M&G CEO Andrea Rossi Says Britain Is Too Complacent to Succeed

Andrea Rossi has travelled to an industrial park on the outskirts of Durham to see a company producing tiny computer chips that could one day tell you when your shirt needs washing.

It is difficult to imagine the impeccably dressed Italian-Swedish chief executive of FTSE 100 investment giant M&G ever needing such technology himself.

Even so, he has invested millions of pounds of savers’ money in the company behind it, Pragmatic Semiconductor.

Rossi, 60, regards Pragmatic as proof that the UK economy still offers significant growth opportunities, despite the widespread gloom. But he believes Britain has also become too complacent for its own good.

M&G’s Catalyst fund has invested more than £47million in Pragmatic, which was founded in Cambridge in 2010 and raised more than £180million in capital three years ago.

The investment forms part of a broader effort to direct the billions of pounds managed on behalf of savers towards supporting British businesses and the UK economy.

Britain has abundant capital, skills and talent, Rossi says, but political instability and a shortage of ambition are holding the country back.

‘There is a lot of capital in the system. There is £2trillion in the UK just sitting in cash, in bank accounts earning one or two percent, when it could be making better returns for savers and supporting the economy,’ he says.

‘We have amazing start-ups and amazing universities. We have more unicorns — privately held companies valued at more than £1billion — than Germany, France and Sweden put together.’

Pragmatic co-founder Dr Richard Price leads a tour of the factory, outlining the many potential applications for the company’s ultra-thin, flexible and low-cost computer chips.

Possible uses include helping patients identify counterfeit medicines and creating smart bandages capable of detecting infection in wounds.

Pragmatic has also tested tiny chips that could be placed in the underarms of shirts and other garments to detect body odour.

Known as Project Plastic Armpit, the concept would see the chip send a smartphone alert when the wearer needed to apply more deodorant.

It is an undeniably inventive idea, although clothing fitted with odour-detecting technology is still some way from reaching shops.

So why, with companies such as Pragmatic showing this kind of potential, does Rossi believe the UK economy is struggling?

He points to a loss of ambition, which he partly attributes to the post-pandemic dependence on working from home.

‘We ask where are the opportunities for young people to work, but is there a willingness to work? I don’t see this hunger any more in people.

‘If we create a world where everyone sits at home what are we becoming? I think people have become a bit too complacent.

‘We have become too comfortable,’ he adds. ‘If you become too comfortable then that ambition is not there. And if the population is not ambitious how are you going to grow the economy?’

He is also frustrated at the way so many UK companies are being taken over by overseas buyers, so much so that M&G is taking a public stand.

‘We have said this really has to change. The government said they want us to talk more openly about it, which we are very happy to do but it needs to be more than just one voice.’

Among the targets to have fallen to overseas buyers is M&G’s rival asset manager Schroders, one of the City’s best-respected names, now being swallowed by Nuveen of the US.

‘There are not many asset managers left in the UK,’ says Rossi. 

‘We are one of the few and that is a pity because you need UK champions with a vested interest to invest in the country.’

When he took over four years ago, the Square Mile was rife with talk M&G itself was a bid target.

That, has, he says, ‘completely died down…I am not overly concerned about someone coming to take us over because we have been strengthening the balance sheet, improving operations and we are growing again.’

He has also forged a strategic partnership with Japanese insurance company Daichi Life, now M&G’s biggest shareholder.

There should, Rossi argues, be financial carrots for individuals and big City institutions to back UK plc.

‘In France and Italy there are incentives to invest in their home market. Why not here?’

‘And why should we be the only modern country to have stamp duty on shares? For me that is insane.’

‘Italy has been the most unstable country since World War II. But we have had stability with Giorgia Meloni as Prime Minister. If only we could have more women PMs,’ he says, momentarily forgetting about Liz Truss.

‘I lived in Mrs Thatcher’s house in Chelsea, I was renting it. I was hoping to see her ghost, but no, never. We need her again, but perhaps I am not allowed to say that.’

‘We need growth in the economy. That is the only way to pay for health and welfare. Politicians need to move from slogans to action.

‘For that, you need stability. In a company, if you change the CEO every 18 months you will go nowhere. It is the same with a country. There has been too much changing of Prime Ministers.’

‘The rule of law and stability of this country has been excellent but unfortunately that has changed. Everybody is negative, negative, negative.’

When Rossi arrived, M&G had lost direction following its spin-off from the Prudential insurance company in 2019.

‘They had no story on what next,’ he says. ‘There was a great heritage, a balance sheet with enormous potential.’

‘But when I arrived there was no clarity on what M&G wanted to be, no real ambition and purpose.’

Investors have seen total returns well in excess of 180percent since he took over. He has strengthened the balance sheet, delivered £250million of cost savings, and achieved record operating profit at the half year.

He has also launched a new brand campaign playing on M&G’s initials.

Momentum and Growth refers to the £100billion invested in companies such as Pragmatic.

Moving and Grooving is a nod to an investment in Seeker Music, an LA-based business founded by Evan Bogart who co-wrote hits for Beyonce and Rihanna.

Memories and Grandchildren is about helping people save enough for their future to enjoy their later years with their families.

Cheesy, perhaps. But behind it all is the mighty PruFund, a huge, but relatively obscure investment powerhouse.

A legacy of the days of the Man from the Pru, it is a 178-year-old life assurance fund with £73billion of assets.

Rossi sees it as a sleeping giant he can awaken and sell to a new generation of savers.

He is planning an advertising campaign and wants to make it easier for individuals to invest directly.

What would he like to see in the Budget for M&G, for savers and for the country?

‘We want certainty. We want policies that are pro-growth and are proportionate.’

‘You cannot just tax more because you will kill the economy.’

He never did see Mrs Thatcher’s ghost, but perhaps it would be some consolation to have a pre-Halloween Budget that does not frighten savers.