Creating The Next Generation Of Fund Managers

Editor Anver Versi visited the London offices of FM Capital Partners, an atypical hedge fund to observe their unique training programme for aspiring fund managers.

KNIGHTSBRIDGE, AT THE HEART OF LONDON’S West End, is probably the world’s most glamorous location with the ultimate department store, Harrods, and other commercial and cultural icons within touching distance of each other.

Tucked away from the high fashion of the streets below, are the offices of FM Capital Partners (FMCP), an asset management company with its roots in Libya. Inside there is the quiet hum of computers as traders track share prices and make their bids. FMCP is largely a hedge fund handling around $1.5bn through its various funds. But this is where its resemblance to other hedge funds ends.

One part of the offices is a ‘school’ where six Libyan students are delving into the intricacies and mysteries of high finance and investment. Another section is devoted to the Africa Research team which tracks African markets and looks for investment opportunities.

“What we are about is not just giving back to our clients healthy returns on their investment but in transferring knowledge so that we can create a new generation of people who will emerge with a very sound level of technical financial knowledge,” said Frederic Marino, the CEO.

“When they finish their five-year course, they will return to their country and be in a position to handle complex investment issues and become top class fund managers.” The students, most of whom are married and have their families with them in London, told me that the intensive courses in London were well beyond their expectations. “What we are learning here is gold dust,” one of them said.

When I was given a glimpse of the syllabus and some of the course textbooks, I blanched at what seemed an unrelieved wodge of figures, equations and graphs. This was a far cry from the usual stereotype of stock traders as a hyperactive bunch screaming at the top of their lungs.

However, in addition to working their way through a demanding syllabus, the students also listen to lectures from a variety of academic and professional experts and best of all, they get hands-on experience working with the traders on the same floor. The traders themselves were a cosmopolitan group and I was pleased to see a Ghanaian and Nigerian among them.

Olivier Vojetta, head of Global Market Research, a vital cog in the FM machine, and was a funds’ derivatives trader at Dresdner Kleinwort in London before joining FM more than two years ago. He leads a team of three analysts in London who get feeds from 15 professionals on the ground across Africa. “Our team is made up of regional, thematic and technical experts from various African countries,” he says. The team produces a daily Africa Markets Newsletter which provides insights into important developments on the continent. It also provides regular sector and country reports to alert investors to the business climate and opportunities that are increasingly cropping up on the continent. “We can leverage our network on the continent to carry out in-depth due diligence investigations,” adds Olivier.

Sovereign wealth

The genesis of FMCP goes back to the heydays of the Muammar Gadaffi regime. In 2006, with the country’s oil coffers full to bursting, the $8bn sovereign wealth fund, Libya Africa Investment Portfolio, was set up as an umbrella organisation to oversea the country’s often sizeable investments in Africa.

Libya, in tandem with other major oil producers like Norway, Abu Dhabi, Kuwait and Qatar, had created sovereign wealth funds in an effort to earn higher returns from investments than they were likely to obtain by putting their money in the bank. But managing investments of this scale is a complex and highly specialised undertaking.

There were few, if any, locals, who had the knowledge, the experience and the know-how to handle assets of this magnitude. Part of Gadaffi’s vision was to create a generation of financial experts over a short period of time. He envisaged 200 core experts in 10 years. The upshot was a decision to create FMCP in London as a hedge fund that would also provide first-class theoretical and practical training to a cadre of Libyan executives.

The fund was set up in 2009 from scratch by Aurelian Bessot, who had 15 years experience in investment banks and Frederic Marino, whose last posting had been with J P Morgan as head of Alternative Investment Emerging Market Group. Libya Africa Investment Portfolio holds 55% of the shares and the rest is owned by Frederic Marino and Aurelien Bessot. Six Libyans were selected to attend the first course.

For Marino and his team, which has now grown to 45, the world came crashing down during the revolution in Libya and Gadaffi’s subsequent murder in the streets of Tripoli. Libya’s assets were frozen but after a meeting with the US Office of Foreign Assets Control, FMCP was given the licence to continue trading but with restrictions on the movement of money into and out of Libya. While the revolution rocked FMCP individuals in London, the firm has continued undaunted. Marino is pleased with the progress that the Libyan students are making and satisfied with the performance of its various hedge funds. He says he would like to form partnerships with other African countries, especially those that either have set up or intend to set up sovereign wealth funds and would like to provide training to more aspiring African fund managers.

Marino is very bullish about Africa. “We want to replicate what we did for Libya in other parts of Africa, train top class fund managers. We want to help countries set up sovereign funds – ‘in-out’ take assets out to invest internationally; ‘out-in’ promote African companies to raise money and invest in the rest of Africa. We want to create research teams in Africa – there is so little solid information coming out of the continent. We want to set up brokerages selling African shares to the world from offices in New York, Hong Kong and London. We want to help set up investment banks to provide loans to African companies and launch international IPOs for African corporates.”

The need for FMCB’s training programme has highlighted one of the most glaring deficits in the African financial and investment worlds – the dearth of expertise in managing funds and trading on an international scale. This lack of capacity has meant that Africa’s capital markets and the continent’s ability to play meaningfully on the international stage has been severely stunted. It has also meant that the deployment of its windfall income, from oil and other commodities, has largely been wasteful. This is not an arena for amateur dabblers; it takes hard graft to understand the underpinning of global markets and experience to be able to interpret them profitably.

It seems to me that FMCP has laid a very solid foundation both in terms of international trading and training and that it will be a pity if other African countries do not take the opportunity to avail themselves of the expertise on offer.