Formica steps in to right the Magellan ship

The one-time market darling has lured an Australian high flier back home from London in a bid to resurrect the firm’s fortunes.

Magellan’s newly appointed chair, Andrew Formica. Picture: Britta Campion

Like many Australians living overseas, a rethink of life and ambition during the Covid-19 pandemic made Andrew Formica want to return home from London. Now he faces the hefty challenge of trying to return former market darling Magellan Financial Group to glory.

Formica faced the stark realisation during the pandemic that his parents and extended family were not just 16,985km away – they were unreachable during border closures.

“We had always felt we could come back and travel the world freely and Covid showed us we couldn’t,” says Formica. “Having been abroad 27 years, I didn’t want to be abroad any longer and it coincided with the view it was right for me to take a step back from executive roles.”

And so the then-chief executive of Jupiter Fund Management left the £55.3bn ($110bn) London-based firm suddenly after two years in the role, declaring he would like to spend some time on the beach.

Now the 52-year-old has been appointed the chairman of Magellan – a firm that in its heyday had funds under management of $100bn with a rock star founder and chief executive Hamish Douglass at the helm. It now has just $39.2bn of funds – and falling – under its control.

Douglass had made bad bets on US tech stocks, but the real clincher was the dramas in his personal life, specifically his shock separation from his wife and obfuscation about whether the seemingly solid couple would retain their significant Magellan shareholdings. Despite an early yes, the answer was soon no.

Co-founder Chris Mackay stepped into the breach briefly and then a number of key investment professionals were replaced. The fund outflows escalated.

Now the firm is looking like it’s actually positioned for a proper reset.

The move to demote Hamish McLennan from chairman to deputy after only a year and a half surprised the market but McLennan says he only ever stepped up because the company was in crisis.

“I sought out Andrew as a replacement,” says McLennan. “The board had asked me to step in as chairman – and I felt like it was my obligation to try and steady the ship in difficult circumstances. It was always temporary on my side.”

McLennan will be busy enough. Apart from remaining on as deputy chair at Magellan, he is also the chair of Australian Rugby Union along with digital real estate giant REA Group, owned by News Corp, the publisher of The Australian.

Formica’s appointment comes amid a management reshuffle afters the company announced earnings that were shy of market expectations. The Magellan share price skyrocketed on Friday on news of the reshuffle and a special dividend was announced.

Chief executive and chief investment officer David George, who started at Magellan in the wake of Mr Douglass’s departure, relinquished his equity job on Friday and current deputy Gerald Stack was promoted to head of ­investments.

With his raft of experience in funds management – Formica was at Janus Henderson Group before Jupiter – will it be a challenge to not roll his sleeves up and run Magellan as an executive?

The new chairman says he “understands and respects the difference between management and the board”. Still, Formica will not be taking on any other board roles.

That might also leave time for time on the beach with his wife.