Buyers queue to grab a stake in Gartmore
Saturday 30 September 1995
Gartmore, the fund management group 75 per cent owned by Banque Indosuez, is in play after the French bank put its stake up for sale, valuing the company at more than pounds 550m.
Gartmore's management headed by Paul Myners is anticipating a multi-million pound windfall, since much of the remaining 25 per cent is owned by staff. Any buyer will also have to provide "golden hand-cuffs" to retain staff.
The announcement set the UK fund management sector ablaze on bid speculation. Gartmore rose 39p to 262.5p, Mercury Assset Management rose 31p to 899p and Perpetual gained 70p to 1683p. Invesco added 9p to 221p.
The French stressed the Gartmore sale was due to an "in-depth review of strategy" and that they had been delighted with Gartmore's performance since buying the stake for pounds 120m five years ago.
NatWest, American group GE Capital and ING, owners of Barings, have been mentioned in the City as leading bidders.
Nationsbank of the US has a joint venture with Gartmore and as such has first refusal over some of the French stake. Any deal will have to be agreeable to the American bank, analysts concluded yesterday.
It is rare for respected fund managers to come on the market and most of Gartmore's pounds 24bn of funds under management come from UK pension funds, regarded as high quality business. Commerzbank showed just how expensive fund managers are at the moment when it paid pounds 169m for Jupiter Tyndall, representing a price/earnings ratio of around 20. Gartmore is currently trading at 23 times forecast earnings for 1995.
ABN Amro, which owns Hoare Govett but was beaten by ING for Barings, is also in the frame, while Merrill Lynch, the giant US broker, has also been mentioned as a potential bidder.
Gartmore, whose chief executive is Paul Myners, said: "Banque Indosuez and Gartmore are reviewing the options for the disposal of Banque Indosuez's shareholding, taking full account of the interests of Gartmore's clients, shareholders and staff."
Banque Indosuez only decided to put the 75 per cent stake up for sale a week ago, said the bank. It received a number of serious approaches yesterday, and sources close to the company expect a deal to be completed by the end of the year.
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