is just one step along the great road forwards. If I can bring a bit of
my skills to the thing in terms of making sure it operates as a plc – I know it
doesn’t sound very exciting, but it’s such an important part,” he says. “I think
the focus is very much now on really bedding down plc disciplines.

“The business has been a wonderful, successful private company as you know,
and so clearly I’m looking at just making sure we get into the old routine of
making it very clear what we’re trying to do, making it very clear the financial
progress that the business is making, making sure everyone understands it and
just keeping in a very boring way delivering on what we said. Great
entrepreneurial spirit, but all controlled and a real value creator.

“At ICAP, the real thing that made me excited was trying to get the
entrepreneurial spirit and vision of Michael Spencer within a controlled
environment. If you keep that balance right, you’re away to the races. So here
at Ashmore, again, it’s all about getting that balance right. I think that’s the
interesting bit of these businesses.”

Growth plans
The business currently employs barely 50 staff, making it practically an SME
compared with ICAP’s 3,200. And Pettigrew is at pains to emphasise that the IPO
is not the culmination of the company’s ambitions, but simply one milestone
along the way. There are some fairly aggressive growth plans on the table, “but
in no shape or form are we thinking we’re going to be 200 people if we make it
to next Christmas,” he insists. “It’s all about thinking very carefully about
how you bring new people in: do they fit in the culture and can you fit in this
team base? At the end of the day, it’s like everything in business. Imagine
you’re an accountant: you pore over numbers, but you’ve got to somehow or other
find the magical non-financial ingredients that really make it.”

Ashmore, like ICAP, is a money business and, also like ICAP, it’s very much a
people business. FDs whose share prices have taken a battering from so-called
star analysts or star fund managers when they’ve turned bearish will be
interested to hear that Ashmore dispenses with the concept of ‘big name’ star
fund managers.

“It’s an investment process – very much about a team-based approach, if you
will, and looking top-down. This is a competitive differentiator. They [our
investment team] are looking at country risk and the liquidity of their
investments within that country, rather than a real detail, bottom-up approach.
You’ve not got one star fund manager managing a fund and not interacting with
anyone else,” he explains. “That’s just the exact opposite end of the spectrum
from the way this business is.”

The fund managers may not be regarded as ‘stars’, but their investment
performance has been stellar. They have had the collective courage to make a
commitment to emerging markets – remember that the Ashmore buyout from ANZ took
place within months of the collapse of the rouble and of the southeast Asian
‘tiger economies’ – and their success has won them more mandates and
institutional funds to invest. “If you rewind 10 years, other people would not
give much time to emerging markets,” Pettigrew says. “People are now actually
past the stage of thinking, ‘Oh, I don’t like emerging markets’. They suddenly
realise the importance of emerging markets in terms of the overall investment

Appetite for risk
But what has prompted investors to increase their risk appetite? “This is an
interesting period, in terms of economics,” he observes. “There’s a massive
amount of money out there to be managed, to generate a return. There are a lot
of people looking for the right homes for it and there’s a general situation
developing at the moment where people feel that the traditional sources of
investment aren’t the all-time answer. They’re looking at pension funds, they’re
looking at the liability issue and they’re looking at their assets. And what
we’re finding is that people are looking at portfolio theory and other things,
which point to a certain amount of diversification of your investment into
different things – including emerging markets.

“Many now believe there are better and more attractive returns [to be had]
over the medium to longer term. That’s not to say that you’re not going to get
some blip, but we’re talking here about medium and long-term trends, which are
starting to really point towards this asset class.”

The bulk of Ashmore’s investments are in dollar-denominated sovereign debt,
but that’s a historical thing as it used to be that emerging market states
couldn’t get access to the international capital markets unless they were
borrowing hard currencies. “But as this asset class develops and grows, they can
then start to issue local currency debt, which is seen by us as being the next
real growth area,” Pettigrew explains.

All in the pricing
In fact, Pettigrew downplays the risks altogether. Never mind what portfolio
theory has to say about diversification of risk, he doesn’t even think that the
dangers are as great as some people think. His team would argue, he says, that
it’s all about the pricing of risk: “They would say that risk is more appr
opriately priced into these emerging economies than it is at the moment in some
of the US and UK markets. So, they would say, in that context, it’s a less risky
prospect. Another example is Italian bonds. They’re probably more risky than a
lot of the higher grade emerging market bonds, but it’s not priced in because
everyone thinks it’s a G7 country; it’s fine. Nothing can possibly go wrong…”

So there you have it: Pettigrew is busily putting in plc disciplines into a
team-based business that invests client money into emerging markets debt because
portfolio theory says that that reduces the risk and, anyway, the pricing makes
it less risky than some allegedly investment grade bonds. But there’s nothing
boring about what Pettigrew thinks he’s found at Ashmore: “The thing that
excited me, and the reason why I came, is finding value in businesses that
others don’t see right at that point in time, and I like to try and be part of
unlocking that value.” The share price chart on this page is going to look very
different in a few years – and there will be nothing boring about that.

Curriculum Vitae
Name Jim Pettigrew
Age 43
Qualifications LLB, DipAcc, CA, MCT

2006 –
Chief operating and financial officer, Ashmore Group plc
1999-2006 Group FD, ICAP (announced intention to leave ICAP in
November 2005)
1988-1998 Sedgwick Group: financial services FD, group
treasurer, group FC, group taxation controller, deputy FD
1986-1988 Group chief accountant, J Fleming
1984-1986 Company secretary, Bell & Sime
1980-1984 Ernst & Young

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