Toscafund’s withdrawal from financial focus marks the end of an era

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Toscafund, one of London’s leading investment firms, is undergoing a restructuring and retreat from its two-decade focus on financials, following the departure this year of former hedge fund manager Tiger Johnny from Hey.

The firm has tapped its financial marketers and will focus on managing private equity, UK small and mid-cap equities and global equities, according to people close to the firm.

It marks the end of an era for Toscafund, formed in 2000 by Hey and Martin Hughes, who made their name as financial experts at Tiger Management.

Tiger was one of the City’s first hedge funds set up by Julian Robertson in 1980. As Tiger alumni, Hey and Hughes were nicknamed the ‘tiger cubs’.

The restructuring of Toscafund, known for its successful bets on banking stocks until it unraveled during the financial crisis, comes after Hey departed from the company in March.

This followed a tough period for de la Hey’s $350 million financial hedge fund, Tosca, which also bet against the stock by shorting it.

The company confirmed at the time that it had closed Tosca and other funds run by Hey to return cash to shareholders.

As a result, the firm also closed its Australian office and disbanded its New York marketing team, both focused on raising money for Hey.

According to Companies House, de la Hey set up a company called Hunters Moon. He did not respond to requests for comment.

De la Hey said in a note to Tosca investors before he left that operating as a long-term equity manager in the financial sector had become more difficult due to the rise of cheap index-tracking funds, among other factors, according to London media . Citywire group.

City magnate John McFarlane, who previously chaired Aviva and Barclays, has also resigned from the board of Toscafund holding company Old Oak, according to company filings. A source close to the firm said this was also due to his age; McFarlane is 77 years old.

Old Oak, in which Hughes is a majority shareholder, also owns private equity firm Penta Capital, which together with Toscafund own around £8 billion in private companies.

As part of its strategic shift, Toscafund has hired three portfolio managers, including Marshall Wace’s Sangeeta Gomez, to help manage its global equity fund.

Toscafund — chaired by Martin Gilbert, co-founder of Aberdeen Asset Management, which became Abrdn — has made successful bets to take private companies such as healthcare group Circle, which it took off the market with Penta Capital in 2017 before selling some. years ago.

The firm also took telco TalkTalk private in 2021 with founder Sir Charles Dunstone and Penta Capital. This month, TalkTalk agreed a refinancing deal with its creditors, which involved an injection of capital from its backers, including Toscafund.

It also holds stakes in private companies such as digital lender Atom Bank, where Hey still sits on the board.

The company’s success in the financial sector ran into trouble during the financial crisis, when it made a series of bets in the spring of 2008 on financial stocks. But the vision of the recovery of the sector turned out to be premature.

Other “tiger cubs” include Bill Hwang, who opened the family office Archegos Capital Management, which collapsed in 2021.

Toscafund declined to comment