By Simon Jessop
LONDON (Reuters) - Activist investor Primestone Capital wrote to the board of St James 's Place (L:SJP) on Monday calling for a broad overhaul of the British wealth manager's cost base to improve shareholder returns.
Primestone's open letter said the share price of St James's Place (SJP) failed to reflect a doubling of client assets over the last five years and had been held back by "a bloated organisational structure", "excessive hiring", "excessive pay" and weak performance at its Asia unit.
Despite funds under management growing 18% a year since 2015, the share price has fallen 7% and total shareholder returns were 2% annualised, Primestone said.
Shares in SJP, which will give its latest trading update on Tuesday, were flat on Monday in line with the broader market.
The London-based fund, founded by former leading private equity dealmakers at The Carlyle Group (NASDAQ:CG), said it now owned 1.2% of St James's Place stock and was going public after failing to get the board to address its concerns "head on".
"SJP has delivered tremendous value for clients, advisers, employees and management … but not so much for shareholders over the last five years," Primestone partners Benoît Colas and Damian Hahnloser said in the letter.
"It is time for the company to address its high cost base and change its culture in order to deliver its full value-creation potential to long-neglected owners."
Primestone called on management to conduct an in-depth cost review and set "ambitious" targets to bring its cost base to the same level as best-in-class peers. It called for the plan to be presented and discussed with investors, and for the company to regularly report on its progress.
It also called for SJP to improve its financial communications by more clearly reporting on revenues, costs, margins and important Key Performance Indicators.
SJP was not immediately available for comment.