Rishi Sunakthe new prime minister of the UK, is quite a familiar face with the financial industry, as he once worked as an analyst at Goldman Sachs.
The newly appointed 42-year-old prime minister spent the bulk of his private sector days working for hedge funds, including one of the financial industry’s most prominent activist investors, known for building large stakes in companies and agitating for action to boost the stock price, news agency Bloomberg said. His arrival at 10 Downing Street is now adding value to UK bond markets hoping for some calm after a wild month.
He spent around three years at the US bank, after which he worked at one hedge fund, co-founded another, and then moved into politics.
Sunak graduated from Oxford University with a bachelors degree in Philosophy, Politics, and Economics — a degree known for producing British politicians. While at university, he was president of the university’s investment society. He left Goldman Sachs to get an MBA at Stanford University. After finishing his studies, Sunak worked at the hedge fund TCI, before setting his own up – Theleme Partners – with a colleague.
According to Bloomberg, TCI suffered the only annual loss in its history in 2008, dropping 43 per cent as market turmoil rocked its stock investments.
On Monday, Sunak became Conservative Party leader unopposed in a dramatic turnaround in his political fortunes less than two months after he lost the runoff with Liz Truss. Now, his job is to fix a crisis facing the economy, one that was exacerbated by a fiscal plan from Truss that was roundly rejected by investors.
Sunak also spoke Monday of a “profound economic challenge” amid double-digit inflation and rising interest rates.
“Rishi understands the working of financial markets and levers that generate wealth for an economy,” said Crossbridge Capital Chief Investment Officer Manish Singh, who has met Sunak.
Sunak, whose first name means a sage in Hindi, will become the UK’s youngest prime minister in more than two centuries and its first from an ethnic minority. He’ll also be the first former hedge funder to hold the post.
At TCI, Sunak supported senior portfolio managers in their activist campaigns, an approach that made Hohn and his investment firm famous. But it was an unsuccessful one that was among the most prominent Sunak worked on.
In 2007, he helped TCI partner Snehal Amin build a position in US railroad CSX Corp., where TCI pushed for management change. The battle ended up in court and TCI exited the losing bet in 2009.
Hedge funds, which in Hohn and Michael Platt have produced two of Britain’s five wealthiest individuals, have been the source of several prominent donors to the Conservative Party. They’ve also at times served as a symbol of soft political power and a shorthand for critics of the ruling party’s policies that benefit the wealthy.
Sunak left the industry to launch his own political career, becoming a Member of Parliament in 2015 and rapidly ascended to become Chancellor of the Exchequer just weeks before the pandemic hit the nation, forcing him to unleash unprecedented financial support. However, Boris Johnson’s government was consistently hit by controversy over everything from parties during Covid lockdowns to the way refurbishments to Johnson’s apartment were paid for.
Sunak quit Johnson’s government in July and then fought and lost out to Truss in the last Tory leadership contest over the summer. But his repeated warnings that her plans would trigger economic chaos proved correct and put him in pole position when Truss’s premiership imploded.