Praemium stems losses – but still in the red

trustee cash flow

31 August 2010
| By Chris Kennedy |

Praemium has slowed its losses from $11 million in the 2008-09 financial year to report consolidated after tax losses of $5.7 million for the last financial year.

The group aims to be cash flow positive across the global business by the end of the new financial year with help from its growing UK presence, according to group chief executive Arthur Naoumidis.

Funds in Praemium’s V-Wrap product grew 26 per cent due to both inflows and market appreciation, while funds under management (FUM) in Praemium’s separately managed account (SMA) products grew from $329 million to $497 million and funds on platform in its UK business grew from £11.4 million to £115.7 million.

The year also saw Praemium’s first venture into the offshore market, with Russell Investments signing a deal to use Praemium’s SMA platform.

The deal came about as Russell was trying to win the mandate of a global trustee that would only shift its assets onto a platform rather than directly into the Russell portfolio, Naoumidis said.

Praemium is now fielding expressions of interest from offshore managers in markets such as Jersey, Guernsey, Gibraltar and Malta, according to Naoumidis.

Fiduciary duty requirements have been increased in many of these markets after trustees and investors were caught up in the Bernie Madoff scandal, and using a platform means managers are more easily able to demonstrate where a trustee’s money is being invested, he said.

As one of the first platform providers into these markets, Praemium would be well placed to take advantage of the changes in regulations, Naoumidis said.

“The sales pitch for us is that the trustee has the platform, and if you want to be the manager for that trustee’s clients you must use that trustee’s platform, and we’re one of the few companies that can deliver a multi-currency SMA discretionary solution,” he said.

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