L&G man in a spot

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The Independent Online
Peter Knapton, a senior executive with Legal & General Investment Management, is in a embarrassing spot. He is open to the charge that, like many in the City, he talks a good investment game but fails to deliver.

Away from his L&G day job, Mr Knapton is chairman and a big investor in Reece, a conglomerate with pounds 19m in sales, whose shares languish at 1.5p, down from 8p five years ago. It has not paid a dividend since 1991. It is, in short, not at all a company into which L&G would steer its policyholders' money.

Reece sells bikes ("a cyclical business," says Mr Knapton), makes door panels, distributes nuts and bolts and makes equipment for the ceramics industry.

It has seen many false dawns. Last year, it produced an improved profit of pounds 166,000 pre-tax and Mr Knapton was quite cheerful. A few months later he revealed a slip back into the red in the first half of 1997.

Mr Knapton must surely be more proud of his six daughters than of Reece. For its performance is not much for a City fund manager to boast about.

"I'm not a fund manager day-to-day," protested Mr Knapton, who insists he is now above such humdrum matters as buying and selling equities. But it is not long since he ran L&G's Recovery Trust, and only four years ago he was chief investment officer at Lazards.

He insisted he did not run Reece day-to-day either; he was a non-executive chairman. He said the problem was that Reece seriously overpaid for the nuts and bolts business. Nobody would buy it, and he could not close it because of onerous property leases.

"I don't say we're doing well but it's difficult to imagine anybody else doing a much better job, and most shareholders seem to understand that," said Mr Knapton.

But not all of them do. "It's not clear the management have added a whole lot to shareholder value in recent years," said money manager Colin McLean, whose Undervalued Assets Trust holds 14 per cent of Reece.

But you can say this for Mr Knapton; he has not cut and run. "I'd like to find a solution rather than just quit."