Jupiter Asset Management has reportedly divested its stake in Starling Bank and established a policy to cease its open-ended funds from buying into private companies.
According to the Financial Times (FT), the move is designed to reduce the risk for investors.
Jupiter is understood to have signed an agreement with institutional investors to sell its 6% stake in Starling, held mainly in its £1bn Jupiter UK Mid Cap fund.
The buyers are existing shareholders, including the investment trust Chrysalis, which agreed to purchase £20 million of equity, accounting for 15% of the fund's total investments, the FT said.
In a letter to its clients passed to the paper, Jupiter CEO Matt Beesley explained that the market volatility in recent years has led to a change in investor sentiment towards holding unlisted assets in open-ended funds.
As a result, Jupiter will no longer allow its open-ended funds to invest in unlisted companies, which are more difficult to trade, in order to protect investors during market sell-offs.
Beesley added that Jupiter still holds very small stakes in a minimal number of other unlisted assets, but will prudently manage these exposures over time to maximize value for its clients. Fund groups generally have a limit on the value of unlisted holdings in a fund, which in Jupiter's UK Mid Cap fund is 10%.
Starling, founded in 2014 by Anne Boden, is expected to benefit from the rising interest rate environment along with other UK retail lenders.
Boden has stated her intention to float the app-based bank within the next two years.
Starling reported last month that it expects pre-tax profit to reach £250 million for 2023 on revenues of approximately £600 million.