More than two decades after it was founded, Octopus Investments manages assets on behalf of some 59,000 investors and has around 750 staff.

The founders of Octopus Group, who have vowed never to list the business, still have around a 45% stake, with other employees owning approximately 18%.

“Our ownership structure is really important to us,” Benjamin Davis, who took over from Ruth Handcock as chief executive of Octopus Investments in February, told Financial News.

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“To be owned by founders and staff means you can adopt a long-term view. It’s important that everyone who works here has a stake in the business.”

Although he has been at the helm of Octopus Investments for only eight months, Davis has a long track record with the group. He joined in 2010 and rose through the ranks to become CEO of Octopus Investments’ real estate arm. Prior to that, he worked at several venture capital firms in his native New Zealand.

Although M&A is currently sweeping the sector — last year was a record in terms of deals struck involving asset managers — Octopus Investments could arguably be a target, as smaller fund houses in particular face pressure to build scale in order to keep pace with their larger competitors.

Octopus Investments has made only one acquisition in the past, snapping up UK healthcare real estate manager MedicX Holdings in 2014 from Cabot Square Capital.

Davis said despite receiving interest in the business from third parties, the investments division is not for sale.

“I don’t think it’s something we’d ever entertain,” said Davis, citing the importance of its entrepreneurial culture.

“I can’t ever see us selling. Our mission is to keep growing and invest in areas that matter to us.”

Octopus Investments has not been immune to some of the headwinds that have plagued the asset management sector over the past 18 months, with fund flows being hit by factors including soaring inflation and rising interest rates.

Documents filed with Companies House show profit at Octopus Investments was down 25% in the 12 months to the end of April 2023, dropping from £92.7m to £69.5m. Revenue fell by around 20% during the same period to £216.3m.

With some 60% of its assets under management originating from retail investors, the business relies heavily on financial advisers recommending its products.

“It has definitely been a more subdued period for institutional fundraising, but I think that’s turning a corner now,” said Davis. “We’ve been solid on our retail fundraising.”

Similar to other asset managers, how to harness artificial intelligence has become a big focus for Davis, who began his career in technology consulting.

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“We’re looking at it with a couple of projects focused on how we can use AI,” he said. “It’s about how we can use technology to summarise information, or automate tasks that were previously done by people.

“We are not looking at AI to make investment decisions or automate that process. I just don’t think that is sensible at the moment.”

Octopus Investments has a focus on investing in younger companies and lists venture capital trusts — investment vehicles that typically back startups — among some of its main products.

The asset manager has around £2bn invested in smaller companies, mostly those listed on the AIM market, according to Davis.

Earlier this year it also launched a UK deep tech fund looking to raise £40m from institutional investors, which will back technology emerging from research centres and university hubs focused on sustainability.

Davis is bullish on some of the reforms unveiled by the government to stem the exodus of companies and entrepreneurs from the UK to rival financial centres.

The City continues to grapple with a shortage of IPOs, and a series of prominent names including chip designer Arm, betting group Flutter and building materials giant CRH have opted to list in the US rather than the UK.

The Mansion House Compact, unveiled in the Chancellor’s July Mansion House speech, will see some of the UK’s largest pension funds — including Aviva, L&G and M&G — commit 5% of their assets to unlisted companies by 2030.

“Anything that encourages investment in early stage companies, startups or that ecosystem and can keep capital flowing in the UK is positive,” said Davis.

“The biggest concern is restoring stability and confidence in the UK economy. We’re definitely seeing that getting better. But it’s about getting back to being more predictable and steady.

He added: “Markets and investors work on stability and predictability. That’s what we want to see.”

To contact the author of this story with feedback or news, email David Ricketts