An investment management firm co-founded by Tory MP Sir Jacob Rees-Mogg is set to close after its largest client, St James’s Place, severed ties with the business and pulled $2.5 billion in assets.
According to reports in the Financial Times, Somerset Capital Management is to wind down after client redemptions from clients such as SJP made the business unsustainable.
At its peak in 2018, Rees-Mogg’s firm had $10 billion in assets under management, but that has fallen to just $1 billion after SJP terminated, blaming poor performance and a need by the UK wealth manager to overhaul its fee structure as it faces regulatory pressure to comply with consumer duty rules.
Compounding the performance pressure, the firm faced the challenge of incentivising the next generation, as about half of the equity in the business was held by retired partners not involved in its day-to-day running.
Of the three co-founders, only Robertson remains at the firm.
Rees-Mogg, who was a minister in the governments of Boris Johnson and Liz Truss, left Somerset in 2019 and is a passive minority shareholder in the firm.
Johnson stepped down as Somerset chief executive last year and is currently minister for investment in Rishi Sunak’s government.