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Putting off the writs

Ah – the notoriously tricky second column. So I suppose now would be as good a time as any to dwell on the situation at New Star, where plans are, of course, afoot to address the company’s not insubstantial debt burden.

If these plans are agreed, the company will be left with some stability, a syndicate of banks will be left in control and the current shareholders will be left in no doubt that the value of equity investments really can go down as well as up.

No – I’ve read that paragraph six times now an I think it’s fair enough. Certainly there’s nothing for anyone to take offence at, is there? Is there? Right, I’ve read the paragraph seven times now and I’m definitely going with it – but, at this rate, I won’t have finished this column remotely ahead of my deadline and you’re currently staring at a blank space.

It’s strange the paranoia that the prospect of a comment piece about New Star can induce – and I’m sure I’m not the only person who feels this way. One slip in the next few hundred words an I certainly wouldn’t be the first columnist to receive a visit from the writ fairy.

Six years ago, I was writing about New Star for another magazine and made some crack about the company’s logo. I was rather taken aback when the editor asked me to remove it – after all, it wasn’t a very good joke so where was the harm? As it happens, I could argue that my comment has been rather borne out by events and, anyway, a few months down the line, the magazine ended up receiving a writ from New Star’s lawyers over another, unconnected article.

So really one just has to plough on, I reckon, which leads me to the various reactions I’ve received at industry functions over the last week after venturing the opinion that this proposed deal was A Good Thing because the financial services industry would be a poorer place without New Star.

In keeping with my earlier comments, I have chosen my words carefully when I say “poorer place”, although here I’m not so much referring to how New Star has, over its short life and in various ways, enriched advisers through sales, investors through performance, publications through advertising or shareholders through…well, you take my general point.

Whatever else one might say – or not – about New Star, it has always been very performance-focused and rarely shirked from removing managers thought not to be doing the business. I would certainly hope its situation does not signal a shift to the benchmark-hugging, jobs-worth school of fund management.

More than that, however, I have been more concerned about how even a slightly messy end for New Star might affect the reputation of the investment industry as a whole. After all, over the last eight years, it has been one of the biggest-selling and most visible fund groups among retail punters and it is not going to take much more bad news from the financial sector to turn that particular group off equities for good.

Tellingly, at a more institutional-oriented function, that view was greeted with looks suggesting that I had already hit the champagne a little too hard. Yet the following night, when chatting with a more retail-focused group of fund managers and advisers, my opinion was met with broad agreement.

Indeed, the only concern raised about the deal was over the potential recipients of the pot of preference shares set aside for “certain employees”, with the prevailing view being that not every single fund manager at New Star could really claim to have covered themselves in glory over the last year or two.

Yup – you bet I took my time over that sentence and in fact I’ve just gone back and reread this whole piece one more time. All in all, and not wishing to tempt fate, I’d feel rather hard done by were I to receive anything through the post from New Star this Christmas that wasn’t a card – most probably designed around the company’s charming logo. Still, if the editor of this splendid publication disagrees with my judgement, you may currently be staring at a blank space after all.

Julian Marr is editorial director of


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