Ex-CIO Logan on the real reason New Star collapsed

Gregor Logan, the former joint chief investment officer of New Star, said a leveraged balance sheet and poor performance from flagship funds caused the demise of the asset manager.

Speaking at the employment tribunal where Patrick Evershed is claiming unfair dismissal against New Star, Logan denied Evershed's claim founder John Duffield's treatment of his staff was the reason New Star folded. Logan said moves to boost the company's dividend by taking on debt had instead played a major role in the asset manager's collapse. New Star took on bank debt and leveraged its balance sheet 18 months before it paid out a special dividend to shareholders in 2007, he said. By late 2008 its debt had spiralled and shares had tumbled in value, and it was eventually bought by...