M&G boss Andrea Rossi: Britain has got all the ingredients to succeed, but we are too complacent

Andrea Rossi has come to an industrial park on the outskirts of Durham to visit a company producer minuscule computer chips that could warn you when your shirt needs a wash.

It is inconceivable that the immaculately attired Italian-Swedish boss of FTSE 100 investment giant M&G would ever need such a thing.

Nonetheless, he has put millions of pounds of savers' money into its maker, Pragmatic Semiconductor.

Rossi, 60, sees Pragmatic as evidence that despite all the negativity there is plenty of growth potential in the UK economy - even though we are a bit too complacent for our own good.

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

It is part of a drive to put the billions of pounds of savers’ money under his stewardship to back Britain.

Andrea Rossi, right, has come to an industrial park on the outskirts of Durham

The UK has an abundance of capital, skills and talent he says, but is held back by political instability and a lack of ambition.

‘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.’

Co-founder Dr Richard Price shows us round Pragmatic’s factory, and regales us with the myriad possible uses for its ultra-thin, flexible low cost computer chips.

These include helping patients avoid counterfeit medicines and smart bandages to detect infection in wounds.

Pragmatic has even experimented with tiny chips designed to be put into the underarms of shirts and other clothing to detect body odour.

The idea of Project Plastic Armpit is that the chip sends people an alert on their smartphone when they need another spray of deodorant.

It is certainly an ingenious idea, though the whiff-detecting garments are some way from appearing in the shops.

Why, with businesses like these, does Rossi think the UK economy is in the doldrums?

One reason is that we have lost our ambitious edge, partly because of the post-pandemic addiction to 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.

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‘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.

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