Rees-mogg firm: This is our chance to make money
ROYAL THANKS
A MULTI-BILLION pound investment firm co-founded by Tory Brexiteer Jacob Rees-mogg plans to make a killing off the coronavirus crisis.
Somerset Capital Management told would-be investors market volatility offers a “once or twice in a generation” opportunity to make “super normal returns”.
As millions face financial misery, SCM managers are buying into businesses where valuations have tumbled – but should bounce back. Potential gains of 500 per cent are touted.
Investments so far include private hospitals in Brazil, pharmacies in South Africa and a firm behind a scanning device which checks whether people are wearing masks in public in China.
The revelation dismayed new labour leader Sir Keir Starmer. He said: “Nobody should be seeking to take advantage of this crisis. We should all be asking ourselves what we can do for our country and each other.”
Shadow Chancellor John Mcdonnell added: “This is about as sick as it comes. Profit seeking from suffering is nearly as low as you can get. When we come through this we need a tax on profiteers.”
SCM’S strategy comes amid a crisis that has killed 61,181 globally, while a further 1,079,389 are infected. The UK death toll yesterday rose 708 to 4,313. Some 41,903 have tested positive.
The economic impact has seen almost a million Brits sign up for Universal Credit.
Finance houses have been quick to move.
Mr Rees-mogg, 50, stood down as a director of SCM so he could become Leader of the Commons last July. But he owns at least 15 per cent, meaning he was entitled to a reported £1million share of last year’s £19.5million profits. Father-of-six Mr Rees-mogg, who lives in a mansion in Somerset, is reportedly worth more than £100million. That could rise if a plan by SCM’S Emerging Markets Discovery Fund pays off. Fund boss Mark Asquith said in promotional material they could capitalise on smaller firms in particular, with prices down up to 50 per cent. He wrote: “History has shown us that super normal returns can be made during this type of environment. Market dislocations of this magnitude happen rarely, perhaps once or twice in a generation, and have historically provided excellent entry points for investors.”
Mr Asquith cited 500 per cent profits made after the 2008 crisis and suggested “we could see similar moves”.
Giving examples where they hope to profit, Mr Asquith’s co-manager Christopher White identified Hapvida, a Brazilian medical insurance company which also runs hospitals.
Disaster
It has a deal to care for patients in the public health system. Stock has also been bought in Clicks, South Africa’s leading pharmacy. SCM has also invested in Advantech – behind tech in China to monitor public mask wearing.
SCM, founded in 2007, is managed in part via the tax havens of the Cayman Islands and Singapore. In November it was revealed SCM traded shares in a firm fined for its role in the 2010 Deepwater Horizon oil spill disaster. It also had holdings of £33million in a Russian bank suspected of helping the annexation of Crimea and pro-putin terrorists in the Ukraine.
Oliver Crawley, a partner at SCM, said: “The human cost of the virus is devastating and we take it very seriously, but our job as investment managers is to remain rational during periods of extreme volatility, in order to carefully invest our clients’ savings and pensions for their longterm security.”