Has leadership appointment boosted Magellan’s rating?

Magellan morningstar leadership maple brown abbott Sophia Rahmani

19 February 2024
| By Laura Dew |
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Having appointed Sophia Rahmani as its new managing director, Morningstar is watching to see how this will play out before it upgrades Magellan’s rating.

Last week, it was announced the asset manager had appointed Maple-Brown Abbott CEO Rahmani to take over from May as managing director, with the intention for her to transition to the CEO role within 12 months. 

Andrew Formica, who has been working as executive chairman since the departure of David George last October, will instead focus on the strategic development of the wider group, and Rahmani will focus on the day-to-day operations of its asset management division. This will see her take responsibility for investment, distribution, information technology, human resources, risk and compliance functions.

She has led Maple-Brown Abbott since 2019, and was previously the chief operating officer, Pan Asia, at Janus Henderson Investors, where Formica was formerly the co-chief executive.

In an analyst note, Morningstar said: “While this appointment is an encouraging step forward for the group after a challenged period under David George’s leadership, at this stage we maintain our current parent pillar rating of Average.”

Reflecting on the period during George’s tenure, who was appointed following the shock exit of Hamish Douglass, it said his “most impactful decision” during his brief tenure had been the consolidation of the global equities team.

“George decided to refocus the investment team on the flagship equities strategies, shutting down nascent research areas such as global small/mid and long/short. This led to seven members of the investment team being made redundant, most of whom were senior.”

George left in October 2023 in a surprise move after just over a year as CEO as the firm believed it was time to “refocus leadership” of the business. 

“The board, in consultation with David, believes it’s time to refocus leadership which will accelerate the progress made to date,” Formica said at the time.

The ratings agency awarded Magellan a ranking of Average overall, as well as for “people” and “parent”, but it scored Above Average for its “process”.

This sees the investment management team focus on selecting stocks that have enduring competitive advantage, lucrative reinvestment potential, low agency risk, low business risk to facilitate predictable cash flow and low market beta.

 

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