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Toscafund, one of London’s leading investment firms, is undergoing a restructuring and retreating from its two-decade focus on financials after the departure this year of ex-Tiger hedge fund manager Johnny de la Hey.
The company has culled its financials marketing specialists and will focus on managing private equity, small and medium-sized UK company stocks and global equities, according to people close to the firm.
It marks the end of an era for Toscafund, formed in 2000 by de la Hey and Martin Hughes, who made their names as financials experts at Tiger Management.
Tiger was one of the City’s first hedge funds established by Julian Robertson in 1980. As Tiger alumni, de la Hey and Hughes were dubbed “Tiger cubs”.
The restructuring of Toscafund, known for its successful bets on banking stocks until it came unstuck during the financial crisis, comes after de la Hey parted ways with the company in March.
That followed a tough period for de la Hey’s $350mn financials hedge fund, Tosca, which also bet against stocks through short positions.
The company confirmed at the time that it had closed down Tosca and other funds run by de la Hey to return money to shareholders.
As a result, the firm has also closed its office in Australia and axed its New York-based marketing team, which were both focused on raising money for de la Hey.
According to Companies House, de la Hey has 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 leaving that operating as a long-short equity manager in the financials sector had become more challenging because of the increase of cheap index-tracker funds, among other factors, according to London-based media group Citywire.
City grandee John McFarlane, who previously chaired Aviva and Barclays, has also stepped down from the board of Toscafund’s holding company, Old Oak, according to company documents. A source close to the firm said this was also due to his age; McFarlane is 77.
Old Oak, in which Hughes is majority shareholder, also owns private equity firm Penta Capital which, together with Toscafund, have about £8bn in private companies.
As part its strategic shift, Toscafund has hired three portfolio managers, including Marshall Wace’s Sangeeta Gomez, to help run its global equity fund.
Toscafund — chaired by Martin Gilbert, co-founder of Aberdeen Asset Management, which became Abrdn — has made successful bets on taking companies private, such as healthcare group Circle, which it took off the market with Penta Capital in 2017 before selling out a few years ago.
The firm also took telecoms firm TalkTalk private in 2021 with founder Sir Charles Dunstone and Penta Capital. This month, TalkTalk agreed a refinancing deal with its lenders, which involved a capital injection from its backers, including Toscafund.
In addition, it has stakes in private companies such as digital lender Atom Bank, where de la Hey still sits on the board.
The company’s success in the financials 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 view on the sector recovering proved 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
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