Small cap fund Adam Smith may close doors

Small-caps manager Adam Smith Asset Management has become the latest local investment firm to consider closing its doors, amid a broader shake-out in the industry.

Sources told DataRoom those at the helm of Adam Smith, which was founded in 2003 by investments stalwart Peter Mouatt, were considering winding down its operations.

The Sydney-based boutique firm is said to manage hundreds of millions of dollars and has suffered, like some of its peers, from the loss of institutional mandates and fierce competition for investment dollars.

If Adam Smith does go down that path it will add to a spate of firms that have opted to do the same in recent times. The boutique was named after free markets guru Adam Smith, often dubbed the father of modern economics.

Already this year, another well-known boutique, JCP Investment Partners, has flagged a wind-down, while Janus Henderson is in the process of closing its Australian equities funds.

Commonwealth Bank’s Colonial has pulled back from its core Australian shares fund and last year agreed to sell its global asset management unit, while Concise Asset Management and Arnhem Investment Management have both shut their doors.

The pressure in funds management is taking many forms, including the downward push on fees, a growing trend for firms to insource investment management and a wholesale shift to passively managed funds.

Sharemarket volatility in the latter half of 2018 put the funds management industry locally under even more pressure as performance at many firms floundered.

Whichever way Adam Smith decides to go, the overwhelming view among domestic fund managers is that the shake-out has a way to go.

Elsewhere, fund managers are expected to meet the management of Victory Offices next week in what is one of the latest companies making efforts to head to the boards.

Overseeing the initial public offering of the business that operates in Australia’s flexible workspace industry is Ord Minnett.

Victory was only started in 2013 and has 19 locations across the east coast, providing comprehensive serviced offering packages and co-working space as an alternative to traditional space. The company hopes to raise between $25 million and $30m and its market value is yet to be determined.

The company’s institutional book build is scheduled for May 9 and it will list on a normal settlement basis on June 11.

For the 2019 financial year, Victory is expected to generate $45m of revenue, $9.8m of net profit and $31.8m of earnings before interest, tax, depreciation and amortisation.