Scottish Money Manager Tells Clients Independence Vote Close Run

Investors and businesses are underestimating the potential for Scotland to vote in favor of breaking away from the rest of the U.K., according to the head of one of Edinburgh’s largest fund companies.

“It’s going to be close, and if it’s close it means it could go either way,” Kames Capital Chief Executive Officer Martin Davis told clients at a company function in Edinburgh yesterday evening. Should voters reject independence, a close vote could lead to Scotland being able to negotiate more political control that can affect how businesses operate in the country. “The genie is out of the bottle,” he said.

Scotland’s constitutional future will be decided on Sept. 18, with the main political parties in London united in their opposition to independence. While polls show the campaign to preserve the political union is ahead, the margin has been narrow enough for Prime Minister David Cameron to promise more powers in an attempt to quash any chance of a yes vote.

A monthly survey by ICM Research in April put the lead at three percentage points. It widened this month to 12 points as 34 percent of respondents supported independence and 46 percent backed the U.K. remaining intact. The proportion of people undecided on how they will vote was 20 percent.

Bookmaker William Hill Plc has been cutting the odds of a yes vote. They are currently at 2-1 compared with 7-2 earlier this year. The company said last month it expects the referendum to go down to the wire.

Tightening Polls

The polls will probably tighten as the vote nears, with support for leaving the U.K. having grown by between five and 10 percentage points since December, Rob Wood, chief U.K. economist at Berenberg Bank in London, wrote in an e-mail to clients today. While opponents of Scottish independence still have a large lead “we need to watch the risk carefully.” he said.

Davis, who joined Kames in October after working at investment fund market Cofunds, said Kames is taking steps to protect customers and ensure there is continuity after Sept. 18. He said he wasn’t expressing a preference on the outcome. A yes vote would have implications for other regions in Europe that are themselves seeking autonomy, such as Catalonia.

Kames oversees about 52 billion pounds ($88 billion) for clients and is part of Dutch insurer Aegon NV. Its assets compare with 184 billion pounds at Standard Life Investments, the largest fund company in Edinburgh, at the end of 2013.

Standard Life Plc, the life insurer parent of the money manager, said in February it was preparing to shift business elsewhere should independence increase the risks around the currency and regulation.

“We are very confident about Scotland and we don’t want that to change in any way or form,” Davis said.

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