Four big names battle it out for Gartmore
Tuesday 21 November 1995
The race for Gartmore, the UK fund manager, has entered the closing stage. The Prudential is the main British contender in a field that has narrowed to about four from the large number of interested parties at the outset.
Aegon, the Dutch insurer, Berliner Bank, a cash-rich, state-owned German bank, and BAT, the tobacco and financial services conglomerate, are the other front-runners. But BAT is believed to be in talks also with the Bristol & West Building Society.
Banque Indozuez, the French bank, put its 75 per cent stake in Gartmore up for sale in September. The remaining 25 per cent is in public hands. Gartmore is valued at pounds 600m. Nationsbank the fourth largest bank in the US, which has a joint venture agreement with Gartmore, is still considering whether it should make a firm approach. Under the joint venture terms, it has options on up to 25 per cent of the fund manager's share capital.
Nationsbank, which is advised by Flemings, had earlier been talking to several potential partners for a bid, as a means of getting around the US accounting rule that requires a speedy writing-off of the goodwill in the purchase price.
The Prudential, Britain's largest life insurer, which is being advised by BZW, is understood to be interested in Gartmore to bolster its own investment management operations. Gartmore, which has some pounds 24bn under management, has grown rapidly in recent years, and is widely seen to be a successful operation in the highly competitive sector.
Aegon, which is being advised by Morgan Stanley, is one of the top 20 listed insurers world-wide, and is already active in the UK via its controlling interest in Scottish Equitable, the life company. With a market capitalisation of pounds 6.8bn, Aegon, the bulk of whose business is pensions and life-oriented, is not far behind the Pru in size, and is looking to expand its presence in the UK market. Scottish Equitable, measured by volumes of new business, is the largest provider of pension products in Britain, through Independent Financial Advisers.
Aegon and Scottish Equitable are believed to see an acquisition of Gartmore as a means of reinforcing investment expertise, and making the life and pension products more attractive.
Berliner Bank, which is said to be advised by Schroders, is the sixth largest German bank in asset terms. Forged by the recent merger of the state landesbank, a retail and a mortgage bank, it has a large proportion of retained capital, which it is now looking to invest in interational expansion. It has bought new City offices which it wants to become the centre of its investment banking operations.Gartmore would give the bank much-needed investment management and equity expertise, which it wants to develop with the prospect of pension funds evolving in Germany.
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