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Fri 26 April 2019
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The head of the second biggest hedge fund to cash in on Brexit also played a vital role in the EU referendum.

He’s head of one of the biggest hedge funds in Europe, a major contributor to the official Vote Leave campaign, and – along with Crispin Odey (see Part 1) – one of the largest beneficiaries of the post-Brexit chaos: but Sir Paul Marshall is more than that.

A co-founder and director of asset management firm Marshall Wace, Marshall was also instrumental in triggering the shock vote of the 2016 referendum.


Hedge fund boss Paul Marshall has links to Leave campaigner Michael Gove – Sky News

Unlike his co-founder, Ian Wace, who donated to the ‘Better In’ campaign, Marshall had a strategic role in persuading the then Justice Minister, Michael Gove, to betray his long-term friend David Cameron and lead the official campaign to leave the European Union.

According to the Sunday Times’ chief political editor Tim Shipman, in his book, All Out War, Gove “finally made up his mind to back Brexit on Thursday, 18 February, after calling Paul Marshall, a hedge fund manager he had got to know through his chairmanship of the Ark chain of academy schools”.

With so many investors both bankrolling Leave campaigning and cashing in on the referendum result, this is particularly true of Brexit.

Shipman not only writes for Rupert Murdoch’s Sunday newspaper, but his book was also published by Murdoch’s publishing arm, Harper Collins. Meanwhile, Michael Gove is a regular Times columnist and close to the Australian-born media owner who presided over Gove’s exclusive interview with US President Donald Trump after his shock election.

Of all the political decisions around the EU referendum, Paul Marshall’s impact on Gove is one of the most precipitate and important. Gove’s defection to Vote Leave persuaded his old Oxford University college friend, Boris Johnson, to join him.

Marshall went on to be a major donor to, and a major beneficiary of, the cataclysmic victory of the Gove and Johnson campaign.

The Great Brexit Short

Before founding Marshall Wace in 1997, Sir Paul Marshall was a director of the giant Blackrock company, which has now nearly $6 trillion dollars of assets under management. Marshall soon became director of the ‘Hedge Fund Standards Board’ in 2008. He was joined by another hedge fund giant, Sir Michael Hintze.

Like Crispin Odey, both Marshall and Hintze donated to Gove’s Vote Leave campaign – £100,00 each, according to the Electoral Commission.

Marshall boosted Gove in the The Times and funded his short-lived campaign.

Like Crispin Odey, both used their hedge funds to ‘short’ on the result of the Brexit referendum. According to the Financial Times“Hedge funds win big from Brexit bets” – Marshall Wace was one of the biggest beneficiaries of the Brexit market chaos.

Soon after Brexit, Marshall wrote in the Financial Times on how British trade would benefit by leaving the EU. He then became a commentator on Brexit Central and helped fund the controversial Legatum Institute. Marshall also bankrolled the Unherd news website, which was originally edited by another columnist at Murdoch’s daily The Times Tim Montgomerie.

Orange Book Lib Dem

Before his role in Brexit, Sir Paul Marshall had a background in the Liberal Democrat party and once stood as a candidate. Along with David Laws, he was the editor of the influential 2004 Orange Book – a reorientation of Liberal Democrat policy which argued for more outsourcing of government expenditure and privatisation.

The Orange Book group helped pave the way to the Coalition Government led by David Cameron as Prime Minister and Nick Clegg as his deputy, which lasted from 2010-2015.

It was during the Coalition Government, when Gove was appointed Education Minister, that he formed a friendship with Marshall. Gove’s ministry heavily funded Marshall’s Ark (‘Absolute Return for Kids’) Academies network of over 34 schools and recruited him to the Ministry of Education’s board.

Soon after Brexit, Marshall wrote in the Financial Times on how British trade would benefit by leaving the EU.

Sir Paul Marshall also funded the Liberal Democrat ‘Centre Forum’ think-tank that encouraged ‘pro-market economic liberalism’ and under whose aegis the modified “PF2” private finance initiative was launched by the Coalition Government in 2013.

In 2015, Carillion, an outsourcing project which had contracts with prisons, schools and the NHS, was awarded a £187 million “PF2” contract to build and run schools in the Midlands. The company would not last long.

Meanwhile, a year later, Marshall’s intervention in the referendum would persuade Gove to abandon Cameron and join Vote Leave, the campaign set up by his former special adviser Dominic Cummings.

Vote Leave has since been fined and referred to the Metropolitan Police by the Electoral Commission for overspending and other irregularities.

After Cameron resigned, Gove supported Boris Johnson as his successor before changing his mind. When he decided to run as Tory leader himself, Marshall boosted Gove in the The Times and funded his short-lived campaign.

Post Brexit Success


Michael Gove poses for a thumbs up photo with Donald Trump during an interview which Rupert Murdoch sat in on

While the Gove leadership campaign foundered, the Marshall Wace fund has successfully bet on the ensuing political and economic chaos after its initial big wins on Brexit. Its funds continue to prosper from market uncertainty over the chances of a ‘No Deal’ exit.

However, just like Jacob Rees-Mogg’s Somerset Capital Management, Marshall Wace has also set up a fund in Dublin to avoid the impact of crashing out of the EU.

Marshall Wace has also benefited from the troubles in construction, retail, and especially around the collapse of Carillion – the kind of government outsourcing project the Orange Book supporters had done so much to promote during the Coalition. When its share price crashed in 2017, Marshall Wace made an estimated £11.3 million.

Marshall went on to be a major donor to, and a major beneficiary of, the cataclysmic victory of the Gove and Johnson campaign.

By the time Carillion finally collapsed last year, Marshall Wace had the largest “short position” against the outsourcing company, betting nearly four per cent of its entire shareholding on the firm’s collapse. Together with Blackrock, it stood to make net gains of around £30m when Carillion finally went into receivership in January 2018.

Last year, Marshall made the top ten “Hedge Fund Rich List in 2018”, with an estimated net worth of £520 million and gains of up £15 million. Over the same period, according to the CER, the cost of Brexit to UK finances has been £320 million a week, and Carillion’s £1.34bn contract for the new HS2 railway has had to be covered by the Government.

By definition, the rationale of hedge funds is to make profits from downturns and smooth out market fluctuations. But even Adam Smith noted that hedging can be disruptive if it has a market impact. With so many investors both bankrolling Leave campaigning and cashing in on the referendum result, this is particularly true of Brexit.

Marshall Wace has been contacted for comment.

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