Fitch Affirms Sycomore AM's Asset Manager Rating at 'High Standards'

Tue Jul 22, 2014 11:08am EDT

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(The following statement was released by the rating agency) PARIS, July 22 (Fitch) Fitch Ratings has affirmed Sycomore Asset Management's (Sycomore AM) Asset Manager Rating at 'High Standards'. The Outlook is Stable. KEY RATING DRIVERS The rating reflects the organisation's institutional set-up, a longstanding and disciplined stock selection process, managed by an experienced and stable team of 12 portfolio managers/analysts. The rating also factors in a sound risk management framework and efficient operational platform, adapted to current volumes and assets. It also reflects the success of the firm in diversifying its product mix, which contributes to reducing the company's sensitivity to eurozone equities. The main challenges facing Sycomore AM remain its pursuit of development abroad, which today represents roughly 15% of Sycomore's total assets under management (AUM), and the development of its business with adequate resources in operations, controls and risk management. Sycomore AM's 'High Standards' rating is based on the following category scores: Company: High Controls: High Investments: Highest Operations: High Technology: High Asset manager operations in the 'High Standards' category have an investment platform and operational framework that Fitch considers strong relative to the standards applied by institutional investors in international markets. Company Regulated by French AMF, Sycomore is an entrepreneurial asset management company, with a 13-year track record in managing eurozone equities. The company's AUM grew significantly in 2013 (+25%). It benefited from strong inflows into its flexible, long/short products and socially responsible investment products, in line with the company's strategic priority to diversify its product base and reduce its business sensitivity to European equities. The teams have been stable, with a large part of the staff being shareholders of the company. Controls The risk management and control framework covers the main risk areas well, with appropriate automated controls on transactions. Investment risk management, performed by a four-member team, provides sound support and data accessibility to the front-office. Risk analytic tools have mostly been developed in-house with the exception of Northfield. Investments Sycomore AM's investment processes are disciplined and transparent, supported by a comprehensive bottom-up research and valuation method using a regularly updated proprietary database. The recent streamlining of research coverage and greater investment committee focus have further enhanced interaction and efficiency of the 12 analysts/portfolio managers Operations Investment administration, performed by a stable and experienced team, is efficient. It offers an appropriate level of security in line with the scope of instruments covered and the volumes, which include an increasing portion of bond instruments. Investor reporting is produced on a timely basis and provides comprehensive and relevant portfolio information. Technology Sycomore AM's technological platform is built around proprietary applications - with the exception of Northfield for risk analytics - offering a high level of integration and adequately supporting the company's needs. Its business continuity plan is effective and regularly tested. Company Profile Established in 2001, Sycomore AM is an independent asset management company that is 90%-owned by the four founding partners and employees. Its historical and main area of focus is eurozone equity management, although it has diversified into other investment areas. AUM amounted to EUR2.3bn at end-June 2014. The client base, primarily French, comprises private clients, institutional clients and multi-managers. At end-June 2014, Sycomore AM had 37 staff, including 12 investment professionals. RATING SENSITIVITIES The rating may be sensitive to material adverse changes to any of the aforementioned rating drivers, notably through weakened financial conditions, heightened staff turnover or deterioration of processes and policies. A material deviation from Fitch guidelines for any key rating driver could cause Fitch to downgrade the rating. Contact: Primary Analyst Francois Vattement, CFA Associate Director +33 1 44 29 92 75 Fitch France S.A.S. 60 rue de Monceau Paris 75008 Secondary Analyst Charlotte Quiniou, CFA Director +33 1 44 29 92 81 Committee Chairperson Alastair Sewell Senior Director +1 44 203 530 1147 Media Relations: Francoise Alos, Paris, Tel: +33 1 44 29 91 22, Email: francoise.alos@fitchratings.com; Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Asset Manager Rating Criteria, dated 6 May 2014, are available at www.fitchratings.com. Applicable Criteria and Related Research: Asset Manager Rating Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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