Carmignac staff seek to work outside France as tax regime bites
In echoes of fund managers fleeing London on news of tax hikes for the wealthy in 2010, French manager Carmignac Gestion has said some staff have requested to work with the group but outside France, as president Francois Hollande moves to boost taxes on its richest citizens.
France’s president last month reaffirmed his plans to impose a 75% tax on incomes over €1m. It is part of a package from the new incumbent to raise €20bn of new taxes.
As such plans draw closer to reality, Eric Helderle, co-founder and managing director of the €50bn independent fund manager, said some employees had approached senior managers at the Paris-headquartered firm, asking to work outside France.
He said the firm would be open to such requests, from existing staff or potential recruits, because finding and securing talented individuals was one of the most important tasks of firms such as his own.
“Our company is growing strategically, and it is quite internationally based and we will find a solution on a global basis.”
Helderle’s words, about France, echo those of hedge funds in London in 2009/2010, who moved to allow valued staff to relocate to places like Geneva, Zug and Pfaffikon after the UK government announced the top-end rate would increase to 50% in 2010. It has since been cut to 45%, but managers such as Brevan Howard, Moore Capital and Bluecrest Capital Management were among firms being flexible with key workers ahead of the rise.
The same seems to be happening now in France.
Helderle says some people who “want to work for Carmignac have asked us to work in other countries. They talk about it more and more. We will be offering it, and working on it and we will find a solution, because if you find a talent and they say they want to work for you, but not in Paris, then we must look for a solution to this because the key for us is to continue to grow.”
Helderle acknowledged having teams based around the world may not be the best solution from an investment perspective, “because having all your people together in the same place helps to nurture cross-fertilisation, and it works best if people are based in the same place.
“If you have to split the teams for tax reasons all around the world, of course there is technology like video but it is not the same.”
Helderle said he “sometimes wondered” if France’s politicians wanted an asset management community. “The finance industry in France is not very popular, especially with the Left. To be honest, I do not think they really care [about having the industry].”
At the same time as some European governments seemingly shun their finance and asset management industries, they also need them, to buy their debt and increasingly to help retirees finance their old age.
Helderle said it was “ridiculous” some major providers of insurance products used by citizens for their long-term retirement savings, had just 5% in equities.
Europe’s insurance companies are expected to buy more heavily into domestic sovereign debt – despite near record-low yields on some long-dated instruments – as a result of lenient capital reserving regulations for holding such debt, under Solvency II.
Helderle said in France, “addressing the pension issue is totally out of scope for politicians”.