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City Financial files notice to appoint administrators

City Financial files notice to appoint administrators

City Financial has filed a notice of its intention to appoint administrators after a difficult 2018.    

According to court documents seen by Reuters, City Financial chief Robert Hain said the firm had taken the protective measure in the event of it becoming 'unable to pay its debts'. 

In a subsequent email to the news agency, Hain stressed the firm is not in administration. 

'We are working with an advisory firm to review the options available to the business,' Hain said. 

He added the firm held 'a number of positive discussions' about its future and that its funds continue to operate as usual, with the priority to ensure a positive outcome.  

City Financial, which filed the notice on 22 February, has 10 days to find a lifeline, or face the prospect of going into administration. 

Its options include the transfer of the management of its funds to another firm, or to close the business and return cash to investors. 

City Financial's assets under management fell from $3.3 billion (£2.5 billion) to $1.2 billion in 2018.   

Accounts for the business for 2017 show losses before tax mounting to £16.7 million, surging from £1.4 million in 2016, as costs ballooned from £25.6 million to £40.5 million.

City Financial said these costs were related to the acquisition of three funds, in London, New York and Hong Kong, investment in infrastructure and one-off human resources costs.

The accounts also detail two loans amounting to a combined £3.5 million, repayable on demand and carrying an interest rate of 12%.    

At the end of the last year the company shut down its Decca hedge fund after a difficult year, which included a 21% loss in February. 

Its fund manager team includes David Crawford (pictured), who joined the firm from Octopus to run the City Financial Absolute Equity fund. The fund has also had a tough time and is ranked 94th out of 96 funds in its peer group, losing 25.9% in the 12 months to the end of January. According to its factsheet, the fund has returned 10.2% since its inception in 2008.   

Its team also includes former New Star fund of funds head Mark Harris, who joined the business at the start of 2013 to take charge of its multi-manager range. 

City Financial was acquired by former Invesco Perpetual chief Rob Hain in 2006 alongside Andrew Williams, who was head of distribution at Invesco. 

The pair had joined forces to acquire asset managers and launch innovative strategies for institutional and private investors. City Financial was their first acquisition. 

Its buys in the years since include Eden Financial in 2012, OPM Fund Management in 2013 and the funds business of family office Iveagh the following year.  

City Financial did not provide Wealth Manager with a comment.  

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