Citywire Exclusive: Downing trio lead MBO to form liquid alts fund firm
Russell Catley, Paul Adams and Jon Gumpel have set up Capel Asset Management following a management buyout.
Dylan Lobo
News editor, City Wire
Industry insights
A trio of Downing fund managers have launched a specialist asset manager following a management buyout of its liquid alternatives business.
Chief executive Russell Catley, chief investment officer Paul Adams and head of multi-asset Jon Gumpel have established Capel Asset Management after spending 18 months at Downing, where they built a liquid alts desk.
Richard Watts, who has held investment leadership roles at JP Morgan, and Columbia Threadneedle, has been appointed non-executive chairman of the business. The business is wholly owned by the three founders and its team line-up includes chief operating officer Mark Wild, head of quantitative strategy Renato Guerrieri, assistant portfolio manager Chris Tutt and Russell's son Joseph Catley, who serves as operating and marketing assistant. Distribution has been outsourced to LGBR Capital.
The catalyst for independence
Back in 2024, Downing offered Catley a to fund management after the end of his three-year non-compete clause following the sale of his controlling stake in Atlantic House to Elcot Capital Management. Alongside Gumpel, who co-founded Brooks Macdonald in 1991, and Adams, an architect of RBC's equities and equity derivatives business in Europe, the three have amassed E405m in assets across two core strategies, which will transfer to Capel.
Catley said the split from Downing was amicable after it was concluded the set-up was not quite working for both sides. 'It was a good place to start the business, but it became clear their business was running at a slightly slower cadence,' Catley said.
'Scale is important in asset management and we realised the synergies we had hoped for were not there and decided it would be more costly for us over the long-term to stay within Downing. So we took the decision to buy out the business and give us more freedom to grow.
The founders had been planning the MBO for some time and assessed various options, including venture capital, before deciding to self-fund it.
'You can have venture capital investors too early,' Adams (pictured) told Citywire. 'They tend to focus on a different outcome, which is not necessarily about doing the best you can for clients. They're trying to build the business and sell it. Capel is about challenging the industry and building a really successful class-leading boutique alternatives asset manager.'
The investment philosophy
The Capel team combines an active management overlay on top of systematic strategies. 'We think of this as Gilts + 5%, which is reassuring for investors worried about persistent high inflation and rising equity volatility, as it means investors receive a real return that floats above the risk-free rate over time,' Adams said.
One of its two strategies is the E280m MGTS Capel (formerly Downing) Active Defined Return Assets Fund - which targets a net return of 8-10% per annum through a portfolio combining UK government bonds with derivatives - that the team launched in 2025.
Managed by Adams in the 12 months to end of August the fund has returned 9.8%.
Its second strategy, the E125m MGTS Capel Diversified Opportunities fund, was originally launched by Gumpel in 2022 at boutique Aubrey Capital. This strategy targets a return of 4% above consumer price inflation via a combination of equities, fixed income, real assets and tactical overlays. It has returned 42.7% in the last three years, beating the 32.6% average in its Citywire Mixed Assets Balanced GBP sector.
The fees on the funds will not change, with the OCF on Active Defined set at 0.6% and at 0.9% on Diversified Opportunities. The OCFs on the founder share classes stand at 0.35% and 0.6%, respectively.
Future growth
Capel intends to add more investment managers to its ranks, with Adams noting that a portion of the capital used for the MBO has been set aside for recruitment over the next 12 months.
Catley said that as an independent business the team can look at expanding its reach in its core wealth and advice markets in the UK and beyond.
The business is planning to bring a third liquid alternatives strategy to the market in the first half of next year and is exploring the possibility of creating income-focused solutions.
The defined outcome ETF market is another area it sees opportunity in, Adams added. 'The market for defined outcome or defined return style ETFs has exploded in the US [and] there's a great belief that it's also going to grow very quickly in Europe too.'
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