On 17 November, Financial News sat down with Fenchurch Advisory Partners founder and former Conservative Party treasurer Malik Karim to discuss his nearly four decades at the top of dealmaking, and what he’s learned about banking from his time with the political elite.
Here are the highlights. Our conversation has been edited for clarity and brevity.
FN: Your career in the City is getting on for four decades now. How would you read today’s environment compared with what you’ve seen previously?
MK: I think it’s it’s all cyclical and structural. I’ve seen four or five downturns…I think that things are never as good or as bad as you think. Our industry is pretty good at extrapolating very aggressively on the positive trends and extrapolating again very aggressively with the negative. It’s hard to get the balance right. But it’s been a challenging year for a lot of people.
FN: Why are you looking at a new market — the US — when fees are falling and others are retrenching?
MK: There’s two or three elements. The first one is that our proposition in the UK and Europe is based around independence, expertise, very strong connectivity, strong execution for our clients, has been compelling and very successful.
For a number of years, a number of our strategic and sponsor clients have been encouraging us to help support the US. Covid probably delayed those plans a little bit, and now is a good time for us to do that.
We’re incredibly fortunate that one of my former colleagues and friends — who I’ve been in touch with and will have known for over two decades — John Sipp, is joining us. He’s somebody I know and trust and culturally does incredibly well with our team.
[The US is] one of the most advanced capital markets. It’s a fantastic growth opportunity.
FN: Where do you see the main differences at the moment between dealmaking in the UK and the US?
MK: The industry isn’t dramatically different. We’ve got a couple of guys in the UK team working with the US. John obviously knows this market. It’s a very competitive market in some ways, but excellence, teamwork, hard work, are all ingredients for a successful business on both sides of the Atlantic.
FN: Is your sector focus — asset management and insurance — going to be the same?
MK: Absolutely. Our initial focus will be on that because that’s where our clients are both sides of the Atlantic. We are progressively opportunistic. This is a talent business.
FN: How much does pay come into that talent piece when there isn’t as much M&A and capital markets activity around?
MK: We’ve been going for nearly 20 years, had two or three severe downturns. We’ve expanded and grown our own people and made some lateral hires throughout each of those. We’ve had no issue winning high-quality business, getting it executed, and getting fairly paid.
FN: Did you ever consider diversifying away from financial institutions work?
MK: Not seriously, no. Over the years we’ve had many approaches. We’d be very stupid if we hadn’t thought about it. I think we’ve decided that we want to stay in one sector and we are differentiated by that.
FN: What are you seeing at the analyst and associate levels in terms of burnout concerns?
MK: I think once you get talented people, you all have a duty of care to make sure that they are fairly treated. There’s a lot of care from the managers in our teams in terms of how much work we do, that we make enough time to get the weekends and holidays. I think it’s just a constant effort for everyone to make sure that everyone is valued and respected.
FN: Have demands for work-life balance ever come into conflict with the demands of the job?
MK: I think this is where our unique proposition comes in. We have a lot of flexibility and we are able to move from A to B to C project pretty seamlessly. Our scale enables us to really have an origination and an execution capacity which…some other people don’t usually have on substantive transactions.
FN: Do you think we’ll ever see people not being lured by the likes of Goldman Sachs or JP Morgan?
MK: They are incredibly successful, world-class organisations that offer a very compelling career.
Equally, we look at our attrition levels and we do very well. I think we’re getting some things right. You can always get better. We’re not trying to compete with Goldman Sachs or Morgan Stanley.
FN: Take me back to the beginning of your career. The landscape must have been so different for you starting out.
MK: When I started with Kleinwort Benson in 1990 we had to go get information on public companies on a microfiche. We had to look up share prices in the newspapers. There were around 200 professionals and two personal computers.
FN: What’s been your favourite deal that you’ve ever worked on?
MK: There’ll be so many, it will be hard to pick one out. But there have been transactions where you have made a huge difference.
We had a transaction from AXA back in 2015 when they were trying to sell some very challenging assets in the UK. They started working with the larger banks when they asked us to help them and support them in terms of reshaping the parameters around the transaction. I think that gave us a huge amount of satisfaction to help an important client through difficult transactions.
FN: How did it feel when you attracted negative attention for other deals such as Bain’s attempted LV= takeover?
MK: I don’t really wish to comment on any particular client’s transaction, but LV= you’re right was a public situation where we did get a lot of attention. We’ve been working with LV for many years. The board hired us to support them in the strategic review. We ran a process which ended up with a transaction with Bain that was endorsed by the board.
Ultimately we couldn’t get it over the line, but 69% voted in favour so it wasn’t exactly a disaster. the key point is that members had a vote, and voted, and we are very pleased to have been involved and done our best for our client.
FN: What are your feelings on remote work now?
MK: We’re pretty relaxed about it. We’re trying to get people to come in three or four days a week, but again, the general rule is providing your immediate team members are happy, you’re on a project, you’re free to work from home, certainly on Friday.
Generally, there is a preference for people to come around, you have more interaction, more spontaneity, more of a spark…But I don’t remember ever having any particular tension. We took the mature approach which was we trusted our people to do the right thing and we still do.
FN: Is banking less attractive to university graduates than when you started out? How do you increase its appeal?
MK: I think that there’s certainly more choice. Clearly, we now have a very large, successful, established private equity industry, a hedge fund industry, a consulting industry, who are all all competing for the best of the best talent. Ultimately, I think people will try not to think before they decide what they really enjoy and where they will be a success.
FN: We’ve just seen the Autumn Statement cut capital gains and dividend tax allowances. Do you feel that financial services and banking has been supported enough in light of those kinds of measures?
MK: I don’t think it’s, it’s a personal attack on business or banking. The context is a whole bunch of international issues which have created inflation in the UK.
We’ve been received by the capital markets and yields are not as high as it were a few weeks ago. The key point here is a map of monetary and fiscal policy working in the same direction.
FN: What was it like navigating the uncertainty of the Liz Truss era during your time as Conservative Party treasurer?
MK: It was challenging. You’ve had three prime ministers this year and four chancellors. We’ve had an intervention from the Bank of England in the capital markets. These are things that are not what the UK is known for.
I’d be lying to you if I told you it wasn’t a challenge, but I think, most importantly, we are now stable as a party and as a government. I think our prime minister has developed a cabinet of unity. Most critically we have a credible economic underpinned by stability, growth and a desire to protect public services.
FN: Did Rishi Sunak’s background in the US and with Goldman Sachs give you more confidence working in the US?
MK: I never thought about it for one second. For us our evolution was an organic thing. It was always a question of when not if.
FN: Have your ideas about European footprint been impacted by Brexit?
MK: We have a strategic partner in Natixis so that gives us a very good gateway to this. Personally I was a Remainer. But I accepted the democratic outcome.
This was a big, big decision with complexities, risk and rewards. Like any corporate transaction, these things aren’t very straightforward and take a little time, it will take another five or ten years for people to even conclude whether this was a good thing or a bad thing.
To contact the author of this story with feedback or news, email Justin Cash